China ban on waste imports leads to piles of paper abroad, surging prices in China

Nine Dragons Paper (Holdings)

28/09/2017 06:00

* Hong Kong hard hit as mountains of waste paper pile up 
    * Online retailers like Amazon face cardboard price rises 
    * Some China paper mills report doubling of paper prices 
    * Maersk says waste shipments into China have declined 
 
    By Pak Yiu 
    HONG KONG, Sept 28 (Reuters) - Huge mountains of old 
newspapers, cardboard and office scrap paper are piling up on 
Hong Kong's docks and its waste-paper collection sites are at 
bursting point. A flotilla of cargo ships laden with paper meant 
for recycling has been stuck for weeks in local waters.     
    The city's system for dealing with its paper waste has been 
failing since China in July imposed a ban on imports of 24 types 
of rubbish, as part of a campaign against "foreign garbage" and 
environmental pollution, including unsorted scrap 
paper. urn:newsml:reuters.com:*:nL5N1K94KO 
    Each day in Hong Kong, 2,500 tons of fresh paper waste is 
piling up with no place to go, according to Jacky Lau, director 
of Hong Kong's main recycling business association.  
    "We started our business 50 years ago and we have never 
experienced such a crisis," Lau said, saying the industry was 
losing HK$2.7 million ($346,000) daily. 
    Traditional suppliers of waste paper to China include 
Europe, the U.S., Hong Kong, Japan and Southeast Asia, according 
to industry associations. 
    While China indicates it will impose an outright ban on 
mixed waste paper, a final decision isn't expected until 
November. For now, authorities have tightened requirements on 
waste paper to markedly cut back on allowed levels of 
contaminants, making it difficult for many recyclers to meet.  
     
    PAPER PRICE SURGE   
    As a result of the impasse, the manager of a major paper 
mill in southern China told Reuters the price of finished paper 
had doubled to 6,000 yuan ($902) per ton from 3,000 yuan as 
supplies of the raw material shrink. 
    That is hurting everyone from e-commerce sites to exporters. 
    Alibaba's  BABA.N  upcoming "Singles' Day online shopping 
festival on November 11, which posted more than 120 billion yuan 
 ($18.1 billion) in sales last year, is heavily reliant on such 
packaging. 
    The U.K.'s Environmental Services Association said the 
restrictions would ripple beyond China. 
    "Online retailers like Amazon  AMZN.O  still need cardboard 
boxes and most comes from China," said Jakob Rindegren, the 
recycling policy adviser of the U.K. association. 
    One corrugated box retailer on the online shopping site 
Taobao reached by Reuters, said the price of cardboard boxes had 
nearly doubled since the end of August to 8.8 yuan ($1.33) each. 
           
    Thirty-one billion packages were delivered in China in 2016, 
 according to another online retailer JD.com in a statement. The 
company said it was seeking to markedly cut back on cardboard 
usage on environmental grounds. 
    Alibaba didn't immediately respond with a comment. 
    The bans, which also include other forms of waste material - 
plastic, tyres and glass - have also had a wider impact on waste 
shipments to China. 
    Maersk Line  APMOLM.UL , the world's largest shipper of 
containers, said it has already seen a drop in waste cargo into 
China.  
    "While it's too early to understand the full impact, we do 
see an impact on volumes of waste imports into China. However we 
expect some measure of rebound as exporters adapt to the new 
regulations," said a Maersk spokeswoman in Hong Kong. 
    Maersk declined to give further details on its China waste 
shipments.     
    In a customer notice on Sept. 26 German container shipper 
Hapag-Lloyd, the world's fifth largest container line, said it 
would stop accepting cargoes of scrap plastic and waste paper 
from Europe, the U.S. and Asia that are due to arrive at Chinese 
ports after Dec. 31. Hapag-Lloyd did not immediately respond to 
a request for comment. 
     ELDERLY PAPER COLLECTORS 
     For now, as Hong Kong's paper mountains grow daily, many of 
the city's invariably elderly paper collectors say they've seen 
a vital source of income halve in some cases, with many 
recyclers no longer accepting scrap as the uncertainty lingers. 
    "There's not much more I can do if I don't have enough 
income," said an old lady in her 80s lugging a cart stacked with 
cardboard in the gritty Sham Shui Po district.  
    "I just have to save here and there to be able to pay my 
rent ... It's very tough," said the lady who gave her name as 
Lam Por Por (Granny Lam).    
    China, the world's largest paper recycler, produced some 
63.3 million tons of waste paper pulp in 2016, according to the 
China Paper Association (CPA), with some 24 percent produced 
from imported waste paper. 
    Cheung Yan, the chairperson of Nine Dragons Paper Holdings 
 2689.HK , one of China's largest packaging and paper producers, 
said at a recent press conference that the price of recycled 
paper "wouldn't be cheap" in the long term.  
    She didn't give specifics except to say labour costs had 
also risen, and that the firm would increase the collection of 
waste paper within China given the slowdown in waste imports. 
    The ESA in the U.K. said around 1.1 million tonnes a year of 
mixed paper - newspaper, magazines and cardboard - is exported 
to China out of the 8 million tonnes of waste paper collected in 
Britain. Exporters have now been seeking new markets such as 
Europe and Southeast Asia given the uncertainty, according to 
the ESA's Rindegren. 
    "In terms of cracking down on polluting activities we 
support China but the way it has done it appears quite heavy 
handed. Some companies are export arms of Chinese paper mills 
and they will be hit as well," he said. 
    In Japan, a waste paper wholesaler union in the Kanto region 
encompassing Tokyo, confirmed to Reuters that they had skipped 
September's export contract of waste paper to China, the first 
time that had happened in several years, because the Chinese 
were holding off buying.  
($1 = 6.6500 Chinese yuan renminbi) 
 
 (Additional reporting by Christine Chan, Oscar Chan in Hong 
Kong; Sam Nussey in Tokyo; Cate Cadell in Beijing and the 
Beijing Newsroom; Writing by James Pomfret; Editing by Martin 
Howell) 
 ((james.pomfret@thomsonreuters.com; +852-28436390; Reuters 
Messaging: james.pomfret.thomsonreuters.com@reuters.net)) 
 
Keywords: CHINA HONGKONG/PAPERRECYCLING