Plastic prices dip as China toughens import stance

Exporters of recovered plastics are reporting that the value of material has dipped following moves by the Chinese government to tighten controls on the quality of waste that enters the country.

Earlier this month, letsrecycle.com reported that the Chinese central government had written to port customs officials to take immediate steps to reduce the impact of foreign waste being imported into the country from overseas, following instructions from the newly elected president Xi Jinping (see letsrecycle.com story).

And, according to exporters, the move has made it increasingly difficult to get mixed plastic and lower quality plastic films through Chinese ports, with some reports that containers are being held in ports or are being returned to the UK.

It is also feared that the UKs domestic plastics reprocessing capacity will struggle to cope with a surplus of material, and recyclers claim that a lot of material is being kept in storage until the market begins to move again.

Exporters are reporting that the price of 80:20 plastic films have fallen by around 40% per tonne, from between 35 to 55 in February 2013, to between 20 and 40 currently. Mixed plastic bottles are valued at around 20 per tonne for lower quality bales.

The market situation has already seen the cost of packaging waste recovery notes (PRNs) rise from between 15-17 in February 2013, to around 17-20 this month, with further rises anticipated.

Uncertainty

A North-West based plastics recycler said: I think the problem at the moment is that the Chinese government are reviewing what they do and it is creating uncertainty amongst buyers about what material it is ok to import. For some grades demand has slowed dramatically or in some cases ceased.

I have heard examples where people have had significant problems with shipments on the water and they have no home for the material, financially that could be very difficult.

Meanwhile, another exporter told letsrecycle.com that there is likely to be a significant drop in the value of mixed plastics bottles, which has been particularly targeted by Chinese customs officials.

He said: The UK will be flooded with mixed bottles as we will see a lot of containers coming back to the UK. Currently only segregated materials are allowed, and there is no route in for mixed bottles.

But, despite reports that prices have fallen, there is not thought to be danger of a collapse as in October 2008 (see letsrecycle.com story), as there is still demand for material from Chinese manufacturers. However, buyers are believed to be hesitant to purchase material unless it is likely to be accepted into ports.

The exporter added: The difference between now and 2008 is that people in China still want to buy, but getting the material in is a challenge.

Inspection

While the specification for the material permitted for export to China has not changed, more stringent checking by the inspection body CCIC in China to prevent poor quality material being imported is causing the depression in the market.

Port customs officials, whose past role has been to check that the correct tax code has been applied to containers entering ports, are now said to be working more closely with CCIC to carry out a two-way check of plastic waste imports. This involves the contents of large numbers of containers being inspected.

China is the largest buyer of recovered plastics in the world, processing more half of the plastic waste exported from Europe for recycling in 2011 and 2012 according to figures published by the continental plastics recycling trade body Plastics Recycling Europe (EuPR).

Keith Freegard, vice chairman of the British Plastics Federations recycling group, commented that moves by the Chinese to clampdown on the quality of material being imported were inevitable, adding: It is a pity we have had to wait for the Chinese government to enact these quality requirements and not for our own government to do so.

Speaking to letsrecycle.com, he said: It is an indication that no longer can the export route be used for shipping low quality materials mixed with non target plastics and it is a strong indicator for the government that they should be ensuring that the recycling that is taking place elevates material to a level that adds value to the UK.