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Mixed paper market racked by Chinese restrictions

2000 mixed paper

The UK paper recycling sector could be close to “breaking point” following China’s restrictions on imports of lower quality material amid fears that stockpiling of mixed papers is imminent.

In submissions to the Environmental Audit Committee’s recent inquiry on China’s import ban, some organisations said that selling mixed paper to alternative markets would become more difficult and predicted stockpiling of material.

After the hearing, an executive in the sector told MRW: “I’m not in possession of hard evidence but all the signs are there and, anecdotally, I have heard that we are at, or close to, breaking point.”

A submission to the Parliamentary inquiry from the Recycling Association said that Europe was “showing signs of reaching capacity and it is predicted that, from now and into February and beyond, there could well be some stockpiling of UK materials, and materials that do move will do so with further and impactful price reductions approaching zero value at best”.

The Resource Association said its members had reported some accumulation of mixed papers in the supply chain and a consequent drop in market value.

Commenting on the short- and long-term implications for UK recycling, the association said: “We, together with colleagues from other associations, have expressed concerns to the Government about risks related to storage and backing up of materials in yards and ports, the potential for increased fly-tipping and fire risk, and the danger of undermining public confidence in the recycling process through the increased awareness that materials being collected for recycling in good faith may not be reaching a recycling destination.”

The Confederation of Paper Industries (CPI) said it had written to Defra since the ban advising of the possible consequences. Its submission said: “The CPI suggested that, in the short-term, the ban on mixed paper could lead to the backing up of recycled materials through the supply chain, a build-up of stock in yards and at dockside, increased fires on waste sites and fly-tipping, a breakdown of the relationship between local authorities and their service providers and, ultimately, a loss of public confidence in recycling.”

DS Smith told the inquiry that, anecdotally, some companies seemed to have enough non-Chinese outlets for mixed papers and mixed plastic, but that some were already experiencing high stock levels, with others anticipating stock issues in coming months.

It also added that it hoped the restrictions would help to improve the quality of recyclables.

“In the short term, it is expected that there will be less of a demand from overseas markets due to oversupply of material,” it said. “This is driving prices down, and has the potential effect that expectations of material quality will rise, as mills will be able able to purchase higher-grade material for less.

”It is hoped that this will help to drive up quality standards in the UK, which have been a concern for recycling companies for a number of years.”

Jakob Rindegren, Environmental Services Association recycling policy adviser, told MRW that the situation for mixed paper had clearly worsened in the past few weeks, with more competition for alternative markets, putting pressure on prices. 

“Storage tends to increase after Christmas and before the Chinese New Year in February, but the levels are reported to be higher than normal,” said Rindegren. “The vast majority of material is still finding alternative markets in Europe or south-east Asia. However, there is an increased risk that prolonged storage of some low-quality paper will make it unfit for recycling and leave no other outlets than energy from waste or landfill.”

Rindegren added that the situation was slightly different for OCC because there were still uncertainties about import licences and how the GB standard will be measured and enforced. 

“There are no indications from our members that OCC is struggling to find end markets at the moment,” he said.

Paper exporter Mark Lyndon was among some in the sector which felt that the Chinese requirements were an opportunity to refocus on quality material, with Colin Clarke, UK managing director, saying that the company had not seen evidence of paper piles.

“It has been about volume for too long and we are rising to the challenge of cleaning up the quality. Mixed and OCC are different markets. Good quality material is finding a home.

“Mixed papers will either be upsorted and cleaned up or go to domestic or other Asian markets. Those markets will become more difficult but I haven’t seen any paper piles.”

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