BIR continues to gather expert updates on the impact of COVID-19 on international recycling markets. Even though China, the starting point for the pandemic, has passed its peak of infections and is taking tentative steps towards a return to normality, Europe and many other parts of the world are still a long way from that stage, creating a fragmented recycling industry picture. China is gradually resuming operations as directed by Beijing, with even the city of Wuhan reopening after 76 days of lockdown.
The paper recycling market in France is down to 65% of normal business levels owing to low collection rates. Shipments within the EU are proceeding but those to South East Asia are proving almost impossible.
Since the end of February, packaging/printing plants and terminal companies in China have been resuming work. Large shopping malls and supermarkets are gradually reopening, and the amount of paper collected via commercial and factory channels has increased significantly whereas paper collections from residential areas has been slow to recover. Main roads in provinces, cities and districts have been restored; however, barriers are still in place within communities and villages, with the result that recycling personnel cannot freely enter and so volumes in most of these areas are only around 25% of what they would normally be.
The resumption of normal operations is being hindered by a shortage of workers and logistics. Fixed costs and staff salaries have become the biggest challenges for businesses during the pandemic. There is a shortage of working capital and short-term loan costs remain relatively high. Some enterprises have been unable to repay bank loans and interest on time, but relevant support policies have either not been issued or implemented.
In line with changes to the Chinese government’s import policy, the quantities of recovered paper entering the country has declined by 40% over the past three years. Up until April 10 this year, China had approved five batches of scrap import quotas covering copper, aluminium, steel and paper, with the total for paper thus far in 2020 being 4,327,429 tons. The aim is still to achieve zero recovered paper imports by the end of this year; the main method of bridging the gap left by lower imports is to process recovered paper into pulp outside of China before importing it. This stream is providing a particularly important supplement given the current shortage of domestic recovered paper and more limited imports.
