Plastic scrap scramble

The Chinese government’s National Sword campaign has targeted the plastic scrap sector throughout the first half of 2017, causing a severe slowdown in importing and processing activity in that nation. Attendees of the Plastics Committee meeting at the 2017 Bureau of International Recycling (BIR) World Recycling Convention, held in late May in Hong Kong, heard updates on the situation, as well as market reports from other parts of the world.

The effects of National Sword and an 18 April memorandum from China’s Central Committee have combined to put the plastics recycling sector into a scramble to find new homes for plastic scrap, both in the short term and the long term.

That 18 April memorandum indicates that China’s government is likely to greatly expand the list of unprocessed or semiprocessed forms of scrap that will be prohibited from entering the country.

A BARRIER IN PLACE

Steve Wong of Hong Kong-based Fukutomi Co. Ltd., who also serves as president of the China Scrap Plastics Association, said the media in China in recent years has “given a very negative image of our industry.” As a result, he said China’s central government now is “not looking at plastic scrap as a resource.”

Several government agencies, led by China’s Ministry of Environmental Protection (MEP), have been working jointly as part of National Sword to inspect all inbound containers of plastic at all ports into China. Wong said inspectors at all ports are “not so flexible” as they used to be. As of May 2017, this has caused a backup of up to 8,000 containers in Hong Kong and demurrage charges that are making transactions highly unprofitable.

Wong said that while some neighbouring countries could accept some of these loads, they also may have no desire to import unprocessed, mixed or “difficult” plastic materials into their nations. More likely, said Wong, is that there will be more plastic scrap processing “closer to source” in places like Europe and North America.

Plastics Committee Chairman Surendra Borad of Belgium-based Gemini Corp. NV said China’s new barrier is unlikely to lead to increased plastic scrap traffic to India. He said China had been importing from 7 million to 9 million tonnes per year of plastic scrap. Comparatively, said Borad, “India is not prepared” to fill that gap, as it imports just 320,000 tonnes per year currently.

Borad added about India, “The authorities are very strict in issuing import licenses [and] Customs is very demanding in its interpretation of quality parameters. I do not foresee major changes in the situation in India.”

Renaud Pfund of Paris-based Veolia Proprete France Recycling said, “The new regulation in China could bring additional difficulties to sell all [plastic scrap] available.”

He added it is likely companies in Europe will make the “decision to build new washing plants” to upgrade their LDPE (low-density polyethylene) scrap.

Guest speakers Deepak Saxena and Anthony Ip of Hong Kong-based Kerry Logistics said the new ocean freight alliances had allowed shippers to raise rates in early 2017 “after six or seven years of disappointment” caused by excess container ship capacity.

Saxena said excess capacity remains a problem for shippers, which are again gradually lowering rates to regain market share. Regarding the sudden increase in early 2017 rates, he said, “I have never before in my life seen this, but [rates] are now going down.”

E-SCRAP SHIFTS ALSO UNDERWAY

Presenters at the preceding E-Scrap Committee meeting at the 2017 BIR Convention also focused on looming changes to their sector, and its handling of plastic, in light of China’s National Sword campaign.

Wong also provided an update to that committee, saying the National Sword campaign has resulted in the inspection of “every container” registered as holding plastic scrap. This has included containers full of shredded e-scrap plastic, which Wong said are being inspected closely for adherence to a legally mandated 5% contamination limit.

Wong indicated that all containers believed to be carrying shredded WEEE (waste electrical and electronic equipment) plastic are “supposed to be prohibited.” He also said, however, that plastic scrap that is reprocessed into a product of uniform resin or colour may still be able to enter the country.

By and large, said Wong, National Sword has resulted in ports clogged with containers full of plastic scrap. Between demurrage charges and increased Customs clearance fees, many plastic scrap import transactions have become unaffordable.

Wong also said that within China, plastic recycling operations are being inspected and shut down, even many located in government-subsidized EcoParks and Resource Parks. Wong predicted that more WEEE plastic will be “recycled at source more often, with electro-static separation” and other techniques. “I think that will be the trend in the future.”

Two Hong Kong-based presenters said the city of more than 7 million people often has shipped its unprocessed or semiprocessed WEEE materials to China, but now is facing changes.

Goh Kian Guan of Chiho-Tiande Group Ltd. said Hong Kong generates some 70,000 tons of WEEE materials annually. He said 80% of this material is collected, but then 93% of that is exported.

The clamped border to China created by National Sword is the latest factor that has prompted Chiho-Tiande to invest in a 60,000 tonnes-per-year WEEE processing plant in the Yuen Long section of Hong Kong. Goh described the facility as containing both manual dismantling capacity and automated shredding and sorting equipment. (Much of the automated processing equipment is being supplied by Denmark-based Eldan Recycling.)

Both Goh and Shirley Kwok of the Hong Kong Recycling Chamber of Commerce expressed disappointment in the Hong Kong Government’s joint venture with ALBA Integrated Waste Solutions (IWS) to operate a collection program and build an electronic scrap processing facility.

Nigel Mattravers of ALBA IWS addressed the Plastics Committee. He said his firm’s electronic scrap processing facility being built in Hong Kong is offering another channel through which it “will be perfectly possible to recycle at source.”

When the plant is up and running later in 2017, said Mattravers, it will be able to convert the plastic components of scrapped computers, televisions and appliances into secondary resins of several varieties, including polypropylene, polystyrene and ABS (acrylonitrile butadiene styrene).

Mattravers indicated Hong Kong’s municipal solid waste stream (MSW) is seeking a similar solution because much of the city’s postconsumer plastic currently heads to two landfills in the region. He said a recent report concluded that more than 2,000 tonnes of plastic scrap head to Hong Kong’s landfill each day. Of what is recycled, more than 90% had been exported (typically to China), but now that must change.

Kwok, who also works with Hong Kong-based firm Wing Fat Recycling, said the introduction of expensive licenses by the Hong Kong government has presented “a big challenge” that it is proving “too difficult” for the small collectors who serve as the first link in the e-scrap recycling chain in Hong Kong.

Goh said Chiho-Tiande “cannot compete” against what he called a subsidized plant being built by ALBA IWS, which he said was “essentially a monopoly” for a 10-year period. “After that, there will be no [other] players in the market,” he commented. “Is the government taking the right approach?”

INDIA’S CONSIDERABLE CHALLENGE

Borad of Gemini Corp., who also is an E-Scrap Committee member, provided an overview of WEEE recycling conditions in India.

As Asia’s other nation with more than 1 billion people (along with China), India has now become one of the five largest producers of e-scrap globally, with an estimated 1.85 million tonnes generated annually—much of it plastic.

Summarizing findings from a recently completed report prepared by KPMG and The Associated Chambers of Commerce and Industry of India, Borad said the already-high figure is expected to reach 5.2 million tonnes per year by 2020, “growing at a compound annual growth rate of about 30%.” He added, “It’s quite a number, and the growth is very significant.”

The challenge is considerable for India, said Borad, commenting, “A mere 1.5% of India’s total e-waste gets [properly] recycled due to poor infrastructure, legislation and framework, which leads to a waste of diminishing natural resources and irreparable damage to the environment and the health of the people working in the industry.”

As much as 95% of e-scrap collected in India “is managed by the unorganized sector, which dismantles the disposed of products instead of recycling them,” he added.

On the opportunity side, said Borad, “There is a high demand and a huge market that is available for the recycling of electronic scrap in India.”