As the trade dispute between the United States and China heats up, the recycling industry is being upended. The Chinese government announced plans to start levying a 25% tariff on old corrugated cardboard, recovered fiber, scrap plastic, and a number of virgin plastics in retaliation for the latest American tariff proposals.
The list issued on August 8 by China’s Ministry of Commerce identifies scrap PET, PE, PVC, PS and other plastics among the product codes that would be affected, Colin Staub reported in Plastics Recycling Update.
“The virgin impact is important for the recycling industry because recycled plastic prices often follow virgin resin trends,” he wrote. “A number of virgin plastics production projects are currently planned or in progress. Experts have predicted they will keep prime prices low in the coming years, putting downward pressure on recycled resin prices. But the tariffs threaten to disrupt that dynamic.”
Chinese tariffs announced earlier this month are scheduled to take effect on August 23, the same day the US is planning to enact tariffs on Chinese goods. Each country is imposing tariffs on $16 billion worth of imported goods. Previous tariffs targeted steel and aluminum. For the first time, plastic and paper are being included, Staub noted.
Even before the Chinese government’s announcement in August, bales of paper and plastic started piling up in the United States due to China’s environmental restrictions on imports. Turmoil in the recycling markets began last year with the crackdown on contaminated recyclables.
“In the US, the average price of used corrugated cardboard fell 36%,” Bloomberg’s Eric Roston wrote in June. “It hasn’t been easy to find other takers for used plastic, since lower oil prices have made virgin plastic cheaper than recycled. While other nations like India and Vietnam have been importing more recyclables, they don’t come close to handling the amount China once did.”
Stateside waste services companies Waste Management and Republic Services had to adjust their profit projections in the wake of the new trade policies.
“At this point in time, we have zero volume going to China,” Richard Coupland, vice president of municipal sales at Republic Services told the Wall Street Journal. “We are still able to move material, but our economic model is completely upside down.”
In Kansas, a nonprofit organization found itself with at least 70,000 pounds of recyclables and nowhere to send them. Recyclers across Michigan have had to raise prices, Michigan Radio reported this week. For one town in Maine, curbside recycling costs jumped from $80 per ton to $200.
Bay Area recycling companies are in a crunch to find places overseas where they can sell materials like plastic yogurt cups and junk mail flyers, the San Francisco Chronicle reported.
Also this week, New York Governor Andrew Cuomo directed the New York State Department of Environmental Conservation (DEC) to figure out how to improve recycling in light of the market volatility. “DEC is working with key stakeholders and municipalities to strategize how New York can bolster new markets and help municipalities address these challenges and build capacity in the state and northeast region,” the governor’s office said.
Some see a silver lining for US companies in the midst of the upheaval. Ron Gonen, CEO of Closed Loop Partners, wrote in a recent op-ed that “leading companies in the recycling industry, consumer goods and packaging industry, as well as a number of investors, see this as an opportunity to further develop and profit from domestic recycling and manufacturing infrastructure.”
