WASHINGTON-Thanks to the efforts of the Environmental Protection Agency and other private and government groups, the Chicago Board of Trade (CBOT) will trade rubber from scrap tires and other recyclable commodities via electronic bulletin board starting Oct. 17. Promoters of scrap rubber, however, are disappointed the board will allow trading of their product before the development of testing or arbitration procedures to ensure quality standards and customer satisfaction.
The EPA and CBOT collaborated with the National Recycling Coalition, the New York Office of Recycling Market Development and the Clean Washington Center in Seattle to develop the Recyclables Exchange, according to CBOT staff economist Patrick Videll.
``This isn't traditional commodities trading; it won't take place on the trading floor, as with wheat or pork bellies,'' Mr. Videll said. ``What we've done is to develop a centralized cash market-a medium for buyers and sellers to find each other.''
The Clean Washington Center took the lead in developing the program, according to Mr. Videll.
Whole tires, tire chips, granulated tires and fine grind will all be available through the bulletin board, the Clean Washington Center's David Dougherty said.
At first, however, they will be offered only in the ``miscellaneous'' category, under which a broad range of recyclable materials will be advertised or solicited.
Only four materials will be offered separately, in a standardized method of trade. They are paper, glass and two types of plastic-high-density polyethylene (HDPE) and polyethylene terephthalate (PET).
There are quality standards and testing protocols in place for these materials, to ensure they meet customer specifications, according to Messrs. Videll and Dougherty. There also are arbitration mechanisms to settle disputes over product quality and other issues.
Representatives of the scrap tire industry show ``keen interest'' in developing testing and arbitration standards for their products, Mr. Dougherty said. Market demand on the ``miscellaneous'' board, however, will determine which materials are expedited for standards development.
Currently the CBOT and the Clean Washington Center are preoccupied with starting the Recyclables Exchange, Mr. Dougherty explained. But he added that he expects the decisions on further standards development to be made by the first of the year.
The scrap tire industry is working with the American Society for Testing and Materials and other groups to devise appropriate quality testing standards for scrap rubber, according to John Serumgard, chairman of the Scrap Tire Management Council.
The STMC is concerned that the ``miscellaneous'' tier is being offered without quality standards, he said.
``If crumb rubber is traded and the trades don't turn out well, that has the potential to set back the concept of making crumb rubber a commodity,'' Mr. Serumgard said.
``We would have preferred a delay until we developed the standards and could proceed in an orderly manner with protection for buyers and sellers alike.''