Decline of Scrap Importer Permits

Last week, Berg Mill reported on the expansion of the alternative plastic markets and recovered fiber imports experiencing a market shift. Import permits have also been impacted as China has been cracking down on what recyclable waste enters their country.

 

A Decrease for Scrap Importers

Last month, China’s Ministry of Environmental Protection approved permits for scrap importers, but they revealed a substantial decline in approved plastic import volumes. Last year’s numbers were significantly higher by millions, as 3.9 million tons were approved for import. This year only allowed 9,335 tons of scrap plastic for import. The dramatic decrease in import permits along with China’s import ban have easily created uncertainty for the U.S. and scrap importers.

 

What is causing the decline?

Though various assumptions have surfaced from the decline of scrap importer permits, Harry Lee of CSPA admits this “is not a total surprise” and there are other contributing factors that have an impact.

There is speculation that the decrease is caused by less companies being present on the “approved for import” list. A list from ISRI showed the approved companies and tonnages, but they have also mentioned that the list is a mere proposal or prediction. We are still anxiously waiting for a final version to published along with a second round of approved importers.

There are other conjectures regarding the decrease, such as the ban at the beginning of 2018 for post-consumer plastics. Though these plastics are not listed in the ban, they are under careful watch for quality controls due to China’s growing concern for maintaining standards. Some companies were unable to make it onto the list and receive permits because they had issues meeting these environmental standards.

 

Trends Creating Tension

Plastic volumes seem to be following a yearly pattern where permits are continually decreasing. For instance, PET permits that were approved during the first round dropped the next year from 3 million tons in 2015 to 1.1 million in 2016. There was a slight increase the subsequent year before the precipitous drop to 5,692 tons.

China had indicated that the decrease would occur months in advance, but scrap importers still felt apprehensive after the first round of permits were issued. Executive President of CSPA Steve Wong reveals, “If this approval rate is continued for the subsequent import permit approvals, the major recycling operations in China, which used to rely on imports, would be forced to switch to sourcing from domestic supply.”

We feel as though this could take quite some time to accomplish.  It will require a major shift in thinking if China is only going to look domestically for scrap.  Not to say it can’t be done, it just won’t be done overnight.  Until then we are here to help suppliers find alternative homes for the scrap plastic, paper, metal, and any other commodity as well.

If you handle large amounts of recycled waste and are looking for solutions to offload idle scrap, please contact our industry veterans at Berg Mill Supply.

We at Berg Mill continue to work hard on creating solutions to overcome fluctuating commodity markets, including opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities.

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