Commentary: How to stay in China’s plastic scrap loop

[There are ways American recycling firms can deal with China’s strict controls on imported plastic scrap, according to the China National Resources Recycling Association (CRRA) and Li Shuanghua of Kingone Consulting Co. in the essay below.]

On July 17, 2017, the Chinese government put forward to the World Trade Organization (WTO) a list of 24 types of scrap materials in four categories banned from importation, including several types of plastic scrap by Dec. 31, 2017. At the end of 2018, China will also ban imports of other plastic scrap grades, and from March 2018 has been implementing new environmental protection control standards for imported scrap.

With imports of as much as 8 million tons per year, China is the world’s largest importer of recycled plastics. For China to fully stop importing plastic scrap would have a strong impact on the international plastics recycling industry.

More than 40 percent of plastic scrap in the United States has, in some years, been shipped to China, and the final proportion is higher yet if adding materials transferred from Hong Kong to the People’s Republic of China.

In 2016, the United States’ total scrap exports were valued at up to $16.5 billion. It is difficult for American companies to find alternative markets from China, so what can they do to meet the challenge? For this, Li Shuanghua, from Kingone Consulting Company in China, proposes these suggestions:

1) According to the current policy of China, leftover and offcut plastic scrap (industrially generated) is allowed to be imported in 2018, but should comply with new environmental protection control standards for imported secondary plastic raw materials—(GB 16487.12-2017). The radioactivity of the exported plastics should meet the standard; the weight of the carried contaminants and the sealed container shall not exceed 0.01 percent of the total weight; and the weight of the carried scrap paper and glass shall not exceed 0.5 percent of the total weight.

2) Plastic scrap exporters in the United Sates should explore the rest of Asia’s processing market. After China restricted the import of plastic scrap, many Chinese enterprises have settled in southeast Asia, especially for the preliminary processing of shredded materials, in nations including Malaysia, Thailand, Laos, Vietnam and India. These countries gradually have become hot spots with increasing demand. It is known that the government oversight of different southeast Asian counties on imported scrap are not the same. At present, Malaysia, the Philippines, Thailand and Indonesia are nations from which China now imports recycled plastic. Among them, Philippines is the second largest importer of recycled PVC; Malaysia the third largest importer of recycled PS (polystyrene) and PVC; and Indonesia the fifth largest importer of recycled PS. However, with the number of the plastic scrap facilities gradually increasing in southeast Asia, these governments likely will strengthen efforts to supervise environmental protection. It can be foreseen that, in the next few years, southeast Asian governments will strictly control scrap imports. Thus, only as a short-term adjustment can this create some plastic scrap trading opportunities.

3) China has imposed strict restrictions on imported plastic scrap, but it is open to receive plastic pellets, and demand is huge. So American recycling enterprises need to adjust their way of recycling and processing to increase sorting, treatment and granulation procedures. In the long run, China has a huge market owing to the numerous plastic products manufacturers and its enormous demand for plastic pellets. Sorting and processing of plastic scrap can occur with automated equipment. By using optical and electrostatic separation, different resins and colors can be separated. There is no need for too many workers for each granulation line: one or two workers can run a line producing two tons per day, and according to the salary of $12 per hour, it will take $192 for eight hours per day, which averages to a labor cost is $96 per ton. If one skilled worker can take charge of a line, it can reduce costs more.

4) Chinese firms, like companies anywhere, prefer a stable supply. With the largest amount of recycled plastic available, the U.S. can work with Chinese firms to create and manage this type of output. Meanwhile, Chinese companies can provide technical guidance and equipment to improve efficiency and reduce risks. At the same time, many plastic enterprises in China are hoping to build an industrial chain of “recycling-processing-granulation-end use” in order to control plastic scrap starting at the source. It is a new opportunity for both nations, because Chinese companies are now actively considering investing in the U.S.

Recycling plastic plays a very important role in protecting the world’s environment. Through the above techniques, American plastic recycling firms can establish a system to increase profits, improve processing ability and develop long-term plans.

The authors are affiliated with the China Plastic Recycling Association division of the Beijing-based China National Resources Recycling Association (CRRA), which can be contacted at crra@chinacrra.org.