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Market Reports - Plastics

RTGE Staff May 8, 2013

The big talk in the recycling industry right now is the restrictive import policies for recyclables taking place at ports throughout China. Dubbed the “Green Fence,” the policy has had a significant impact on companies exporting plastic scrap (as well as other recyclables) to China. Several sources expect the policy to remain in place through most of this year.

China traditionally has been a major consumer of a wide range of plastic scrap from Europe and North America. However, over the past several years as purchases have grown, quality levels have sharply declined.

There have been calls from various environmental groups for tighter restrictions on the flow of plastic into the country. While in the past Chinese government officials attempted to improve the quality of the plastic coming into the country, it appears a turning point was an alleged problem shipment from a Dutch recycling company in late January. Raids of the company’s facility were conducted by Dutch law enforcement officials. While the company has denied wrongdoing, it appeared the incident was the catalyst for China’s new leadership to impose more rigorous inspections of material flowing into the country.

Several supporters of the policy say the Chinese government has not imposed new restrictions; rather they have started to follow policies that have been in place for a number of years.

The result, according to several plastics recyclers, is that more container shipments of material are being rejected. As well, there is a growing backlog of containers being subjected to more rigorous inspections and container movement has slowed to crawl.

The level of rejections is an area of significant concern for many plastic scrap exporters, who say that a sizable rejection could end up costing the recycler tens of thousands of dollars.

While most grades of plastic scrap are slumping, the biggest challenge appears to be the mixed grades. Several sources say that these grades, including most shipments of rigid plastics, are drawing the closest scrutiny.

There are growing reports that more Asian countries are also starting to take a more aggressive stance to ensure that plastics that may include out-throws and contaminants are kept out of their country. In the short term, a number of European plastics recyclers are looking to redirect shipments away from Asia to other sources, including end markets within Europe.

This most recent move may turn out to be a long-term positive, as quality issues for plastic have been a major concern over the past several years. Several sources say that some larger plastic scrap processors are slowing down their operations to ensure better quality.

Adding to the challenge for the plastics recycling industry in Europe, there are concerns about the lack of available plastic scrap, especially from the countries in the European Union. Reflecting the concern, the European Union is calling on various stakeholders to participate in research on the future of the plastics recycling industry.

Several sources contacted say they are having a more difficult time increasing the amount of plastics to which they have access. These sources say that some countries with significant energy-from-waste capacity are opting to steer more plastic to these end sources, leaving less available for recyclers.

To address this issue, the European Commission recently released a research paper that aims to address the supply of plastic scrap. The report is seeking comments from stakeholders from all perspectives on the plastics recycling industry in hopes of crafting a policy for ways to grow the plastics recycling sector throughout Europe.
 

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