What happens when a national nonprofit dedicated to improving recycling partners with the philanthropic arm of a multinational food, snack and beverage corporation? According to The Recycling Partnership, Falls Church, Virginia, and the PepsiCo Foundation, Purchase, New York, 25 million families gain access to or optimize their existing recycling programs, resulting in the collection of 1.9 million tons of quality recyclables over the next five years.

In late July, the organizations partnered to launch All In On Recycling, which they describe as “the largest ever industrywide residential recycling challenge.”

Multiplying the investment

The PepsiCo Foundation has provided $10 million to jumpstart the challenge, which is seeking to raise $25 million in total donations from companies and organizations.

“We identified curbside and residential recycling as a critical area for investment and knew that [The Recycling Partnership] was the right partner for the project,” says Tim Carey, senior director of sustainability for PepsiCo. “We’ve been working with them for the past few years and believe in their data-driven approach that identifies, community by community, the specific challenges with residential recycling and then deploys targeted solutions.”

Keefe Harrison, CEO of The Recycling Partnership, says the investment model will allow the nonprofit to provide recycling carts to communities across the U.S.; create multifamily recycling infrastructure; optimize existing recycling programs through technical assistance and access to free online tools; and deliver education that will drive behavioral change among consumers.

“The Recycling Partnership model leverages corporate dollars to unlock public sector dollars,” Harrison says. “To date in our infrastructure projects, that leverage has been as high as $7 public sector to $1 private sector.”

She continues, “For this challenge, we anticipate at least a three-fold leverage—so we’ll be able to turn that $25 million into $100 million ($75 million leverage) worth of recycling improvements.”

The public dollars come from local budgets and state grants, Harrison says, adding that additional community foundation funding could be provided.

Several large corporations in addition to PepsiCo have shown interest in the program, she says, noting that final amounts have not been determined as of mid-September. However, Harrison says she expects those figures to be in the millions. “The more we are able to raise, the more system change we can make at an important time in the history of U.S. recycling.”

Because of insufficient infrastructure, widely varying municipal recycling programs and low awareness of proper recycling practices, more than half of the material that could be recycled from U.S. households is lost, the partners say.

Half of the total funds raised by this challenge are expected to help provide curbside carts to more than 550,000 households—a proven way to double the number of recyclables recovered, according to The Recycling Partnership—and the missing infrastructure needed to recover recyclables from multifamily homes, such as apartment buildings and condos. The other half of the funding will support recycling education and operational programs that will increase collection of recyclables while reducing contamination, which has become a growing area of concern in light of the quality parameters China introduced earlier this year for imports of recyclables.

Educating on the basics

While some in the industry blame large-capacity carts for the growing contamination in the recycling stream, Harrison says she does not believe this to be true. “Instead, a lack of targeted residential engagement tends to be the issue when you look at programs with high contamination,” she says.

“Communities that use carts for recycling can still have under a 10 percent contamination rate,” Harrison continues. “Unfortunately, we as an industry have tried to roll carts out and have tried to manage them just like garbage collection. When this happens, too many homes are placed on a route, often little information is given to the resident about what to put in the cart and no protocols are put in place to audit the material going into the cart (i.e., what should the driver do, how should the program reject carts, etc.).”

Harrison says she has seen communities and haulers make a number of missteps in transitioning to carts for curbside-collected recyclables. These include using recycling carts that are the same color as garbage carts, deploying carts without any information and failing to reject recycling carts even if they are clearly filled with garbage.

“We believe recycling carts should be a different color (preferably blue) than the garbage cart with a big mobius loop hot stamp on the side,” she says.

The Recycling Partnership also believes recycling carts should be delivered with information packets that highlight acceptable recyclables.

Harrison says, “With proper education and implementation of contamination-reducing programming, we believe single-stream carts can be viable in generating increased tonnage for the recycling system.”

She adds that The Recycling Partnership supports dual- and single-stream recycling programs.

Regardless of the mode of collection, according to capture rate data from The Recycling Partnership, only 50 percent of recyclable packaging is making it into recycling carts in half of the households that have this service.

“Our multipronged strategies, rooted in behavior change, include a tested and proven combination of direct mail, tagging of carts with messaging and local educational campaigns,” Harrison says, adding that The Recycling Partnership has increased capture rates and decreased contamination.

