Falling on the sword

Departments - Plastics

Plastics brokers feel the effects of China’s “National Sword.”

April 19, 2017

Some sources say they have begun to feel the effects of China’s “National Sword” or “Border-gate Sword” initiative. According to China’s General Administration of Customs (GAC), the border control regimen is designed to crack down on smuggling and importing of “foreign waste” into the country.

*Producer price index is based on December 1980 average prices as 100; source: U.S. Bureau of Labor Statistics

In late February, Steve Wong, chairman of Hong Kong-based Fukutomi Co. Ltd. and a member of the Plastics Committee of the Bureau of International Recycling (BIR), Brussels, said, “Nationwide action has been carried out by the GAC [at] ports in Guangdong, Shenzhen, Guangzhou, Huangpu, Qingdao, Tianjin, Ningbo, Shanghai and Nanjing. This crackdown has so far resulted in 15 smuggling operations being exposed, the arrest of 90 suspects and confiscation of 22,100 tons of ‘foreign waste.’” Wong said these shipments have included electronic scrap, plastic scrap and mixed household waste and recyclables.

A broker based in the Midwest says that while his company continues to export plastic scrap to China, demand is “not as strong as it has been.” In addition to National Sword, he attributes the decreased demand to the tenuous relationship between the U.S. and Chinese governments and to shipping line rate increases.

He says he’s begun to question whether his company should continue to ship certain loads to China, though he describes them as clean, postindustrial material, because they don’t fall into a specific category or within specific parameters.

A broker and reprocessor who also is based in the Midwest says her company is seeing the effect of National Sword in terms of reduced demand from China. “The activity of export buying is decreasing in Asia, particularly China,” she says.

National Sword also has shipments of plastic scrap backing up at the Port of Hong Kong. According to the Beijing-based China Scrap Plastics Association (CSPA), some 5,000 sea containers loaded with plastic scrap have not been able to enter the People’s Republic of China since it began its National Sword inspection regimen.

In an April 11, 2017, email to its members, the CSPA says it is helping to prepare the estimated 5,000 “overdue” containers to be “auctioned to potential buyers from Southeast Asia” in conjunction with the ChinaReplas 2017 Exhibition, May 11-12, 2017, in Dongguan, China.

Despite reduced export demand, plastic scrap generation in the U.S. remains steady, according to sources, with the broker adding that industrial generation “has probably picked up a bit.”

“Export demand is soft, but the domestic market is decent.” – a broker based in the Midwest

He attributes that uptick in part to growing consumer confidence.

The Consumer Confidence Survey, which is based on a probability-design random sample and conducted for The Conference Board, New York City, by Nielsen, reached 128.6 in March, the highest level since December 2000.

Both plastics recycling industry sources say domestic demand remains decent, though the broker/reprocessor adds that demand for polyethylene terephthalate (PET) is decreasing in line with seasonal cycles.

“It’s rare when the export market and the domestic market are high at the same time,” the other broker says. “Export demand is soft, but the domestic market is decent.”