The Great Green Fence of China. Dylan de Thomas Editorial Director, Resource Recycling

Transcription

1 The Great Green Fence of China Dylan de Thomas Editorial Director, Resource Recycling

2 What is the Green Fence?

3 Headlines!

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8 Thumbnail Sketch of Operation Green Fence China primary outlet for large volumes of recyclables, particularly on the West Coast. From a 2006 law, enacted in month (Feb. Nov.) enforcement action Prohibitives not to exceed 1.5 percent for paper, 2 percent for mixed plastics Primarily affecting mixed paper and mixed plastics exports to China Market for mixed plastics bales hardest hit

9 The Thumbnail of the Thumbnail? China doesn t want our trash.

10 The Rise of Xi Jingping President, leader of the Communist Party and head of the country s military since March Reportedly concerned with corruption and the environment Chinese Dream Will not sacrifice the environment for shortterm growth. Those damaging the environment should be held accountable for a lifetime.

11 The Beginning of the Fence

12 The Beginning of the Fence Reportedly began with a small scandal over some dirty containers of mixed paper or plastics from Europe. Rumors of rejected bales exchanged for months leading up to official beginning of operation. Reports exploded after ISRI Convention in early April/issuance of ACN letter. The random inspections partly psychological, according to a Chinese official at the ISRI Convention.

13 America Chung Nam s Supplier Letter of Awareness Zero tolerance for banned items, such as e-scrap, textiles, green waste, animal/human waste, insects, animals, food waste, medical waste, etc. Prohibitive levels must be maintained below 1.5 percent on a bale-by-bale basis. Common examples include wood, metal, glass and plastic. Material shipped as "waste paper" but incorrectly declared is cause for customs penalty, including shipment of convertible items such as rolls, reels, boxed or plastic-wrapped paper, cut sheets, etc. Wire baling is the only acceptable form of packaging for "waste paper." Wet material (exceeding 12 percent "air-dry" standard) creates an environment for degradation where material can pick up dirt, inviting additional scrutiny, regardless of prohibitive level. Loading photos for each container must be sent on or before the cut-off date for each booking, so that they may be reviewed in a timely manner. Shipment will be suspended and potentially returned for any failure to do so. Make sure each container is clear of foreign matter/debris before loading (items such as those for blocking/bracing and items such as moisture absorbent gel packs left by previous shipper).

14 What Happens According to documents, 10 percent to 100 percent of containers are inspected. If they fail to hit stated prohibitives marks (no more than 1.5 percent), they are rejected. Shipments are sent back, cost to be paid by the firm shipping to China $2,000-$2,500 shipments to the country are cheap (as low as $500), going to U.S. are not. Next phase is an increased scrutiny (or a reduction in the number of) for the licenses issued.

15 The Action of Green Fence Details what the customs agents are looking for types of companies, where the materials are going. Licensing from General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ) carried out by its subsidiary the China Entry-Exit Inspection and Quarantine Association Reused and Recycling Branch (CIQAR).

16 The Action of Green Fence Exhaustive list of documentation checks. Looking for firms that have been found to be dishonest in the past/unscrupulous players. Frequent change of import ports. If declared price is lower than the normal customs price. Or the declaration of freight and insurance is low.

17 The Effects on Exports Mixed Paper Mixed Nos. 3-7 Plastics

18 Effects on Mixed Paper Exports

19 Effects on Mixed Paper Exports U.S. Mixed Paper Exports, West Coast, through May Source: RISI, 2013.

20 Effects on Mixed Paper Exports U.S. Mixed Paper Exports, East Coast, through May Source: RISI, 2013.

21 Effects on Mixed Paper Exports Exports of recovered paper to China fell 4 percent YOY Jan-Apr Prices of recovered paper fell ~20 percent from mid-march to May. Typically the recovered paper market at this time of year is robust, post Chinese New Year celebrations. Not all due to the Green Fence.