Taking a holistic approach

Carey says initiatives such as All In On Recycling that help to recover more cans and bottles create more opportunities for Pepsi- Co to increase its use of recycled content.

“We approach sustainable packaging holistically, which includes investing in recycling infrastructure to make it easier and more convenient for customers to recycle materials including glass, aluminum and plastic,” he says. “PepsiCo is one of the largest users of recycled plastic in the world, and we firmly believe that if we are using plastics in our packaging, then these materials must be reused again and again.”

Carey says PepsiCo has invested nearly $55 million in U.S. recycling efforts throughout the past nine years and views these investments as being “essential” to achieving the company’s product sustainability goals.

When it comes to designing for recycling, he says, “We have design teams working right now to improve the recyclability of packaging so it doesn’t interfere with existing collection and recycling systems. We recognize that some components of our packaging may inhibit recyclability. That’s why we’re replacing certain materials (like labels) to help optimize material recovery in municipal recycling systems. We’re also looking to reduce the volume of materials used in each package.”

The company’s goal is to have 100 percent of its packaging be recyclable, compostable or biodegradable by 2025. According PepsiCo’s data for 2017, Carey says nearly 85 percent of its beverage packaging worldwide fell into one of these categories.

However, he adds that PepsiCo is looking for “better, more responsive ways to package our products,” noting that this includes piloting plant-based bioplastic bags. The company has partnered with biotech firm Danimer Scientific, Bainbridge, Georgia, to develop snacks packaging made completely with biodegradable film resins.

Going beyond single family

Just as PepsiCo is challenging itself in the area of packaging design, All In On Recycling is targeting what has been a challenging segment for the recycling industry: multifamily residences.

“Multifamily is challenging because each property owner can determine if, who and how often recycling services will be provided to their multifamily units in a given community, so the number of stakeholders that needs to be reached increases significantly versus single-family homes,” Harrison says.

She adds that the staff of The Recycling Partnership is experienced in this area and has a variety of strategies to provide grants and assistance to multifamily properties that want to begin recycling programs. “Our intent is to deliver best practices and learnings to this segment so programs can be scaled and services improved across the country.”

Transforming the system

Harrison says The Recycling Partnership was created to drive measurable improvements in the recycling system throughout the U.S. “As the partnership continues to build a strong track record of delivering measurable results in improving recycling, leading companies are exploring ways to partner together with us to transform recycling for good.”

In exploring its options to improve the recycling rate, Harrison says PepsiCo and its foundation found that it made sense to make a long-term commitment to The Recycling Partnership.

She says, “As companies explore their options in reaching their waste, recycling carbon and community goals, we think many more leading companies will decide to follow PepsiCo Foundation’s example and invest in transforming the recycling system to create a healthier plant, a healthier economy and thriving communities.”

The author is editor of Recycling Today and can be contacted at dtoto@gie.net.

With China placing tariffs on scrap commodities from the U.S., already difficult scrap market conditions have become more challenging. The import restrictions China enacted earlier this year have led to some uncertainty as to where U.S. nonferrous, mixed paper and plastic scrap commodities can go.

As of Aug. 23, China began to impose tariffs of 25 percent on certain U.S. goods, including scrap. On that same date, the U.S. Trade Representative also initiated a 25 percent tariff on certain Chinese goods. According to the Institute of Scrap Recycling Industries (ISRI), Washington, the 25 percent tariff applies to paper, plastic and several types of metal scrap, including ferrous, copper, aluminum and nickel-bearing scrap.

Additionally, concerns have arisen regarding proposals for plastic scrap commodities that went before the Basel Convention in Geneva Sept. 3-6. The convention wrapped up with support for Norway’s proposal to add plastics to the list of wastes subject to the trade controls under the convention as well as for a European Commission proposal that would redefine certain recycling processes as “treatment” rather than recycling. ISRI had voiced concern on these proposals prior to the convention, saying they could harm the global trade of plastic scrap.

Recycling Today connected with ISRI President Robin Wiener to get her perspective on some of the changes affecting the international trade of scrap.

Recycling Today (RT): What is the state of scrap trade today compared with one year ago?

