China recently announced their finalized contamination threshold for scrap plastic and paper imports – 0.5 percent. Though the new waste policy will not go into full effect until March 1st of this year, major shifts in the global scrap trade have already been observed. Countries across the globe, particularly in Southeast Asia, have experienced major hikes in recycled imports.
Among the Southeast Asian countries accepting greater export volumes are Thailand, Malaysia, and Vietnam, some of which have more than doubled their tonnage from 2016 to 2017. Exporters have also been diverting scrap from China to Taiwan, India, Turkey, Mexico, Spain, and Canada.
Prior to China’s escalating import crackdown, the country accepted nearly 51 percent of global recycled plastics and 55 percent of the world’s recovered fiber imports. Though alternative markets have rapidly expanded, many industry insiders have warned Chinese demand will not be so easily replaced.
Alternative plastic markets expand
In the past, China turned the majority of the scrap plastic into the pellets domestic mills would use for production. As the import restrictions unfolded, however, plastic exporters shifted supplies to other countries that then became the link between exporter and China.
From 2016 to 2017, all grades of plastic have seen a major shift to secondary markets:
Polyethylene (PE). Thailand experienced a nearly nine-fold spike in PE imports, from 1,041 metric tons to 10,153. Vietnam increased PE imports from 16,845 tons to 44,716, representing a 166 percent increase. Malaysia more than doubled its intake of PE, from 16,277 tons to 37,778. India upped imports by 50 percent, from 58,747 tons to 88,155. Taiwan took in 18 percent more tonnage, from 14,063 to 16,575.
Polyethylene terephthalate (PET). Vietnam more than doubled PET imports, from 7,759 tons to 18,384. Turkey accepted 91 percent more, from 2,807 to 5,354. Malaysia received 13,551 tons in 2017, up 63 percent since 2016. India took in 47 percent more, from 3,477 to 5,101.
Polyvinyl chloride (PVC). Malaysia experienced the greatest volume change in PVC imports, increasing by 407 percent from 1,679 tons to 8,521. Thailand’s volumes increased by 128 percent from 880 to 2,006. Vietnam accepted 51 percent more PVC imports, from 3,040 to 4,584 tons. Mexico took in 35 percent more PVC, from 7,959 to 10,763 tons. And Canada saw imports increase by 9 percent, from 6,433 to 7,037.
Mixed Plastics. Spain increased mixed plastic imports more than seven-fold, though they accepted the least amount, 5,014 metric tons, of any country. Malaysia imported nearly 300 percent more mixed plastics, increasing from 9,604 to 37,694 tons. Thailand imported more than double the tonnage, from 3,642 to 9,114. And Mexico increased volumes by 88 percent, from 12,968 to 24,386 tons.
Though the dramatic shifts might inspire optimism, heightened plastic scrap imports in other countries may signal a frenzy to offload excess materials rather than an increase in overall consumption demand. The alternative markets also do not have the capacity to satisfy demand of Chinese end users, who will still need about 5 million tons to meet production expectations.
Fiber also shifts hands
Recovered fiber imports, including mixed paper and cardboard, have also experienced market shifts. However, current demand may not reflect long-term consumption patterns. It’s not that other countries have been investing heavily in recycling infrastructure or upping production; rather, Chinese operations are simply moving to nearby countries, while shipments of scrap paper rejected at China’s ports were likely temporarily deflected elsewhere.
Vietnam, India, and Canada have all increased mixed paper imports. Vietnam experienced the greatest spike, though, consuming 616 percent more mixed paper in 2017 than 2016. As for shifts in old corrugated container (OCC), or cardboard, markets, India, Mexico, and Vietnam are in the lead. US exporters sent a combined 300,000 more tons of OCC to India and Vietnam.
Though replacement markets are somewhat easing the burden on US scrap exporters, Chinese demand remains difficult to replace. 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.
As we have done in the past, Berg Mill continues 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.