As China roils recycling markets, prices plummet and plastics pile up in Missouri

Story corrected April 27, 2018

A thick layer of mud caked the ground outside the recycling sorting plant in Columbia, where Ben Kreitner works as the city’s waste minimization coordinator.

Heavy rain from the previous night had left the surrounding area looking like a swamp, and Kreitner pointed to a damp, empty spot against the warehouse wall where they had recently stockpiled around 140 tons of plastic recycling scrap. “We didn’t have any other space,” he said.

Between November and February, the city had been caching a portion of its plastic scrap because of a lack of interested buyers. Particularly, Columbia couldn’t find anyone to bid on its plastics in categories No. 3 through No. 7, which include the types of plastic found in many household products like detergent bottles, food containers and even industry goods like car parts.

The city of about 120,000 people produces up to 16,000 tons of recycling a year — all of which it had been shipping off to bigger cities like St. Louis or to out-of-state recyclers who can process the scrap back into a reusable form for consumer and industrial products.

That was before last summer, when China announced a broad ban on recycling goods coming into the country, citing stricter environmental standards. The ban took effect in the months before a rapid escalation of trade tensions between the U.S. and China, which has brought the threat of tariffs on hundreds of exports between the two countries.

Since the ban was announced, and since it took effect on Jan. 1, global prices on recyclables have dropped drastically, and even cities like Columbia, far away from the major coastal ports that handle shipments to and from China, are feeling the impact.

For some communities, that’s meant dumping collected recyclables into landfills because no one will buy them. For others, like Columbia, it’s meant hoarding recycling scrap outside a warehouse until the market picks back up.

To Joe Pickard, chief economist for the Institute of Scrap Recycling Industries (IRSI), the ban on plastics could be an ominous sign for an already volatile recycling market. In the U.S. at least, he said, it’s been a major disincentive for cities and other municipalities to recycle.

“A lot of people don’t think about how what happens in China actually affects what you can put into your bin at home,” Pickard said.

The bigger picture
A pile of plastic sits in Columbia’s recycling sorting plant, awaiting further processing. For about three months, the city stockpiled around 140 tons of plastic scrap after its market value dropped dramatically. | Kristoffer Tigue/Missouri Business Alert

To understand just how a ban on the other side of the world could affect a small recycling operation in mid-Missouri, you need to look at the bigger picture, said Jonathan Sloan, president of Connecticut-based Canusa Hershman Recycling.

While Canusa Hershman operates out of the East Coast, it does business across the U.S. and in China, buying up post-consumer plastic and melting it back into resins that can be used by plastic manufacturers.

But when China announced it would be halting the import of 24 different kinds of post-consumer waste last year, Sloan said, it threw the entire recycling market into chaos. “It’s affecting the entire world,” he said. “This is a global marketplace.”

In 2017, China was the biggest importer of U.S. recyclables, with an estimated 31 percent of U.S. scrap exports, valued at more than $5.6 billion, going to the country, according to a recent IRSI report.

In the beginning of 2017, the U.S. was exporting about 75,000 metric tons of plastic scrap a month to China. But after the country officially announced the new restrictions in July, those numbers plummeted to 5,807 metric tons per month by December — a drop of more than 90 percent.

Image via ISRI

The result, Sloan said, was a nosedive in the price of recycling scrap, which was already suffering due to declining oil prices making new plastic more affordable. “In a lot of cases, people have gone from getting paid to paying to get rid of some recyclables,” he said.

IRSI’s Pickard said it’s not just plastic scrap that is losing value, but some metals and paper, too. In some areas, paper has dropped from $60 per ton to $10 since last year, he said, and in other areas, it has no value at all.

Nick Paul, who helps run Columbia’s recycling program, said he’s seeing the same trend in mid-Missouri. In 2015, Paul said, the city was getting bids as high as 5 cents per pound for No. 3 through No. 7 scrap plastic. Today, he said, they’re lucky to get a penny per pound for it —the lowest rate for which the city has ever sold the material.

“It’s getting harder and harder — all the recycling,” Paul said. “Cardboard has gone down quite a bit; mixed paper has gone down. The only thing that’s going up right now is tin.”

‘More focus on quality’

Eventually, Columbia found a buyer for its stockpile of plastic scrap. In February, ReVital Polymers, a plastic processor in Sarnia, Ontario, bought all seven loads. “Out of the blue, they called us,” Paul said. “We didn’t know nothing about them.”

Keith Bechard, with ReVital Plastics, said their company collects recycling scrap from all across the Midwest. Since China’s ban, he said, plastic scrap has been much more available in the region.

Word may be spreading. In March, another buyer from North Carolina reached out to Columbia for its plastic. For Paul, it was a sign that the market was at least starting to recover from the turbulence caused by China’s new restrictions.

Sloan said he also believes the market will recover, but that doesn’t mean the marketplace will look the same when the smoke clears. Scrap has already started going to other countries like Vietnam, he said, but with pricing so fickle, certain recycling goods may simply become less valuable.

Pickard said the ban is most likely going to force U.S. industries — particularly on the West Coast, where they’re more dependent on shipping recyclables overseas — to further invest in sorting technology and other methods to create cleaner products. “I think we’re going to see more and more focus on quality,” he said.

Sloan agrees. If U.S. recyclers want China to start buying their post-consumer scrap again, he said, they need to do a better job sorting material, like better separating plastic from metal and paper. This has become particularly difficult as cities across the U.S. adopt single-sort methods, he said, which produce dirtier products.

For Missouri, investing in cleaner recycling could mean hiring more people to work on sort lines, or funding more public education efforts to teach proper recycling habits, said Missouri Recycling Association Executive Director Angie Gehlert.

So far, Gehlert said, the impacts of the China ban haven’t been harsh enough to force any major changes in the state. But somewhere down the line, she said, Missouri should start thinking about updating its sorting methods. “We need to do a better job recycling,” she said.

As for Columbia, Paul said, the city isn’t planning on making new investments anytime soon, so long as they have space for storage and customers are bidding on their products.

“We’re going to keep doing what we’re doing, and hopefully we’ll ride out the storm,” he said. “We’re selling stuff right now. Not as fast as we’d like, but we are selling it.”

Correction: This story was updated to reflect a historic price for scrap paper of $60 per ton. A previous version of the story incorrectly stated the price was $60 per pound.

Missouri Business Alert’s sustainability coverage is funded in part by the Mid-Missouri Solid Waste Management District.

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