The role of China in the global plastics recycling sector was the biggest takeaway mentioned by presenters at the Plastics: A Global Perspective session, held during the 2016 Paper & Plastics Recycling Conference in Chicago, Oct. 19-21.
Opening the session, Sunil Bagaria, president of GDB International Inc., New Brunswick, New Jersey, noted that in 2014 about 310 million metric tons of plastic were produced in the United States. Meanwhile, about 46 million metric tons (about 15 percent) of that plastic was recycled, either domestically or in export locations.
Roughly 2.2 million metric tons of plastic scrap were exported in 2014, Bagaria said. Of that total, around 850,000 metric tons were shipped to China; Hong Kong took in about 600,000 metric tons; and India consumed about 100,000 metric tons. Combined, he continued, those three regions account for around 85 percent of all the plastic scrap being exported from the United States.
This overwhelming dependence on these three countries for exports does pose some challenges, Bagaria noted. Plastic scrap may be a growing commodity for exporters, but companies need to pay attention to some of the drivers. For starts, plastic scrap is susceptible to virgin raw material prices. Markets have been sluggish over the past year, and, with more capacity coming on line, there will likely be continued pressure on many scrap plastic grades.
Another issue that continues to plague all aspects of the plastic scrap chain has been the inconsistent quality levels of the exported material. There often is a quality mismatch between buyers and sellers, Bagaria noted.
Also playing a role in export marks have been the currency fluctuations, which could sharply change the landscape for exporters.
Despite the challenges, having a ready offshore market does offer significant upside for many exporters. Bagaria ticked off several factors that make the export market more enticing for some U.S. plastics recyclers: lower environmental regulations and controls and the cost of recycling can be much higher in the United States than overseas for some grades, especially when factoring in the relatively inexpensive labor costs overseas.
Keying in on one plastic scrap grade, Bagaria noted that in 2014, of the 18.1 billion pounds of plastic film produced, about 1.2 billion pounds were recovered for recycling, a 44 percent increase in the total amount of film plastic collected in the past 10 years. Continuing with film plastic, of that amount, 60 percent was exported. In 2005, less than 30 percent of the film plastic collected for recycling was shipped overseas.
While China is the main driver, India also remains a potential growth area. Bagaria notes that India is a strong buyer of polyethylene scrap, including LDPE and LLDPE. Additionally, the country has a strong demand for postindustrial and postcommercial grades of plastics.
On the downside, Bagaria continued, in light of its recycling infrastructure, India is not able to import waste and postconsumer grades of plastic scrap. Further, he noted, imports of plastic scrap are restricted to companies located in the country’s Special Economic Zones (SEZs) and Export Processing Zones (EPZs).
While plastic scrap to India is improving, the country is becoming far more conscious about the need to boost the quality of the plastic scrap it is importing. This, Bagaria noted, is part of the mindset of U.S. consumers, who often take the “out of sight out of mind” approach, resulting in poorer quality plastic scrap.
Octavio Victal with Avangard Innovative, a plastics recycling company headquartered in Houston, said that in light of the economic problems throughout the world, partly driven by the slump in oil prices, a host of Latin American countries have fallen into recession. This has chilled the flow of plastic scrap from the United States to many Latin American countries.
Further, Victal noted, to grow the plastic recycling market in Latin America, companies need to improve their access to quality recycled plastic scrap other than PET.
Another challenge to boosting the recycling of plastics in Latin America is improving the logistics into the region. In his remarks, Victal noted that intermodal and OTR traffic has made for an easier flow of plastic scrap from the United States to Latin American markets, especially to Mexico.
The third speaker during the session was Kathy Xuan with Parc Corp., a Chicago-area based plastics recycling company with significant exposure to the Chinese market. The company provides recycling services for postindustrial and postconsumer scrap materials.
Her presentation focused on the plastics recycling markets to China. One point she noted was that the plastic scrap market has changed significantly after the implementation of China’s Green Fence several years ago.
While post-Green Fence there has been greater pressure to boost the quality of the plastic scrap moving into China, statistics show that after falling sharply when the Green Fence was first enforced in late 2008, the volume of plastic scrap entering China has steadily increased.
Xuan also noted that a more recent trend in regard to the Chinese plastic industry is the growing number of state-owned enterprises.
In regard to the most widely imported plastic scrap grades, Xuan noted that closed to half of all the plastic scrap flowing into China is polyethylene (PE), with 46.39 percent in 2014. Following PE, PET (polyethylene terephthalate) plastic was the second most widely imported plastic scrap grade, at slightly less than 25 percent; PVC (polyvinyl chloride) plastic, 6 percent; polystyrene (PS), 4 percent; and other grades of plastic scrap at 19 percent.
At the same time, the trend is moving toward more plastics being shipped from China to other South Asian countries. Xuan noted that Malaysia, Indonesia, Thailand and Vietnam receive a significant amount of plastic scrap after the material is first shipped to China. These shipments have benefited from the Asian Free Trade Agreement, which makes the shipments duty free.
The Paper & Plastics Recycling Conference was Oct. 19-21 in Chicago.