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For most of this century, much of the plastic recycling supply chain has been about as lengthy and as global as possible. A sizable percentage of the plastic scrap collected in North America (and in Europe) was baled and shipped to Asia—predominantly China—before it was reprocessed and used to make new products there.

Those well-established trade routes, however, were disrupted in early 2017, when China’s government took sudden and wide-ranging actions to restrict plastic scrap imports.

By the second quarter of 2017, sea freight containers loaded with plastic scrap were stuck in limbo, many of them diverted to Hong Kong or to the ASEAN (Association of Southeast Asian Nations) countries of Malaysia, Thailand and Vietnam.

By mid-2018, some plastics reprocessors and manufacturers formerly based in China that use recycled-content resins had relocated their operations to Southeast Asia. However, the same sentiments that caused China’s government to sour on accepting the world’s plastic scrap have emerged in the ASEAN region. This has once again caused leaders of the North American links in the plastics recycling supply chain to reconsider the future of their business models.

Mass market

The International Scrap Trade Database maintained by the Washington-based Institute of Scrap Recycling Industries Inc. (ISRI) portrays this century’s China-centric plastic recycling story.

Every year between 2006 and 2016, China and Hong Kong combined imported more than 11 million tons of plastic scrap. This dwarfed the plastic scrap import volume of any other nation during that time span. The closest any nation came to even 1 million tons of plastic scrap imports in any one year was when the Netherlands imported nearly 687,000 tons in 2014 (and much of that scrap likely came by truck from neighboring countries).

China’s voluminous import level coincided with America’s status as the largest plastic scrap exporter during that same time frame. Each year from 2009 to 2015, America shipped more than 2.2 million tons of plastic scrap overseas (except in 2013, when the figure slipped to 2.1 million tons in reaction to China’s “Green Fence” quality restrictions).

As China became the world’s factory after it opened up its economy in the 1980s and 1990s, part of its industrial success story was tied to scrap commodities. Scrap paper fueled China’s booming corrugated containerboard sector; aluminum and copper scrap fed part of its rising metals production sector; and plastic scrap helped make the toys, electronic components, synthetic fabrics and countless other products bearing the “Made in China” label.

For reasons not always presented clearly by the Chinese Communist Party (involving a mix of environmental and trade protectionism), the nation has soured on imported scrap materials since current President Xi Jinping came to power in 2013. President Xi reportedly viewed the 2016 documentary film “Plastic China,” which portrays unsafe and unsound practices at plastic scrap sorting and reprocessing facilities. That film’s director also produced a 2012 documentary titled “Beijing Besieged by Waste,” which delved into how the Chinese capital was handling its own municipal solid waste.

For recyclers attending industry conventions in China this decade, the term “foreign garbage” was consistently translated into their ear pieces when officials from China’s customs agency or environmental ministry presented.

China’s government has introduced increasingly rigid scrap import restrictions during the Xi presidency, culminating in banning many types of plastic scrap and imposing purity requirements on the rest that many recyclers say are unattainable.

By May 2017 at the Bureau of International Recycling (BIR) convention in Hong Kong, BIR Plastics Committee member Steve Wong portrayed an industry sector in chaos, with thousands of shipping containers turned away from Chinese ports, many of them stranded in Hong Kong up for auction.

Since then, Chinese buyers have been able to import more recycled-content plastic pellets (if uniform in color), but the barriers to most baled plastic scrap have remained in place. (See the sidebar, “Plenty of room for pellets,” above at the left.)

It was the start of a reprocessing exodus that has involved several neighboring nations and that continues to have ripple effects on the way plastic scrap is handled in the U.S. and every other part of the world.

Sorting it out

Although plastic scrap export figures portray China as the world’s biggest buyer of the secondary commodity, the central government was not the actual buyer, but rather it was an eager entrepreneurial class of importers, reprocessors and plastic products manufacturers.

While American recycling programs and facilities with growing stockpiles of “unwanted” plastic scrap made the news in the U.S., Chinese entrepreneurs were struggling to survive.

Wong also is CEO of Hong Kong-based recycling company Fukutomi Co. Ltd. and an officer with the China Scrap Plastic Association (CSPA). As CEO of Fukutomi, he has spent much of the past two years rearranging his business model. Wong acknowledges that it has been an expensive endeavor, which has involved changing the geography of his business because of the absence of former end markets in China.

Many entrepreneurs turned immediately to Malaysia, Thailand and Vietnam to set up plastic scrap sorting and reprocessing operations, though investments also have been made in Taiwan and Hong Kong. (Although Hong Kong is a special administrative region of China, it has its own customs and trade policies.)

