With UK prices for used cardboard and mixed paper tumbling this month (February 2018), an international conference in Shanghai, China heard details of a fall in the volume of recycled or waste paper (RCP) used in the country in 2017.
In the UK at present mixed paper is trading between Free of Charge and £20+ for deep sea orders and cardboard generally below the £65 per tonne level. But, in China domestic paper prices have been much firmer because of strong demand, partly encouraged also by high pulp prices.
Information about what is happening in terms of the use of RCP in China came at the recent Cycle Link conference in Shanghai from Winner Xu of Cycle Link International who told how RCP imports to China had declined by almost 10% (9.75%) in 2016, from 28.5m tonnes in 2016 to 25.7m tonnes in 2017.
Since October 2017, said Winner Xu, the amount of domestic RCP used had exceeded that from the United States. This had been a factor in the price of finished product rising to 6000 RMB per tonne, the highest level in history.
The import licence limitations, which will be furthered by the use of quotas, will help encourage paper mills to purchase more domestic tonnage, said Winner Xu, and, the domestic recycling industry in turn will face more regulation and scaling up.
On a positive note for exporters to China, more capacity is planned and this, he said will exceed 20 million tonnes, currently new capacity is 10 m tonnes.
In terms of where the RCP will come from, he suggested it would be by increasing the domestic rate coupled with policy enforcement to ensure this but this will not meet demand. Some existing RCP material supplies will need a different home because “weakened mills” will exit. This was a reference to China’s policy on modernisation with the likelihood that smaller and medium sized independent mills were more likely to be closed on environmental grounds in the face of more stringent inspections.
The gap will be met by alternatives (including starch) as well as imports of used cardboard and also potentially of recycled pulp. Mills will also transfer production to other countries such as Vietnam, said Winner Xu.
He said that businesses overseas “updating sorting systems will have a higher cost” but face “a risk of not finding the Chinese market”, a comment likely to cause some concern among UK businesses who may invest but still not be able to meet the 0.5% contamination limit.
Inspections were already underway and there was the possibility that since January those trying to meet the 0.5% target had been adding in office material to the cardboard but there was the possibility that this was actually mixed paper, he noted.
South East Asia as a whole had a total capacity of 18 million tonnes in 2017, he said but demand will rise by 15-120%. This covered Vietnam, Thailand, Indonesia, Malaysia, Korea and India. “It is a smaller market and the key point is the price of imported waste paper and they are concerned about moisture,” remarked Winner Xu.
Delegates and guests at the Cycle Link International conference in Shanghai visited the modern Ji’an papermaking mill which included a look at incoming material with this container understood to contain Australian material.
From 2018 more South East Asian countries will be using RCP, said Winner Xu, but he cautioned that “they are paying more attention to the Chinese government policy of 0.5% and reduced contamination.”
A colleague of Winner Xu’s, Echo Wu, discussed the status of recycling in China and future trends. Echo Wu said that there were 5,000 recycling companies with 10 million people working in this industry. “The industry is rather messy in China. There is a lack of information symmetry.”
She outlined future plans for the sector in China which would change the current structure noting that the limitations on import licenses required domestic mills to purchase more material in China.
To be issued in the future is a “standard regulation of recycled paper processing operation” and “qualified” businesses will obtain more policy support and development opportunities. Businesses are likely to have to handle 100,000 tonnes of material and have at least a 10,000 sq m site.
Consequently, the recycled paper industry will attract investment for company development.
A recycling standard will be developed by a number of organisations – including MOFCOM, SDPC, MOHURD and the Ministry of Environmental Protection.
Echo Wu reiterated China’s ban on foreign garbage. She concluded: “We are already at a critical juncture. Uncertainty lies in the future, big changes are coming.”
The closing address at the conference came from Lai En (Patrick Lee), Cycle Link International’s president. He said that the company and others needed “to respond to the changes because they are better for the country providing a healthier environment.”
Lai En explained that while Cycle Link’s major function was procurement, “today we are rethinking our position. On the one hand we must guarantee the supply of raw material but we also add value to the industry. We are working with our partners to provide services in a win-win partnership.”
He noted how the company was fully engaged in supply chain thinking and looking at developments such as the artificial intelligence. Cycle Link, he emphasised, is “investing in quality”. We have our depot audit passports system and like the government, we want to see you as a responsible supplier.”
On the 0.5% limit, he told delegates that it will be challenging to work out if the material is at a limit of “0.5 or 0.6 – nobody has told you how to measure this. The first six months will be hard.”