China Continues Its Path toward Recycling Self-Sufficiency
ISRI was recently in China to attend the China Nonferrous Metals Recycling (CMRA) conference in Guangzhou.
The conference theme was “New Era, New Development,” with speakers who were laser-focused on preparing the metals recycling industry for China’s “new era” in self-sufficient recycling. Although an anticipated ban on “Category 7” metals (such as wires and electric motors, which require additional processing) is expected on December 31, 2018, and buying power has been limited by smaller import quotas, tight quality standards and “trade war” tariffs, the metals recycling industry generally has not yet seen a wholesale transformation. This is in direct contrast with the Chinese plastics recycling industry, which has been completely decimated following this year’s import ban on post-consumer plastics.
There is an expectation that industrial parks created in China specifically to process imported “Category 7” metals will either close or transition into other forms of recycling operations.
But, but, but, however that transformation takes place, it was evident from the conference speakers that the Chinese government sees recycling as critical to green growth and a pillar of a “green” Belt and Road Initiative. The Chinese government’s infrastructure development strategy is to link China with Western Europe and all the countries in between.
As part of the Belt and Road Initiative, Chinese companies are learning to do business outside of China. Chinese plastics recyclers that no longer have access to feedstock from abroad quickly moved to neighboring Southeast Asia, but they did so without complying with those countries’ environmental regulations and are now facing the consequences.
But wait, at the conference, there was an expectation that the metal recyclers would follow suit, and for that reason, the Chinese government called on the recyclers to “act more respectfully” in other markets.
Keep your eyes open, because the Belt and Road Initiative has reportedly been used as a platform for the Chinese to export their business values in other regions. It is a phenomenon to watch.
In the meantime, the Chinese government continues to direct “green financing” towards moving China up to a higher recycling value chain through improved domestic collection and recycling operations that use more advanced technology while also being in full compliance with China’s environmental protection rules.
Although it was a metals conference, one senior Chinese official broke from prepared talking points to firmly emphasize that the Chinese government will not reverse the ban on imported plastic scrap. But it was also clear from speakers and the CMRA hosts that work continues on how or whether the Chinese government will ban additional scrap metals. There was a general consensus that China’s “resource bottleneck” (a euphemism for resource supply shortages) remains of great concern. No import policy announcement has been made on metals that are “furnace-ready” (nor higher paper grades, for that matter), which gives us a small reason to hope the Chinese market will not be completely cut off by 2020 (as some industry watchers have incorrectly interpreted a provision in a proposed Chinese policy), but we do expect China to continue to close the door to its market for imported recyclables.
International Trade: The recently agreed to USMCA will undergo congressional ratification procedures. This agreement and other free trade agreements and other trade issues will be top priorities for ISRI. Tariffs and other border adjustments will be under scrutiny from both political parties leading into the 2020 Presidential Election.