As plastic scrap poured into Malaysia, Thailand and Vietnam in 2018, however, criticism mounted from environmental advocacy groups that those nations were becoming a new “dumping ground” for the material. Port managers in the three nations complained the new heavy volume of inbound container traffic was clogging their port facilities.

By June, Wong told CSPA members that “according to recent market information, there are more than 30,000 containers idle at the ports of Thailand due to port capacity or import permit problems. Similar issues were also seen in Vietnam, causing ports such as Cat Lai to suspend unloading services.”

Wong’s report also noted that Thailand’s Department of Industrial Works (DIW) had prohibited imports of electronic scrap and plastic scrap into Thailand, “effective immediately.” That nation’s government also announced it would inspect some 2,240 plastic recycling facilities “to detect illegal imports of e-waste, violations of environmental control, illegal labor [and the] illegal use of import permits,” Wong wrote.

In Vietnam, the nation’s Ministry of Natural Resources and Environment blamed waves of recycled material imports for clogging its ports. The CSPA reported that 4,480 containers of scrap materials were sitting at ports in Vietnam operated by Saigon Newport Corp.

The CSPA added, “Now, the country’s government is moving toward legislative action,” including “revising legal documents on the management of [scrap] imports, taking into account environmental protection, as well as putting into place a mechanism to manage, control and prevent the trade and import of scrap from afar.”

Malaysia’s government took a more measured response but also froze plastic scrap imports for 90 days beginning in July, affecting 114 firms and factories in that country, Wong said.

He continued, “This is to allow time for [Malaysian] authorities to set things right, including [ensuring] the use of import permits and compliance with pollution controls.”

The sudden rise and seeming decline of the ASEAN region as a plastics recycling hub ties into Wong’s comments at the May 2017 BIR convention, when he told the assembled delegates that more plastic scrap and electronic scrap will be “recycled at source more often.”

Recycling at the source

Reprocessing capacity to handle the 2.2 million tons of plastic scrap that recyclers in the U.S. used to export annually did not exist in early 2017, when China’s government took its decisive action to block scrap imports.

The recycling and manufacturing sectors in the U.S.—as well as in other plastic scrap surplus regions, such as Europe and Japan—have been reacting to the new dynamic, however, with investments announced on a regular basis in 2018.

In the U.S., Oregon-based Agilyx and California-based GreenWaste Recovery are among the companies investing in technology to return plastic scrap to its base chemical form. (See “The promise of chemical recycling,” beginning on Page 8 for more information on these companies.)

Asian companies also have been investing in American recycling capacity. Shanghai-based Roy Tech Environ Inc. announced in early 2018 its plan to open a facility in Grant, Alabama. CEO Lily Zhang says it will install grinders, shredders and pelletizing equipment for five production lines with approximately 22,000 tons of annual capacity.

Thailand-based chemicals and plastics multinational firm Indorama Ventures Public Co. Ltd. invested in recycling in France, buying Sorepla Industrie S.A., a 57,300-ton-per-year producer of recycled polyethylene terephthalate, recycled high-density polyethylene and food-grade pellets.

Some governments have been willing to get involved. In September, California’s legislature passed a bill to provide $25 million to support recycled plastics end markets, which that state’s governor was expected to sign into law by month’s end.

France’s secretary of state for ecological transition has proposed a policy that would increase the costs of consumer goods with packaging made from plastic without recycled content. As part of the same policy, products with recycled-content plastic packaging could cost up to 10 percent less, and the government would increase taxes on solid waste heading to landfills while cutting taxes for recycling operations.

Intervention or incentives for increased plastic reprocessing capabilities may be increasingly necessary in light of a proposed Basel Convention policy. Basel Convention signatory Norway has proposed declaring plastic scrap a “hazardous material” that would face severe restrictions when being shipped from developed economy nations to developing ones.

ISRI says, “Adopting Norway’s plastics proposal would do more to discourage plastics recycling than it would help curb plastic waste in the oceans, and we believe recycling is part of the solution, not the problem.”

In the face of policies that scrutinize long-haul shipping of plastic scrap, investments in reprocessing in North America seem certain to continue and to pick up their pace.

The author is a Hong Kong-based editor with the Recycling Today Media Group who can be contacted at btaylor@gie.net.

For more information:

Bureau of International Recycling, 32-2-627-57-70, www.bir.org

China Scrap Plastic Association, steve.wong@fukutomi.com

Indorama Ventures Public Co. Ltd., 66-2-661-6661, www.indoramaventures.com/en

Institute of Scrap Recycling Industries, 202-662-8500, www.isri.org

Roy Tech Environ Inc., 256-728-5554

Sorepla Industrie S.A., 33-3-29-06-11-80, www.sorepla.com