Wiener: Scrap market conditions today vary widely by commodity. For those commodities that have traditionally relied on Chinese demand, including mixed paper, postconsumer plastics, shredded nonferrous scrap and others, market conditions have clearly become more challenging this year. For other commodities that are primarily driven by domestic demand, such as iron and steel scrap, market conditions are actually better this year.

RT: How do you think scrap trade will fare in 2019?

Wiener: Scrap is a globally traded commodity. Scrap demand goes hand in hand with manufacturing output, and so economies with expected economic and manufacturing growth are also expected to see upticks in scrap demand. In addition, scrap consumers around the world appreciate the high quality and consistent delivery of U.S. scrap.

Access to foreign markets has always been a cornerstone of the health of the recycling industry, and that will certainly continue in 2019, especially with strong demand in Europe, Asia (outside of China), Canada and Mexico.

Canada and Mexico are already two of our most important trading partners and, therefore, we’re closely monitoring the NAFTA (North American Free Trade Agreement) renegotiations. The renegotiations will modernize many provisions that help facilitate the movement of goods and services across North America, and we expect those benefits—such as improved customs procedures—to also benefit the recycling industries of all three countries.

Additionally, recycling is the first link in a global supply chain and, as the agreement strengthens existing and helps create new supply chains, recyclers will also benefit. That all being said, there are still quite a few unanswered questions.

RT: How are Section 232 tariffs affecting scrap recycling and the economy?

Wiener: For the economy as a whole, most economists expect the tariffs will have minimal impact on overall U.S. economic growth. However, domestic consumers of steel and aluminum are extremely concerned about the availability and costs of their raw material inputs due to the trade situation. For many in the industry, the expectation was that the tariffs would restrict imports of steel and aluminum, driving up the price of those metals and, by extension, for scrap metal. But scrap metal prices have not kept pace with the increases in domestic steel prices so far this year.

In addition, retaliatory trade measures from our major trading partners have been and continue to be a major concern for scrap traders.

RT: How are Section 301 tariffs impacting scrap recycling and the economy?

Wiener: The [Trump] administration’s first list of products to be levied tariffs included parts used in shredder operations. These parts need to be replaced often, sometimes daily, and are one of the top financial outlays by these operators. Now these parts cost 25 percent more and [have] an impact on the bottom line of these operators.

Additionally, China retaliated against the administration’s policy by imposing tariffs on all scrap commodities. While trade to China was already impacted due to China’s import restrictions, these tariffs have the potential effect of nearly cutting off trade entirely as Chinese consumers look to cost-competitive suppliers in other regions.

RT: What are some of ISRI’s biggest concerns about the plastics-related proposals before the Basel Convention?

Wiener: Although we applaud a revised proposal to create a dialogue mechanism for governments, civil society and the private sector to discuss issues pertaining to reducing and better managing plastic waste, we remain concerned that any recategorization of plastics within the Basel Convention’s annexes could make the trade of plastics scrap nearly impossible, especially for countries that lack recycling infrastructure.

RT: What’s the status on nonferrous scrap trading, particularly for low-grade material? What are alternative homes for these materials?

Wiener: China has been the major source of overseas demand for U.S. nonferrous scrap. As a result, China’s import restrictions are having outsized impacts on a range of nonferrous scrap commodities. For example, U.S. exports of copper and copper alloy scrap to mainland China during January to July 2018 were down 41 percent as compared to the first seven months of 2017. The corresponding figure for aluminum scrap is a 26 percent decrease.

Finding homes for this material has been a challenge, although growth markets do exist, including India, Mexico and Southeast Asia. The focus going forward will continue to be on improving quality, which will benefit scrap processors and consumers both in the U.S. and overseas.

RT: With various tariffs and restrictions, has ISRI membership gone up or down in the past year? How is membership being affected by some of these changes?

Wiener: ISRI membership has increased over the last year. ISRI has experienced a 5 percent growth rate this year and looks forward to a continued strengthening in 2019. Much of this can be attributed to the fact that we are recognized as an effective advocate for the recycling industry on these very issues. Furthermore, ISRI is a trusted source of information and analysis that those in the industry cannot find any place else.

