Chinese recycled pulp import restrictions raise concern

In early October, Chinese officials announced that all recycled pulp importers must specify whether the material was produced using a dry or wet method, adding a new dynamic to an old corrugated containers (OCC) market that has faced instability all year.

The policy also allows on-site shipment inspections and is meant to curb contamination and improve import oversight and safety.

However, the move, effective Oct. 10, immediately raised concern among recovered paper exporters that have turned to the export market in response to lagging domestic demand.

“OCC demand has been down and the export market has been propping that up,” Bloomberg corrugated packaging market analyst Ryan Fox says. “Now what?”

Recycled wet pulp production, a process that primarily uses OCC and mixed paper, requires purification processes, including removing impurities and screening in liquid conditioners as well as concentration, steam treatment and high-temperature drying, Xu Feng, professor at Beijing Forestry University's College of Material Science and Technology, explains in a report.

In the dry-milled pulp production process, recovered fiber is shredded and packed for export, omitting 95 percent of the purification process and producing bales with higher levels of contaminants, according to Xu.

A letter issued Oct. 13 by American Chung Nam (ACN), the buying arm for China’s largest packaging producer Nine Dragons Paper, describes the situation at Chinese ports as “a severe disruption.”

“Customs authorities have added [a] new measurement standard for recycled pulp imports [in] which they have to test bacteria and microorganisms inside pulp, [which] usually takes four to six weeks just to get lab results, and this applies to all ports across China,” the letter reads. “As a result, all pulp cargoes arriving in China are currently pending inspection and consignees have been instructed to await further customs arrangements.”

“This abrupt policy shift has created a severe disruption throughout the supply chain. Given the uncertainty regarding inspection timelines, we have temporarily suspended all [recycled] pulp shipments to China. The suspension has also begun to affect Southeast Asian pulp mills, which has put them at a full stop and not allowing anymore wastepaper to be imported into their mills.”

ACN adds that while the duration of the customs inspections remains unclear, the company foresees at least 31 days of free time will be required as a buffer to manage the current congestion and delays at the ports and that it might even need more time.

Matt New, vice president of sales at Ekman Recycling, with operational hubs in Sweden, Hong Kong, Zurich, Miami and Wall, New Jersey, spoke at this year’s Paper and Plastics Recycling Conference in Chicago in mid-October and expected OCC and mixed paper prices to decline over the course of October and November.

“There's still much demand for recycled pulp,” he said. “But there will be a shift. I think once everything gets settled in Thailand, and that should take … maybe three, four weeks, the price will probably take a little bit of a dip … but then there will be that four-week period where nothing was shipped. I would assume the demand would increase back up as they are able to resume making recycled pulp.

“India's buying a little more, not aggressively, but they are buying. The price is down a little bit. I think it will find its level.”

OCC and mixed paper prices have steadily declined over the second half of this year, prompting the increased concern after the latest restriction in China.

The U.S. average mixed paper price in October was $25 per ton, down from $54 per ton in October 2024 and down from $38 per ton at the start of the year, according to Fastmarkets RISI. Meanwhile, the U.S. average OCC price in October was $51 per ton, down from $83 per ton in October 2024 and $66 in January.

OCC prices briefly reached triple digits last year, fluctuating between $100-$106 per ton from March to September 2024, but have otherwise not crossed the $100-per-ton threshold since August 2022.