Scrap importing restrictions introduced by the Chinese government in 2017 made it clear the recycling industry was going to change quickly and dramatically, and events in 2018 only have served to magnify and accelerate the changes.

A trade spat between China and the United States, even if it is partially resolved by year’s end, has included basic materials and secondary commodities at the center of the dispute.

Based on Chinese government actions, plastic, metal and paper scrap processors and consumers in China were among the first to realize that “business as usual” from the previous two decades likely had come to a close.

A South China-based nonferrous scrap processor, when asked in April 2018, estimated that “about 50 percent” of the recyclers in his market sector and his region of China were exploring setting up shop in another nation. (A second recycler pegs the figure as closer to 75 percent.)

The Chinese processor points to Thailand and Malaysia as nations being scouted for new locations in a research and investment process he says can take anywhere from six to 12 months.

"A veteran U.S.-based recycler says the relocation of operations closer to where scrap is generated is overdue and ultimately will be better for the industry.”

Recyclers moving to those two countries, along with Vietnam and others in the ASEAN (Association of Southeast Asian Nations) region, may face looming limitations, however. These include limited port and transportation capacity as well as the potential that those governments will introduce scrap import restrictions that mimic those in China.

A veteran U.S.-based recycler who works for a company with operations in several nations says the relocation of operations closer to where scrap is generated is overdue and ultimately will be better for the industry.

“Do we follow the whack-a-mole pattern of the last 30 years for a few more dollars, shipping to companies with whom we can’t verify their [proper] handling?” he asks. “Do we deplete our [processing] capabilities to almost zero, like what has happened to U.S. plastics recyclers, and then have to throw the plastic scrap in landfills?”

How generators, processors and consumers of scrap materials choose to answer those questions almost certainly will be one of the major decisions faced by business owners and executives in 2018.

Recyclers would probably prefer to calculate an answer to the risk-reward equation based solely on commodity prices and their operating costs. It may prove difficult to do that, however, if government policies continue to shift on a monthly basis.