Writing in the Bureau of International Recycling’s Recovered Paper Divisions July 2018 Mirror report, Ranji Baxi of J & H Sales International Ltd, says that global trade practices continue to shift away from multilateralism and free trade towards unilateralism and protectionism, which seem to be the current driving forces. The escalating trade dispute between China and the USA has certainly slowed the Chinese economy. America is China’s biggest export market and its second-largest trading partner after the EU. During the first half of 2018, China’s exports to the USA rose by 13.6% year on year to US$ 217.7 billion while imports increased 11.8% to US$ 84 billion, resulting in a trade surplus of US$ 133.7 billion for the first half of 2018.
Exporters of recovered fibre both from the EU and the USA have been greatly affected by China’s controlled release of import licences (14 were released in the first half of the year, totalling around 11 million tons) and the imposition of strict quality controls by China’s customs enforcement department at all of the country’s sea ports. Fibre imports have to be screened to check contamination levels are below 0.5%, making most regular grades not export-worthy to China.
Various regulatory controls continue to be introduced, making fibre imports for mills in China more difficult. At the end of June, China Customs issued a circular designating only a limited number of ports for the handling of fibre imports. “It is likely to be a challenging second half to the year, with reduced growth and an intensification of the trade conflict between China and the USA, which will continue to hamper both growth and trade,” said Mr Baxi.
In the meantime, the South East Asian market is flooded with supplies of recovered fibre, largely as a result of too much availability and the arrival of large volumes of OCC from USA. The infrastructures of some of these countries has been totally overwhelmed by the massive influx of materials for recycling. Vietnam has simply closed its doors for a time in order to exercise better control over incoming material and to take stock of the situation. Taking orders is complicated and prices are not attractive.
Specifically within the UK, Keith Trower of Viridor Resource Management Ltd reports that mills have reported that the quality of infeed material has declined in recent months – potentially because of UK market attempts to further sort material and to set aside best quality for the Chinese market, which attracts higher prices. This is perceived to be a short-term effect as mills across the UK are investing heavily in quality initiatives. It is believed mills will now be focused on working towards the CEPI EN643 guidance.
