Slowing to a halt

Departments - Plastics

China’s National Sword campaign continues to affect the flow of plastic scrap.

August 1, 2017

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

Plastics recyclers around the world are feeling the effects of China’s National Sword campaign.

“Export markets are slow,” a reprocessor based in the Southeast says. “Exporters are citing the regulations/crackdowns in China.”

A broker based in the Midwest with processing capacity in China says material flow is “nonexistent” right now as the company waits for its affiliate’s plastic scrap import permits to be renewed and the related inspections by Chinese authorities. “The month of July has been lost,” he says. “I have shipped one container in July when I normally ship two or three per week.”

He says he fears the U.S. market will be flooded with material as a result of delays related to permitting in China, eroding pricing.

“The industry is kind of being held hostage,” the broker says of the effect of China’s policies on the plastics recycling sector.

When asked if the experience has him interested in adding processing capacity in the U.S., the source in the Midwest says, “It doesn’t make me want to do anything at the moment.”

A recent report on a Chinese state television network has provided data on inspections of plastics recycling plants in that nation.

Steve Wong, executive president of the China Scrap Plastic Association (CSPA) and a member of the Bureau of International Recycling (BIR) Plastics Committee, says a report from CCTV 13 news broadcast Saturday, July 15, included information provided by China’s Ministry of Environmental Protection (MEP) with results of its month-long inspection campaign targeted against nearly 1,800 licensed factories with import permits for plastic scrap.

According to the report, through July 14 (representing the first 14 days of the month-long campaign), of the 1,792 establishments targeted:

  • 888 locations had been inspected;
  • 590 of them, or 66 percent, were found to have rules violations during inspection;
  • 383 locations had production suspended;
  • 53 locations were determined to be closed;
  • 349 locations have been put under investigation based on their rule violations; and
  • at those 349 locations, 871 total violations were identified.

Factories with violations can have their import permit applications suspended for one year, writes Wong.

Back in the states, generation from the automotive sector has declined in light of holiday shutdowns and slower car sales, the reprocessor based in the Southeast says. However, she says generation from the packaging sector appears to be steady.

The reprocessor characterizes domestic demand for polypropylene (PP) and polyethylene (PE) as “steady,” adding that (high-density polyethylene) HDPE injection grade material is in particularly high demand as of mid-July.

She predicts PP soon will firm up as seasonal consumers ramp up their use of the material.