22 Effects on Mixed Plastics Exports

23 Effects on Mixed Plastics Exports Source: Resource Recycling, 2013.

24 Effects on Mixed Plastics Exports Lowest-value plastics mixed plastics bales, e- plastics, PVC, PP hit the hardest. For some, the market disappeared. Some of these plastics are being salt and peppered into No. 1 and No. 2 bales. According to internal Chinese figures, there has been a 5.5 percent drop of scrap plastic imports into the country. As with paper, not all due to the Green Fence.

25 Effects on Mixed Plastics Exports In the past week we have received five truckloads of shredded e-plastics free-of-charge. They used to get 5 cents a pound from China. The fence is a chain link fence for paper, you can get through it. For mixed plastics, it s a wall. Common theme post-industrial seem to have a home for export but zero export market for postconsumer anything, not even PET so far.

26 What About MRFs?

27 What About MRFs? Bigger MRFs seem to be weathering the storm better Caught some by surprise No other options other countries not yet emerging as viable destinations for material, short-term Some are stockpiling material Re-running bales (~$.03/lb) Slowing down lines, adding pickers WM s Bill Caesar Domestic mills establishing their own green fences Some are landfilling some plastics

28 What About MRFs? I don t know anyone who s making bales with 1.5 percent [prohibitives] percent is more realistic. We can re-run the material, but can we afford it? Equipment manufacturers and analysts say that modern recycling equipment can produce Green Fence-level materials.

29 What About MRFs? Bales are being re-run. Some are exerting pressure on collectors. Some changing what materials are being accepted. We don t want glass in single-stream any more. Industry-wide concerted effort to increase quality.

30 What s the Outlook?

31 The Good and Bad News Good News Not all materials affected Expected to boost bale quality Could help domestic mills, reclaimers New recycling equipment can handle it Nov. 30 end date Will likely continue Bad News Lowest value materials affected most Could hurt budding markets Could hurt MRFs, brokers Not all can afford the equipment Many doubt end date Will likely continue

32 The Big Question Who is going to pay?

33 Much Ado? Seattle, San Francisco, San Diego, Santa Monica city contacts all say there is no issue. Alameda County (Calif.) says that government is not intervening. Some stockpiling, but half say they are not. No change in guidelines. This is a decree and not a market force, so market forces continues to put pressure on the infrastructure and policy makers.

34 The Green Fence s Silver Lining Will help increase bale quality. Can help build domestic markets Initial reports of at least one recycler expanding U.S. has processing capacity: Scott Saunders, KW Plastics: This is great news for American processors. I don't buy the argument that MRFs have nowhere to sell material. There are lots of ready recyclers here in the U.S.

35 The Green Fence s Silver Lining This is a good thing. Short term pain, long term, it's fantastic. The Green Fence should be looked at as an opportunity for MRFs, municipalities, stewards and reprocessors to develop domestic markets in North America. We don t mind paying more, we just want clean material.

36 The Green Fence s Silver Lining Can t overstate how pleased mills/reclaimers are. Bales aren t clean yet but they re thinking about getting cleaner. Many think that the tighter bale specs are permanent. This time it s real.

37 Back to China

38 Back to China Rising middle-class; more consumption by populace. Strong growth in robust production capacity (mills, processing facilities). Increasing domestic collection of recyclables. Reliance on recovered materials from the West could wane.

39 Back to China Other countries not emerging Hannah Zhao of RISI said that the firm restrictions of the Green Fence will soften in Nov.: China s fiber capacity will get hungry and will need the material. China will always want our good, clean, long recovered fiber. With continued decline of ONP, mixed paper bales not going away.

40 Here at Home Opportunities for communities that want to produce cleaner recyclable materials. Possible MRF bale quality could pressure some operators to re-capitalize or consolidate operations. Potential public push-back if rumored landfilling of plastics is occurring. Quality expectations are permanent, and retooling may be necessary.

41 Thank You! Dylan de Thomas Editorial Director, Resource Recycling, Inc