The Chinese government announced they are blocking recovered paper (RCP) imports from the United States. This has caused chaos across Asian markets, as it has negatively impacted the supply chain and continues to affect trade relationships. This week, Berg Mill highlights the halt and how the U.S. RCP import block is affecting the supply chain.
Shortages and Price Fluctuations
The predicted RCP shortage has disrupted the supply chain and sources are expecting to overcome various adversities. RISI reports on this matter and calls attention to the “…converters and traders rushing to snap up available volumes of finished products imported from other Asian countries” because the shortage is affecting the entire supply chain. Converters and traders are on the lookout for recycled containerboard and duplex board, as customers find any RCP tonnage they can. This includes European, Japanese, Australian, and other imports along with domestic materials.
As a result of the import block, prices for various commodities are increasing drastically. The price fluctuations are predicted to continue due to sellers waiting to propose their offers. The demand for the commodity is estimated to remain high, which is why sellers have not shared their offers. Domestic RCP prices have also been directly impacted by the change, as they have increased $69-96/tonne this month. RISI also notes, “The level is equivalent to $441-535/tonne after deducting 16% VAT, which has been cut by 1% from May 1.”
Recycled board levels have also seen a hike in price from the RCP import halt. Chinese buyers are looking to other countries, such as Japan, South Korea, Taiwan, and Southeast Asia to purchase recycled containerboard and duplex board. RISI reveals, “A Singapore-based trader said Chinese buyers were initially offered $510/tonne for recycled fluting exported from Indonesia for this month’s shipments.” This offer is no longer available because there is no tonnage left for the Chinese buyers to purchase.
Impending Import Inspections
China’s General Administration of Customs (GAC) issued a notice on May 3, which provided details on RCP cargo import inspections. Any imports received from the U.S. are to be opened and inspected from May 4 to June 4. Any RCP that contains silicon paper, thermal paper, wet wax paper, moisture-proof paper, or any other materials that could be difficult to identify will be immediately sent to a lab for a hazardous evaluation.
During the span of the month, the China Certification and Inspection Group (CCIC) will stop any RCP pre-shipment inspections when the imports arrive in China. All RCP imports will now require a CCIC certificate when they arrive at Chinese ports to receive clearance from customs. Because U.S. RCP imports totaled 1.914 million tonnes in the first quarter this year, it is understandable why the industry and supply chain are shaken by the block.
Ongoing Trade Disputes
Since China’s first import ban took effect last year, the trade disagreements have been incessant and frequent. China and the U.S. have experienced various trade disputes and sources speculate that the Chinese government’s decision to initiate the RCP import block relates to this ongoing battle. Berg Mill Supply Co. has multiple outlets outside of China for paper, plastic, and metal scrap.
We want the industry to know that we are doing everything we can to help during this difficult time, as we try to improve the health of our environment. Please understand that the news is changing rapidly. Just today, we heard rumors of China possibly opening its doors to our tonnage in some capacity again. The hope, of course, is that this would swing the market back up. Stay tuned for the latest.
At Berg Mill, we continue to work hard 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.