China no longer wants to receive garbage from other countries. Inspectors are now operating under a new program, “Operation Green Fence,” and are reportedly inspecting nearly every container. Because inspections slow down port operations, shippers are now seeing rising demurrage costs as they pay ports to hold containers until they are inspected.
Definitive assessments of the market impact of enhanced inspections are not available, with much of the current analysis relying on rumor. It is known, however, that a number of containers have been rejected in China, especially for mixed paper, #3-7 plastics and mixed rigid plastics.
It is also known that several large exporters, such as America Chung Nam, have increased their container inspections here in the U.S., before the containers are delivered to the port for shipping. A “Supplier Letter of Awareness” from ACN to their customers details numerous “items of concern.” Many of the “items” are what you would expect, one that stands out is: Prohibitive levels must be maintained below 1.5% on a bale-by-bale basis. Common examples include wood, metal, glass and plastic.
Some recycling market analysts contend that this changing situation in China is the key reason why prices for some recovered materials in the U.S. have declined over the past few weeks. Several recovered paper shippers say they are more and more unwilling to ship to China, and they are seeking domestic orders instead. They contend this has resulted in domestic mills (on the coasts) being able to push prices down by about $10 per ton. Plastics is also seeing the same market decline.
And demand in China has slumped. For example, global shipments of recovered paper to China in the first two months of this year were down 18% compared to 2012.\
Some market players feel Vietnamese buyers will jump in the void by buying bales of paper or plastics containing high levels of contaminants. These buyers will then manually sort the bales, remove the garbage and rebale the fibers or plastics before shipping the containers to China. Does anyone see a problem with this? – MT
One likely effect of all this will be that U.S. mills will no longer have to put up with what China was taking. A large plastics reclaimer said his company had already started to reject bales that previously it would have been forced to buy.