Robin Wiener is president of the Institute of Scrap Recycling Industries (ISRI), Washington. She can be contacted at rwiener@isri.org.

In the third quarter of 2018, the steel industry in the United States enjoyed growing levels of output. In mid-September, the nation’s mills were operating at slightly more than 80 percent of capacity, a level seldom reached since the great plunge in output tied to the financial crisis of 2008.

For U.S.-based steel companies, the increased activity has led to growing revenue and considerable profits. One steelmaker after another reported healthy results for the first half of 2018, and more good news is expected when second-half results are announced.

Ferrous scrap recyclers are by no means singing the blues in 2018, but some of their potential prosperity has eluded them because of political and economic circumstances in the Republic of Turkey.

Turkey makes steel that is shipped throughout the Middle East, North Africa and other nearby regions. Steelmakers there rely on scrap-fed electric arc furnace (EAF) technology, putting the nation annually atop the list of ferrous scrap importers—and giving it an outsized role in determining the price of scrap in North America and Europe.

Taking charge

This past decade, Turkey is one of the world’s nations that has seen an elected president take consistent measures to put himself in a position of permanent power.

Since assuming the role of prime minister in 2003—and then president in 2014—Recep Tayyip Erdogan has taken advantage of his popularity to clamp down on potential rivals and tip the scales so his Justice and Development Party (AKP) can enjoy an increasingly secure perch atop Turkey’s government.

During much of Erdogan's time in power, his maneuvers have had few negative impacts on Turkey’s economy. His self-reliance on steering the ship of state appears to have encountered troubles in 2018, however, and the ripple effects reach all the way to the U.S. ferrous scrap market.

Despite the health of the U.S. domestic steel industry, ferrous scrap prices exhibited a downward trend in August as portrayed by transaction figures for the first three weeks of that month collected by Pittsburgh-based Management Science Associates (MSA) Inc. for its Raw Materials Data Aggregation Service (RMDAS). September pricing, as gathered in surveys conducted by American Metal Market (AMM), showed a second set of similar price drops.

RMDAS pricing for August showed No. 1 heavy melting steel (HMS) prices dropping $22 per ton in August and shredded scrap declining $21 in value. The two grades, which also are most commonly exported, declined by similar or slightly higher amounts in the RMDAS North Central/East region, where Turkish mill buyers have their greatest influence.

Economic and steel industry-specific woes in Turkey have played a lead role in the price drop. The value of the Turkish lira and expectations for the Turkish economy dropped in the summer of 2018 after Erdogan made questionable decisions and the Trump administration imposed increased metals tariffs against Turkey.

The movement of ferrous scrap into Turkey in August dropped sharply in part because the United States hit the country with tariffs that ranged from 25 percent to 50 percent on its steel. By the second week in August, mill buyers throughout the U.S. anticipated that scrap recyclers in the Northeast would have plenty of shredded and HMS scrap available to serve the domestic market.

According to a web posting by London-based Freight Investor Services (FIS), the initial uncertainty surrounding the tariffs made some Turkish banks reluctant to open letters of credit (LCs) or caused them to engage in long delays in issuing the LCs to Turkish steelmakers seeking to buy scrap.

Adding to the woes of Turkish steelmakers was the decline in value of the Turkish lira, which could increase the price of scrap imports considerably for Turkish mills.

The problems for the lira began before the U.S. tariffs took effect. In early July, Erdogan replaced Turkey’s established and experienced chief economic advisor with his son-in-law. The appointment drew a hostile reaction from investors and currency traders, sending the nation’s stock market index and the value of its currency sharply downward.

The negative sentiment in Turkey was likely a main reason U.S. mill buyers returned from the July 4 holiday feeling they had the upper hand, stalling what had been upward momentum in ferrous scrap pricing. As Turkey’s economy hit its rough patch, U.S. mill buyers knew processors on the East Coast would need to turn toward domestic mills if they needed to sell ferrous scrap.

Turkey’s troubles led not only to a halt in rising ferrous scrap prices in July but also to the subsequent declines of about $20 per month in the U.S. market in August and September. Those price drops occurred despite consistent strength in domestic steelmaking output. To what extent Turkey and the global scrap market will recover in the fourth quarter have become leading issues for scrap recyclers as 2018 draws to a close.

