Chinas Green Fence leads to PRN price spike

Fears over the future of the waste plastics export market following a quality crackdown in China have led to a spike in the price of packaging waste recovery notes (PRNs), exporters have said.

A crackdown on imports of low quality waste was initiated by the Chinese Government earlier this year at the request of the newly elected President Xi Jinping (see letsrecycle.com story). Codenamed Green Fence, the initiative is aimed at reducing the amount of poor quality waste that enters Chinese ports from overseas.

According to exporters the move has made it increasingly difficult to export some grades of mixed bottles and film plastics for which China was the largest buyer. Under the initiative, port officials are carrying out more stringent inspections on material and in some cases refusing to allow poorer quality shipments to be unloaded.

While the tougher inspection regime is expected to last until at least November, exporters of plastic waste are unsure if there will be a strict enforcement of the quality requirements subsequently.

Lower grades

The crackdown on material quality has seen the value of some lower grade material drop as exporters have found less buyers available, which, industry experts say, has also lead to an increase in the price of PRNS as less material is being processed. And, the plastics market is expected to be difficult for the rest of the year.

Raj Iqbal managing director of Choice Waste Management, who also represents exporters on the Advisory Committee on Packaging (ACP), told letsrecycle.com that uncertainty over the future of exports to China is currently hanging over the market.

He said: The market at the moment is very bad, and over the last month we have seen PRN prices jump from 25 to around 60. Nobody really knows what will happen beyond November, and China might choose not to lift the restrictions at all.

There are other markets that are open but China, as the largest exporter of finished goods, has a greater need for raw materials, a gap that recycled products has always filled.

A spokesman for the PRN trading platform The Environment Exchange (t2e) confirmed that a small number of PRNs had been purchased for around 60, but most were being traded for around 55.

Another exporter of plastic waste commented: Markets like Lithuania are now taking some low grade films but only in very small amounts and certain grades are getting very hard to move. People are just sitting on the material that they cant shift at the moment and yards are starting to fill up.

Defra

Despite the concerns, Defra has said that it will not be sending officials to China for discussions over the restrictions, adding that it was not aware of any recent imports from the UK having been turned away.

Instead the government has said that it is focussed on domestic initiatives to increase the quality of recycled material produced in the UK such as the Quality Action Plan for England and the statutory code of practice for Materials Recovery Facilities (MRFs) for England and Wales.

A Defra spokesperson said: We are aware that China has launched initiatives to improve its environmental operations, and that its authorities are taking a closer look at the materials they import. But we are not aware of any recent UK imports having been turned away.

Under the Waste Shipment Regulations, the Chinese authorities can specify the types of waste they wish to receive from Europe.

Supermarkets

Collections of waste plastic films from supermarkets are also understood to have been affected by Operation Green Fence, as the price of lower grade film plastics has plummeted as buyers for the material have disappeared.

Speaking to letsrecycle.com, one plastics recycler said: A lot of major players are giving a warning to the supermarkets that they might have to stop taking that material, or they will have to charge a gate fee for it in future. A lot of the material that would have been sent to China, like carrier bags and c-grade film will now have to go for sorting to separate the material that cannot be sold.

Commenting on the developments, a spokesman for the British Retail Consortium (BRC), said that the organisation saw no evidence that the market for high quality plastic films was under threat adding: The market for high quality, clean material is strongest and we are not aware of any issues about the market being affected by quality requirements.

While industry sources agreed to some extent with the BRC view and explained that most back of store material, such as the cleaner film grades such as 98:2 should be movable, the poorer grades, including carrier bags, appear likely to face a trickier market.