Poor market conditions following China’s crackdown on waste imports is costing businesses thousands of pounds each week, with closures expected this year as some material prices plummet to zero.
Mixed papers, one of the materials included in China’s de facto ban, has struggled to find a new market and some traders have been unable to find buyers as a result.
MRW has heard from a number of businesses, including one who said the knock-on effect of the ban on the UK was costing his firm £100,000 a week as a result of renegotiating contracts.
The industry is walking on a bed of nails
John Glover, Bywaters
Simon Ellin, chief executive of the Recycling Association, said he was aware of companies having difficulty in paper as well as plastic, and that the economics no longer stacked up.
“I would be utterly amazed if we didn’t see some casualties,” he added.
John Glover, managing director at Bywaters, said “the industry is walking on a bed of nails”.
He agreed it was very likely that businesses would go under if the market did not improve, because many firms did not have the resources to respond to China’s strict contamination standards.
Ray Georgeson, chief executive of the Resource Association, said that smaller companies did not have the capital resources to reconfigure instantly how they process material and therefore could not meet the new quality standards.
“I can see there are tough times for them. That is a consequence of what has been a dramatic policy shift.”
MRW understands that stockpiling of mixed papers is underway in some parts of the UK.
But Glover warned against stockpiling, saying those who did so risked going bust because mills were less keen on the material and it posed a fire risk.
Ellin added that he expects to see material coming back from China following rejection at ports.
Insiders agreed that the Government’s lack of guidance over China had left the industry “distinctly underwhelmed”.
Georgeson commented: “We are all uniformally dismayed.” He added that the Government had limited ambition and sense of urgency towards the crisis, with little response to letters written to ministers and evidence submitted to committees.
However, Glover said the Government suffered from an overabundance of lobbyists pulling them left and right, and that it could not possibly know which way to go.
Environment minister Therese Coffey “encouraged” the sector to provide more capacity last year, but Glover pointed out that there were fewer paper mills in the UK now than ever before, with sites such as Aylesford having closed in 2015.
Coffey also did not accept the situation was a “crisis”, but industry experts disagreed with this following the sharp drop in various commodity prices and lack of market capacity.