By Zhai Qiuping, Sublime China Information (SCI)
A variety of scrap plastics with wide applications
Different industries produce a variety of scrap plastics, which can be classified into thermoplastic and thermosetting plastics according to the structure and properties, and almost all the thermoplastic plastics are worth recycling. There are nine main types of scrap plastics in the domestic market, as shown in Table 1.
Limited industrial newcomers, weakened market concentration
Recycled plastics are the feedstock that is closest to the end-use products in the whole industry chain, and in some ways, they and plastic raw materials are substitutes for each other. There are many kinds of recycled plastic products, such as recycled PE, recycled PP, recycled PVC, recycled hard rubber (recycled ABS, recycled PS, recycled EPS), recycled engineering resin (recycled PA, recycled PC) and recycled PET (recycled polyester bottle piece).
Domestic recycled plastics industry suffered from blind production and disorderly competition caused by high profits, and so far, it has been in its growth period. The industry is polarized by two modes of businesses: large-scale enterprises and family workshop type enterprises. Among them, the number of large-scale enterprises is small, and the competitiveness of this kind is yet to be improved; the number of family workshop enterprises is large, but many of them have not met the industrial standard.
The access to the recycled plastics industry is not high due to simple production process and low investments on equipment. However, with higher requirements of environmental protection and standardization, as well as the softening prices in recent years that has shifted the industry from high profits to low, fewer new producers are coming and more producers are reshuffling or leaving. Therefore, the industry has changed from high concentration to decentralization.
The prices close to the historical low in 2020
The novel coronavirus in 2020 has a profound impact on the supply chain of commodity markets. Figure 1 shows the price trend of recycled plastics from 2018 to 2020.
Figure 1 Prices of recycled plastics, 2018-2020
The prices of recycled plastics have been declining year by year since 2018. In 2020, the prices of most products (such as recycled PE, recycled PP, recycled PA, and recycled PET) went in a curve of "stable - down - up - flat", while the prices of recycled ABS were “stable – down – stable”. Table 2 shows the prices and fluctuations of recycled plastics in 2020.
Output and consumption to decrease sharply
The supply of recycled plastics has slightly outnumbered the demand. In 2019, the total supply of recycled plastics in China was 12.7471 million tons, a decline of 3.0346 million tons from 2018. The apparent consumption in 2019 was 12.7043 million tons, down by 3.0696 million tons from 2018. The importing of scrap plastics has been completely forbidden since 2019.
The tightness of domestic scrap plastics supply has become the new normal, as the recycling system is not perfect. Affected by the virus, weak economic situation and stricter environmental protection policies, the recycled plastic producers are facing great challenges in 2020, with the domestic supply and demand losing their ground further. Production and consumption of recycled plastics are expected to decline sharply this year.
Policy guidance to standardize scrap plastics industry faster
The recycled plastics industry is policy-oriented, as the policies have significant impact on the supply and demand of granules, the supply of waste plastics, the standard operation of producers, and other important aspects.
The publication and implementation of normalized policies, laws and regulations, such as environmental protection inspection, all point to a fact that the government attaches great importance to the environmental quality. This will affect the production of both recycled plastics and plastic products, and then the supply and demand of recycled plastics in some areas.
The 14th Contracting Party of the Basel Convention on the Control of Transboundary Movements of Hazardous Wastes and Their Disposal from April 28 to May 10, 2019 agreed to involve plastic garbage in the object of import and export restrictions. The proposal will take effect in January 2021, indicating that China will take initiatives to keep imported plastic waste away.
The implementation of garbage classification policy has improved Chinese government’s ability of utilizing end resources and conducting harmless disposal. For example, Shanghai has commanded to classify garbage since July 2019, and Beijing has officially started garbage classification since May 2020. With these measures, the recycled volume is expected to increase, but unlikely on a large scale.
On January 19, 2020, the National Development and Reform Commission and the Ministry of Ecological Environment jointly issued the Opinions on Further Strengthening the Control of Plastic Pollution", which clearly pointed out the specific requirements and the set goals of restricting and prohibiting plastic products, and advocated the use of recycled plastics that meet the quality standards, i.e. giving support to the recycled plastics industry from the demand side.
To sum up, a growing number of waste plastics will be recycled in the future, and the supply and demand of domestic recycled plastics will also further increase. In recent years, the recycling industry is still on the track to fine-tune itself so as to improve the industry standards, so the standardization pace of the recycled plastics industry will be accelerated.