Blip or trend?

A saying within economics circles holds that there is no cure for high prices like high prices. That is, as the price of something becomes inflated, the market will react by buying less of it, weakening pricing from the demand side.

The opposite can hold true in the global ferrous scrap market: When prices fall rapidly, opportunistic buyers can swoop in and stimulate demand as quickly as it had previously disappeared.

In late 2018, the reemergence of demand could be coming from several different places, including Turkey itself. By mid-September, AMM was reporting that mill buyers in Turkey were again booking bulk cargoes off the U.S. East Coast, in part because lower prices made returning to the U.S. market advantageous.

Within Turkey, a September Wall Street Journal article portrays the economy as tilting between a recession or significant inflation. Turkey’s greater than 5 percent gross domestic product (GDP) growth in recent years has been good for its steelmakers. A domestic recession, though, would put pressure on steelmakers to rely even more on exports.

Despite the U.S. tariffs, thus far in 2018, Turkey’s steel producers are retaining their ability to tap into overseas markets.

In its figures for the first eight months of 2018, the Turkish Steel Exporters’ Association (ÇiB) reports steel exports from Turkey valued at $9.6 billion, representing a 28.5 percent increase compared with the same time frame in 2017.

According to an online report from the Günesli, Turkey-based Hürriyet Daily News, the news in 2018 has not been all good as exports of construction-sector steel products, which the newspaper describes as “the main export items of the steel sector,” have been decreasing because of import policies set not only by the U.S. but also by Egypt and the United Arab Emirates.

FIS and various media outlets have reported that, in response, steelmakers in Turkey have shifted their attention to selling more finished steel products into Southeast Asia (where China has traditionally been the major steel supplier).

AMM’s mid-September report indicates this geographic redirecting effort was causing Turkey not only to re-enter the U.S. scrap market but also to bid up prices. A steel shipper from Turkey told AMM that to justify higher steel prices to its buyers in Southeast Asia, Turkish mills need to point to higher ferrous scrap prices in the U.S.

Beyond Turkey re-entering the market, lower ferrous scrap prices tend to trigger more containerized ferrous scrap sales off the East Coast to India. As well, the market in the fourth quarter seems poised to receive ongoing demand from U.S. steel mills operating at a healthy capacity rate.

Nonetheless, ferrous scrap recyclers in the U.S. have learned from recent scrap export history to observe economic and political events in Turkey closely. (See the sidebar “A history of imports” on page 85.)

If Turkish mills were to struggle in the face of a difficult economy, or if they opt to turn away from the U.S. scrap market in favor of Russia or Western Europe, the impact on U.S. scrap prices will be sudden and significant.

The author is senior editor of Recycling Today and can be contacted via email at btaylor@gie.net.

During the previous two decades, China emerged and then solidified its role as the leading producer and consumer of nearly every basic material, including base metals, plastic and paper and board.

The global shift in resources also entailed China becoming a magnet for secondary raw materials, including millions of tons annually of paper, metal and plastic scrap imported from other nations.

In the closing years of this decade, however, several factors seem to be combining to slow down and reverse this pattern, which has largely dictated how recyclers in North America conduct business.

Decisions made in Beijing, Washington, other world capitals, state capitals and in corporate board rooms around the world are contributing to a series of moves and countermoves reminiscent of a chess game—each move of a piece can dictate where tons of scrap paper are shipped and consumed.

No longer welcome here

In financial and political press coverage, President Donald J. Trump’s willingness to impose tariffs on materials and goods from overseas—and the responses of other nations—have been of keen interest to some of America’s largest business sectors.

Several months before the Trump trade wars started, however, the business model of recyclers was met with a severe shock when China’s government quickly enacted restrictions and outright bans on a long list of scrap materials.

Recyclers of plastic were immediately hit in the broadest manner. However, the Chinese government’s swift targeting of the mixed paper grade also caused severe headaches in the North American recovered fiber market.

As China essentially closed its ports to the grade, material recovery facilities (MRFs) in the U.S. and Canada were soon producing stockpiles of baled mixed paper with nowhere to go. Soon after, the value of mixed paper plunged to zero.

