China’s decision to restrict the import of solid waste including recovered paper (RCP) in 2017 was a major turning point and impacted RCP trade flows severely. The last three years saw the global recycled paper industry trying to adjust to the new world trade patterns brought about by China’s new RCP import regulations. Fastmarkets RISI offers a comprehensive viewpoint.
Over the years the recovered paper grades have changed dramatically along with the global consumer markets for these materials. All over the world, recovered paper (RCP) is a fundamental raw material and most of the world’s paper and board is made from recycled fibre. Most of this paper is made in China.
In July 2017, China announced its plans to limit the import of solid waste, a large part of which is RCP and this led to drastic changes in RCP trade flows all over the world. It led to Chinese RCP imports falling drastically from 28.5 million tonnes in 2016 to 10.4 million tonnes in 2019. Chinese trade data reveals that Chinese RCP imports plunged by about 47.5% year-over-year in the first seven months of 2020. The COVID-19 pandemic also added to the slug in demand for RCP and caused logistics issues in the first half of 2020, though a few countries and regions still managed to post considerable increases in imports during this period.
While the world braced itself for the inevitable announcement from China, it came in June 2020, when the Chinese Ministry of Ecology and Environment (MEE) officially announced that there will be no permits issued for solid waste imports in 2021, while confirming that China will ban all RCP imports by December 2020.
China’s act changed the course of RCP trading globally. Here is a quick look at 5 major changes in the global RCP trade patterns.
- With China’s imports having declined sharply, almost all of the major RCP exporting countries and regions saw a substantial drop in exports over the last few years. Net RCP exports of West European countries fell from 8.3 million tonnes in 2016 to 5.0 million tonnes in 2019, while net exports from the US fell from 18.9 million tonnes to 16.0 million tonnes. Japan, the largest exporter in Asia, saw its exports sink from 4.1 million tonnes in 2016 to 3.1 million tonnes in 2019.
- Due to their growing RCP demand and the increasing availability of RCP from Western Europe, Turkey and several East European countries purchased much more RCP in 2016-2019. However, even the total import growth in these countries could not offset the sharp drop of the Chinese imports.
- Globally, the RCP trade volume went down from 58.5 million tonnes in 2016 to 49.4 million tonnes in 2019, and the world’s total RCP demand dropped from 24% to 20% during this time.
- A positive outcome of these changes for China has been the increase in collection, baling and processing of recovered fibre within the country. China’s collection business has since skyrocketed because of the high cost of fibre and it increasing demand.
- While the Chinese ban is profoundly affecting the global markets, other Asian countries like Malaysia, Indonesia, Vietnam, Thailand, Philippines and India are stepping up to become the growth areas for RCP use, especially with India emerging as a major player in the market.
– By Inder Aurora