ISRI2018: China’s recyclers seek to stay in the game

ISRI2018: China’s recyclers seek to stay in the game

Whether inside China or in a new location, processors and consumers in China are scrambling to keep their businesses viable.

April 25, 2018

Above, from left: Shen Dong of OmniSource Corp., Steven Gilbert of Queen City Metal Recycling,
Vinod Singh of Far West Recycling, Chad Hansen of Sealink International and Adina Renee Adler of ISRI

As the Chinese government has made swift policy decisions to ban or restrict imported scrap materials, the turmoil has affected not only sellers in the United States and elsewhere but also the processors and consumers based in China who have relied on the material. The dilemmas faced by buyers and sellers were the topic of a panel discussion at the ISRI2018 convention, held in Las Vegas in mid-April and hosted by the Washington-based Institute of Scrap Recycling Industries (ISRI).

Scrap metals trader Shen Dong, who is based in Shanghai for Indiana-based OmniSource Corp., commented that many facilities in Southern China that had processed what the Chinese government lists as “Category 7” scrap metals (including wire and cable and mixed motors) are now closed. (China announced a complete, pending ban on those materials during the ISRI2018 event.)

In the previous two decades, Dong estimated some two-thirds of the nonferrous scrap, by volume, imported into China had been Category 7. The pending ban has “changed the face of scrap going to China forever,” he commented.

The “frustrated” Chinese recyclers “want to stay in the business,” said Dong, and many have begun relocating operations not only to the nearby ASEAN (Association of Southeast Asian Nations) region but also to North America. In the ASEAN market, which includes Malaysia, Thailand and Vietnam, such companies can bring skilled operators and technology to the region, he commented.

Long-time motor recycler and trader Steven Gilbert of Charlotte, North Carolina-based Queen City Metal Recycling, said with the bans in place or pending, “the biggest issues are the new quality requirements” being applied by the Chinese government to all grades of imported scrap. The 0.05 percent contaminants threshold “can only be developed with clear and precise specifications,” he remarked.

Currently, said Gilbert, inspection results given by pre-inspecting agents in the U.S. “are not matching” with inspection results at Chinese ports. “The cost to bring a container back can be three times to five times the cost to send it."

Although he has a lengthy history of trading with China, Gilbert indicated he also has “been developing a market [for motors in Europe] for years” and sees it as one alternative. “But to replace the Chinese market is a massive challenge,” he added.

Vinod Singh of Oregon-based Far West Recycling said the material recovery facility (MRF) sector on the West Coast of the U.S. sounded an early alarm as to the disappearance of the Chinese market for plastic scrap and mixed paper bales. “We’ve had to explore new markets,” said Singh. “We could move our paper, but not necessarily our plastic,” he said of Far West’s initial postban experiences.

Investments in domestic consumption will be necessary to absorb such MRF materials, said Singh, who said recyclers and government officials in Pacific Coast states are studying “mill development” to consume scrap paper. “We want do to what’s right with the materials. We’re going to survive; we’re a very resilient industry,” he stated.

Also caught in the turmoil have been shipping companies, according to panelist Chad Hansen of Dallas-based logistics firm Sealink International Inc. Hansen referred to the state of plastic scrap shipping as “the ugliest of all,” with the Chinese market being “done” and Vietnamese ports likely at their limit to accept plastic scrap containers.

Hansen said many carriers are no longer accepting plastic scrap shipments, a problem caused in large part by the considerable number of containers abandoned at ports. He said that practice is giving the entire recycling sector “a black eye” in the freight forwarding and ocean shipping industries. “We need to band together on this problem” he urged the recyclers in attendance.

Session moderator Adina Renee Adler, ISRI’s Senior Director for Government Relations and International Affairs, told the assembled audience, “It’s important the world understands you’re not dumping trash on China. You’re trading valuable secondary commodities.”

ISRI2018 was April 14-19 at the Mandalay Bay Resort & Casino in Las Vegas.