Statements by the Chinese government, in particular its Ministry of Ecology and the Environment (MEE) and the General Administration of Customs in China (GACC), and coverage in China’s largely state-dominated media, have portrayed mixed paper (and plastic scrap) as “foreign garbage.” Stated and implied in the media coverage is that China has been a dumping ground for the world’s trash.

This characterization of the scrap trade focuses on the single-digit residuals percentage of a mixed paper load while ignoring the 95 percent or more of the material that is a vital raw material at paper mills.

The medium-to-long-term future of tariffs and trade disputes can be difficult to discern, especially from the U.S. perspective, where lobbying and electoral politics can create quick policy reversals. The tariffs have caused supply chain disruptions, but many decision-makers are essentially waiting it out.

Chinese government policy is far from transparent, but it has become easier to trace to just one person: President Xi Jinping, who has accumulated government and Chinese Communist Party titles as he has consolidated his power since 2012.

Xi’s antipathy toward imported scrap materials reportedly is connected to his viewing of a 2016 documentary film titled “Plastic China,” which portrays worker exploitation and environmentally unsound practices connected with sorting and reprocessing imported plastic scrap. The film was essentially designed to evoke “China as a dumping ground” feelings.

Other statements from Chinese government agencies, however, have pointed to boosting China’s internal recycling programs and goals as a reason to restrict scrap imports, lending more of a trade protectionist angle to the policy.

Entering the fourth quarter of 2018, few signals have emerged that the Chinese government is having second thoughts about its scrap restrictions and bans. The potential permanence of this policy has caused reevaluations throughout the global paper manufacturing and recycling supply chain.

Supply line shuffle

An immediate effect of China’s spurning of mixed paper was an oversupply of the grade at North American MRFs. Mixed paper has been almost exclusively an export grade, with the vast majority of that export market in China.

As the stockpiles accumulated, MRF operators looked for buyers, and many papermakers in India sensed an opportunity.

Naynesh Pasari of New Delhi-based Shree Krishna Paper Mills says his company is one of many in 2018 that has increased its buying of American-produced mixed paper. Pasari spent some time in early 2018 visiting plants operated by one of America’s largest MRF operators, and he ultimately signed a contract to buy a guaranteed amount of mixed paper going forward several months.

Pasari says Indian government statistics show Shree Krishna was not alone in its actions. In the first three months of 2018, he says, Indian mill buyers brought in about 475,000 metric tons (about 496,040 tons) of mixed paper. “Since the ban [in China], mixed paper imports in India have been up by at least 50 percent monthly,” he says.

Although American recyclers welcome the opening of this spigot, India’s total consumption of recovered fiber does not come close to equaling the volumes Chinese mills have imported annually since the start of this century.

The sheer tonnage of mixed paper produced at MRFs seems likely to require either an adjustment in how scrap paper is collected in the U.S. or investments by mill companies to enable its consumption closer to home. From mid- to late 2018, many such investments have been announced.

Georgia-based containerboard producer Pratt Industries, a subsidiary of Australia’s Visy Industries, has been a U.S. leader in consuming mixed paper. In the second half of this decade, Pratt has expanded its ability to do so by opening a new mill in Indiana in 2015 and building another one slated to open in 2019 in Ohio. Those two mills combined can produce nearly 900,000 tons annually of containerboard.

Atlanta-based Georgia-Pacific, a subsidiary of Wichita, Kansas-based Koch Industries, has been piloting a system it calls “Juno Technology” to be able to use mixed paper as feedstock at its mill in Toledo, Oregon. Should the system prove capable, the firm may be able to consume some 100,000 tons per year of mixed paper at the mill starting in 2020.

The news is welcome by Pacific Coast region recyclers, where state governments have reportedly met to discuss their options for consuming scrap paper and plastic that formerly headed to China.

Another mixed paper destination in the making is a mill operated by Mexico’s Copamex. In early August, the firm announced it was converting its paper machine in Anáhuac, Mexico, from producing printing and writing paper to containerboard. The stock prep system to be installed, made by German company Voith, will allow the facility to use mixed paper (along with old corrugated containers, or OCC) to feed the 260,000-tons-per-year machine.

