For companies that recycle scrap paper, plastic, and metal commodities, China’s trade barriers continue to pose some obstacles for their recycling efforts. In this week’s blog, we take a closer look at how the trade barriers continue to impact the industry as well as what it could mean for recycling’s future. We also call attention to the price fluctuations caused by the steel and aluminum tariffs put into effect last month.
Higher Standards on Recyclable Materials
According to The Wall Street Journal, China was one of the only countries that had no issues buying all the U.S.’s “junk.” They had bought the majority of used paper and scrap aluminum the U.S. sold in 2017. The United States is known to generate the most recyclable waste out of every country. China was happy to purchase this scrap until their trade barriers took effect, posing a challenge to the U.S.’s recycling efforts. The millions of tons purchased by China last year may not have a home this year, as the standards have been incredibly difficult to meet, and most recyclables are ending up in the wrong place.
China does not want to deal with the “disposal headache” of sorting each of the bales and exposing their workers to health hazards in doing so. The statistics demonstrate the drastic decrease in scrap plastic sent to China, as the 0.5% waste limit imposed on imports became too difficult to meet. The WSJ reports, “…U.S. exports of scrap plastic to China dropped from October to January by 80% to 5,000 metric tons.”
Falling Prices and Smaller Spaces
The entire industry has felt the shock of the trade barriers, especially with other commodity prices dropping drastically and space running out. Co-owner of Texas Recycling Inc. expressed, “If China doesn’t take it, you can ship it to other places, but nobody has the capacity that China has.” The recycling industry continues to find ways to overcome the challenges of lowered commodity prices and smaller capacities.
Berg Mill Weighs In
In The Wall Street Journal’s article regarding the issue, they featured Berg Mill COO William Winchester to comment on the situation. He explains that the difficulty to keep up with China’s standards is because “…most U.S. sorting centers handling paper and plastic collected by home recycling services aren’t capable of reducing food waste and other contaminants by enough to comply with China’s new levels.” William notes that the standard is basically impossible to meet and there are very few sorting facilities that will test it out because it is a costly endeavor that won’t yield profit.
Looking Towards the Future
The recent steel and aluminum tariffs could also mean increased export costs to China; these increases could be a difference of hundreds of millions a year. China has control in the industry right now, including purchasing their scrap from other sources. This includes the European Union, which the WSJ labels “the second-largest aluminum scrap exporter to China.”
U.S. aluminum prices have also seen fluctuations since the tariff was imposed in March. If China purchases less scrap aluminum from the U.S., then there will be even more uncertainty in the industry to find a place for all the scrap and to increase the demand for the commodity.
At Berg Mill, we continue to work hard on creating solutions to overcome fluctuating commodity markets, opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities.
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.
