In the past week, exporters of material from the UK and Europe have reported that temporary controls have been imposed in Malaysia, which had become one of the key markets for material since China’s absence from the market, in particular for lower grade LDPE films.
Tighter markets are also being seen in Vietnam where there are reports of mixed paper exports being restricted.
Malaysian authorities have reportedly ceased issuing ‘Approved Permits’ to facilities seeking to import plastic scrap from destinations including Europe, whilst concerns over plastic pollution to the environment are addressed.
Some sources with close ties to the country suggest that this situation is likely not to change for up to three months.
Markets
Speaking to letsrecycle.com, Surendra Patawari Borad, chairman of the Bureau of International Recycling’s plastics committee, confirmed that restrictions on imports of material to Malaysia are expected to be in place for several months. He also warned of the prospect of similar restrictions in other Far Eastern markets.
He said: “I have spoken about this possible issue for a number of years: the insane dependence on China and the Far East.
“China used to buy about 7 million tonnes of material per year, nobody is going to fill that gap.
“Malaysia used to buy around 50,000 tonne per month, and this has increased to about 100,000 tonnes per month and then about 120,000 tonnes per month from April.
“Malaysia has now said that it is not issuing additional AP [approved permits] and I have been told that it might take another two months before they issue any new ones.”
Mr Borad added that higher quality sorted material remains in demand in regions including continental Europe, but noted that outlets for poor quality scrap are becoming increasingly scarce in markets including the Far East.
“I feel that the industry has not expected the inevitable”
Surendra Board
BIR plastics division
“We must improve the quality of material in Europe. I feel that the industry has not expected the inevitable.
“The market will become more conscious about quality, those taking care of the quality will find a home for the material. Good quality material will always be in demand.”
Companies in the UK handling plastic films are watching the situation in Malaysia closely, as it is thought the approach taken by the Malaysian authorities could be replicated elsewhere in the region.
Infrastructure
Jonathan Edmunds, commercial manager at packaging and recycling firm DS Smith told letsrecycle.com that the industry had seen a growth in recent month of plastic volumes shipped to countries including Malaysia and Vietnam.
He said: “As we anticipated, these alternative markets are now seeing the effects of over-supply of material, as their infrastructure, particularly at ports, struggle to cope with the volume. As a result, temporary restrictions have been put in place on the import of plastics in these countries. It is expected that other Asian countries will follow suit, and the long standing deep sea routes to market are likely to become less viable, and more volatile going forward.”
Mr Edmunds noted that the UK, as a net exporter of plastic waste, is likely to be challenged by further restrictions on waste to overseas markets, with any potential for growth in domestic reprocessing infrastructure likely to take several years to come on stream – if companies are prepared to invest in new plants.
He added: “While there are some great companies doing great things in the UK, capacity and demand for recycled plastic product continues to be outstripped by our production of plastic waste. As with other materials, such as paper for recycling, quality is also a key factor. We produce high volumes of mixed or poor quality plastics, which up until recently have been destined for export.
“With export becoming less of an option now, we need to assess whether sustainable end markets exist for the recycling of lower quality grades. Waste producers, and the recycling and waste management industry, need to act swiftly and improve quality as quickly as possible.”
2017 increase
In Malaysia, according to the country’s investment authority, the volume of plastic waste imports rose from 288,000 tons in 2016 to 450,000 – 500,000 tons in 2017, an increase of almost 50%.
In April this year, the investment authority (MIDA) noted that many industrialists in Malaysia “see the plastic waste recycling as a promising industry. It is one of the most dynamic and established industries in Malaysia’s manufacturing sector.”
MIDA said in April that there were about 1,300 companies in operation, producing products ranging from common household items, packaging materials and conveyance articles to parts and components for the electrical and electronics, automotive, office automation, computer and telecommunications industries.
“To date, MIDA has approved a total of 54 projects for recycling waste plastic materials with investments of RM305.2 million.”
Warning
MIDA emphasised that Malaysia should take advantage of the availability of raw materials to export high quality resins to China to improve the country’s balance of trade rather than relying on Chinese investors to set up low value recycling plants in Malaysia. And it warned that “too much importation of plastic scrap to support the recycling activities will disrupt the local ecosystems. It will also result in more wastage of resources as recycling factories’ that uses low-efficiency production methods require a large amount of water, energy and human labour.”
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