china great wall
Raids by China’s customs agency have again muddied the waters for the future of scrap shipments to that nation.
Photo by Brian Taylor.

Is China reinforcing its wall against imported scrap—again?

Traders indicate “anti-smuggling” crackdowns are providing yet another barrier.

June 12, 2020

A media report indicates 80 people at as many as 38 companies have been detained because of “illegal trash imports” arriving in China. This comes just as some agencies in that nation have worked toward reclassifying designated imported scrap shipments as resources or raw materials rather than “waste.”

According to a June 10 online news item by Xinhua, a Chinese government media outlet, customs agents seized more than 1 million metric tons of what the state news agency calls “illegal trash imports” in what Xinhua calls “the latest round of crackdowns on smuggled foreign waste.”

One source in Guangdong Province says in that region, plastic scrap was the predominant target of the citations, but at least one metals recycler has been affected. “The smuggled trash included waste mineral residue and oily water, the General Administration of Customs (GAC) said in a statement,” according to Xinhua.

The effort in Guangdong was just one in a series of several “crackdowns” in nine different provinces, according to Xinhua.

The anti-recycling actions come just as China’s government also has made overtures toward keeping some scrap import supply lines open. In April, tariffs were lowered on nonferrous scrap from the United States.

Throughout late 2019 and early 2020, China’s government has been working on an as yet uninitiated program to reclassify some nonferrous scrap categories from “waste” to “resource.” That effort also has reportedly spread to the ferrous scrap sector.

The reclassification efforts led to a hope that doors would remain open to China for nations with scrap metal and paper surpluses, even if the harsh stance toward plastic remained in place.

However, recyclers and traders indicate recalibrating the relationship remains difficult and uncertain. At a recent Bureau of International Recycling (BIR) International Trade Council webinar, Max Craipeau of Hong Kong-based plastics and rubber trading firm Greencore Resources Ltd. indicated customers with recycled-content plastic targets “want to take advantage of our factory in Indonesia [which makes recycled-content plastic pellets].” Access to such resources is increasingly rare in China.

Two Hong Kong-based metal traders have told Recycling Today their transactions with ports in China have dwindled to a single-digit percentage of their overall Asian business. “We are basically not selling to Guangdong at all, and haven’t been for quite a while,” one trader says.

The same trader says he also has heard such “anti-smuggling” arrests have occurred in the red metals sector in the Ningbo, China, area.

The other trader indicates the situation has become so dire for secondary nonferrous metals producers in China that some are importing finished secondary aluminum or red metal ingots from India or Southeast Asia, and promptly remelting them. With this environmentally and financially unsound practice, they can create “made in China” recycled-content ingots that meet these stated criteria for certain customers in China.

The suspicion exists among Chinese entrepreneurs and overseas traders alike that the bans on scrap remain a way to favor state-owned enterprises (SOEs) in the steel, aluminum and polymers sectors. Those companies tend to have existing heavy capital investments based almost entirely on the use of virgin ores and petrochemicals. Environmental and circular economy advocates are likewise troubled by this notion.

With Xinhua using language that includes, “Customs officers detained 80 suspects and broke up 38 smuggling rings during the raid in nine provincial regions,” any optimism generated in the global scrap sector by the waste-to-resources reclassification dialog is likely to evaporate.

China’s state media outlets demonstrate an inability or unwillingness to distinguish secondary commodities from non-recyclable solid waste. Other sections of the six-paragraph June 10 Xinhua item on the GAC activities state: “China imported nearly 3.23 million metric tons of solid waste in the first five months of the year, down 45.2 percent from the same period of last year,” and, “The country began importing solid waste as a source of raw materials in the 1980s [and] some companies have profited by illegally bringing foreign waste into the country, posing a threat to the environment and public health.”