Hong Kong-based Nine Dragons Paper Co. Ltd., which has most of its mill capacity in China, also has made 2018 investments in paper and pulp capacity in the U.S. In May 2018, Nine Dragons purchased mills in Maine and Wisconsin from Canada-based Catalyst Paper. The two mills have a combined annual capacity of about 1 million tons of pulp or paper.

Three months later, Nine Dragons announced its U.S.-based subsidiary, ND Paper LLC, which now owns the former Catalyst mills, purchased a 220,000-tons-per-year pulp mill from Canada-based Resolute Forest Products Inc. Ken Liu, CEO of ND Paper, says the company intends to make investments in the mill that will “expand its current capabilities and inject growth into the West Virginia economy, particularly in the surrounding community.”

During the same week Nine Dragons added a West Virginia mill to its portfolio, a U.S. subsidiary established by China-based Shanying Paper purchased an idled paper mill in Kentucky. That mill, formerly owned by Ohio-based Verso Corp., will have about $150 million invested into it so that it will be capable of producing pulp and kraft packaging paper.

Verso Corp. is investing in new capacity, with the longtime printing and writing paper producer having invested about $19 million to convert a paper machine in Maine to be able to produce about 200,000 tons per year of linerboard.

Time to come home?

To what extent the series of mill and mill technology investments in 2018 will continue in 2019 and beyond will likely help determine the future of the mixed paper grade. The causes and the effects of these investments could tie into a much broader trend, though.

Among the factors that caused Trump to separate himself from other Republican presidential candidates in 2016 was his willingness to question the global trade regimen and its effects on the American manufacturing sector.

In relation to China, the North American Free Trade Agreement (NAFTA) and beyond, the Trump administration has been eager to demand changes in how U.S. trade arrangements are structured.

The president has said consistently his goal is to increase industrial output in the U.S., whether that involves steel and aluminum, automobiles and their components or, most recently, urging Apple to reconsider China as its manufacturing hub.

Reversing the decades-long trend of Fortune 1000 companies to seek out the lowest offshore labor and manufacturing costs would have seemed inconceivable just three years ago. However, a number of circumstances could yet lead to some rethinking of the global geography of manufacturing.

Wider factors causing some companies to reconsider their strategies with China include cyber security and access to global websites; intellectual property protection; and increasingly unpredictable (and often swiftly enacted) regulations introduced by the Chinese government. China’s trade policies also play a role, and nowhere more so than in the secondary raw materials sector.

The scrap restrictions chaos has caused initial investments in pulp and papermaking capacity in the U.S., but a wider shift in manufacturing activity away from China would cause greater shifts yet in the containerboard sector.

As parts of America’s manufacturing sector have fled to Mexico, China and other nations, America’s containerboard industry has lost out on producing the boxes that used to hold large and small appliances, clothing, shoes and enormous quantities of other items no longer made in the U.S.

One result has been that even in a stable and growing economy this decade, containerboard producers have chosen to run their plants at an industrywide 97 percent capacity rate while remaining unconvinced to invest significantly in new capacity.

Signs, however, point to increased confidence by papermakers to invest in North America. In addition to the investments by Chinese companies and the front-end mill changes to accept mixed paper at new mills, 2018 also has witnessed investments in paper machine conversion projects and one new containerboard mill.

Wisconsin-based Green Bay Packaging announced in June that it planned to move from a 71-year-old papermaking site and invest $500 million at a new, nearby location that will house a 100-percent-recycled-content containerboard production facility. The front end of the new paper machine, supplied by Voith, will allow it to accept OCC and mixed paper as feedstock.

Economists are largely skeptical as to what extent the globalization genie can be put back into the bottle. However, it is fair to ask how many economists forecast in 1975 that just 30 years later, nearly all the toys, shoes, small appliances, televisions and clothes Americans purchased would be made in China.

It is unclear how or whether various seemingly unrelated factors—including political populism; national security; circular economy, plastics in the ocean and sustainability issues; and automation that minimizes the impact of labor costs—could shift the geography of manufacturing just as dramatically. Clearly, though, paper recyclers and the mills they feed have direct stakes in the outcome.

The author is the senior editor of Recycling Today and can be contacted at btaylor@gie.net.