Are Indonesia’s New RCP Import Requirements Breaking the Bale?

Recycling industry stakeholders have held their breath as new import bans and restrictions for scrap have gone into effect in major markets.

The Indonesian government’s 0.5% contamination limit and policy to inspect 100% of incoming bale shipments of recovered paper (RCP) imports was to go into effect at the beginning of April.

The Indonesian inspection company KSO Sucufindo-Surveyor sent a letter on March 22, stipulating that shipments would need to be inspected to ensure that they were not contaminated with “hazardous or toxic waste and not containing excessive impurities.” The idea of bale breaking concerned stakeholders, as it was a potential logistical nightmare, not to mention the strict cap on impurities.

Additionally, the guidelines from Indonesian authorities specified that the incoming RCP needed to be “clean, dry and homogenous,” an ambiguous description that couldn’t adequately be ensured in shipments prior to inspection.

However, only a few days later on March 29, Sucofindo issued another letter statement that postponed these new strict guidelines until further notice. The bale breaking requirement has been loosened considerably and only 10% of shipments are being subject to inspection. Now it looks like the requirements will be 1-2% for prohibitives and 3-4% for outthrows, which is far more reasonable.

Given the short timeline and rising import restrictions across the board, it’s likely that Indonesia’s announcement of these RCP import restrictions received a great deal of pushback from industry stakeholders. The need for raw material in Indonesia may also be a factor—it takes time to create domestic infrastructure to process scrap.

Indonesia is a prime location for U.S. RCP exports and was actually increasing its imports up until this past January, following behind only India and China during the first month of 2019, countries that are now also restricting imports.

India and Vietnam are both still planning to phase out scrap plastic imports, but they have not done so yet and are importing plastic scrap into these countries today. Resource Recycling reports that Vietnam imported 165 million pounds of scrap plastic from the U.S. in 2018, so a complete stop on imports is a very lofty goal to reach, especially if it is to be done by 2025 as Vietnam has announced.

It’s hard to say how long the leeway will last with these incoming import restrictions, but the Institute of Scrap Recycling Industries (ISRI) says that it is working with both U.S. and Indonesian governments to make the process more consultative in order to reduce the burden on traders within the industry.

Import restrictions inevitably have an effect on the demand and consequently, the price of recycled scrap will have major implications for recycling industry stakeholders both financially and logistically.

The industry will need to perfect its sorting methods to decrease contamination and find new and reliable markets for scrap. But these challenges are confounded by a short timeline. Regardless of import restrictions, the recycling market will adapt and rebound, given time and new technology.

Berg Mill has a long history as one of the pioneers in the industry, and we are not going anywhere even when faced with recyclable import changes. If you continue to handle large amounts of recycled waste and are looking for solutions to offload idle scrap, please contact our industry veterans at Berg Mill supply via our website or phone at 866-333-BERG. Talk to us about purchasing any and all of your scrap paper, plastic, metal, textiles, glass grades, and other recyclables.

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