How will the ban on the import of solid waste affect related industries?

On November 25, the Ministry of Ecology and Environment, the Ministry of Commerce, the National Development and Reform Commission, and the General Administration of Customs jointly issued the "Announcement on the Comprehensive Ban on Import of Solid Waste" (hereinafter referred to as the "Announcement"). The "Announcement" stipulates that the import of solid waste by any means will be prohibited from January 1, 2020; the Ministry of Ecology and Environment will stop accepting applications for the approval of import permits for importing solid waste that can be used as raw materials. The licenses issued in 2020 should be used within the validity period of 2020 stated in the certificate, and expire automatically after the expiry date. The promulgation of the "Announcement" marks that starting from 2021, China will fully enter the era of banning the import of solid waste.

China’s solid waste imports mainly include waste plastics, waste paper, scrap metal, etc. In recent years, with the comprehensive utilization of resources by enterprises and the increasing awareness of reducing costs and increasing efficiency, the use of renewable resources has gradually increased, but the recovery rate of domestic renewable resources And product quality, price, etc. do not have sufficient advantages. Therefore, the import of solid waste has once become a good raw material supplement for these industries. This time the total ban on solid waste will reduce the import volume to zero. It is expected that this will have various impacts on related industries. There are different.

1. Waste plastics: the impact has been digested, and the local regeneration inherits the mission

For a long time, imported waste plastics have played an important role in the raw material link of China's recycled plastics industry as a supplementary means to make up for the shortage of domestic waste plastics. However, environmental and economic problems frequently occur in the import of waste plastics in the long-term operation. In recent years, the "ban on waste" has become the mainstream trend.

It can be seen from Figure 1 that before 2017, China’s annual imports of waste plastics were more than 7 million tons. In 2017, the General Office of the State Council issued a “waste ban”, and the import volume of waste plastics dropped sharply. Only a small amount of imports in 2018-2019 , The import volume will drop to zero in 2020. In fact, the impact of the ban on the import of solid waste in the plastics industry has been digested. On the one hand, China's domestic renewable resource industry has developed rapidly, filling part of the import gap; on the other hand, the import of recycled plastic particles is not banned, and the increase in imported recycled plastic particles has made up for the decline in waste plastic imports to a certain extent. In addition, the increase in virgin material production capacity has also replaced part of the recycled material.

2. Waste paper: the gap in the supply of waste paper increases, and the cost of papermaking may rise

Waste paper accounts for about 95% of the raw material ratio of packaging paper in China. Since China’s waste paper recycling rate is only 50%, there is still a big gap compared with the 80% recycling rate of some developed countries. At the same time, China’s waste paper ( (Hereinafter referred to as "national waste") part of it cannot be recycled after consumption, and considering the loss of papermaking technology, a greater part of China’s waste paper comes from imports.

In terms of quality, compared with domestic waste paper, the wood fiber content of imported waste paper is higher than that of domestic waste paper. Due to the mixed raw materials for papermaking in our country, the wood fiber content of waste paper is low, and it is difficult to produce high-grade paper and cardboard. Moreover, due to the imperfect recycling system of waste materials in my country and the relatively large number of waste paper purchase links, the price of domestic waste paper is not much different from that of imported waste paper. Therefore, for companies, the willingness to use imported waste paper is stronger than that of domestic waste paper. of. According to statistics from Zhuo Chuang Information, China’s waste paper consumption in 2019 was 66.888 million tons, of which 10.363 million tons were imported, and the import dependence was 15%, and the import dependence was as high as 25%-40% in the years before 2018.

In 2020, China's waste paper imports will drop by one step. From January to October, the import volume is 5.098 million tons. From 2021, this number will drop to zero. This part of the loss will have to be resolved through the following channels:

First, increase imports of waste paper pulp. Judging from the current situation, domestic paper companies have increased their imports of waste paper pulp. In 2019, China imported 923,000 tons of waste paper pulp, an increase of 204.6% from 2018. From January to October 2020, a total of 1.667 million tons were imported. It is estimated that the annual import volume will be about 2 million tons, which is equivalent to about 2.2 million tons of imported waste paper, but it is still far from making up for the waste paper supply gap caused by waste ban. In addition, foreign waste paper pulp production capacity is limited, and there are currently no domestic waste paper import standards. The import of waste paper pulp still has certain limitations, and the substantial increase in China’s waste paper pulp imports does not rule out the increase in import prices and papermaking. The possibility of cost increase.

Second, improve the waste paper recycling system as soon as possible to improve the quality of domestic waste paper. At present, the recovery rate of waste paper in my country is around 50%, while the recovery rate of waste paper in many developed countries is above 80%. The recovery rate of waste paper in my country is far below the world average. If we want to reduce our dependence on imported waste paper, we must improve China’s waste paper recycling system as soon as possible and improve the quality of domestic waste paper. However, in the short term, the amount of imported waste paper has shrunk sharply, domestic raw materials will be further insufficiently supplied, and the domestic waste paper gap will further expand. The demand for alternative national waste will increase, which may push up the price of national waste.

Third, increase imports of finished paper. After the import of foreign waste was banned, the supply gap of waste paper was enlarged, and the import of finished paper was also one of the ways to shift pressure. According to data from the General Administration of Customs, from January to October 2020, domestic imports of corrugated paper were 3.192 million tons, an increase of 180.77% year-on-year; imports of containerboard paper were 3.24 million tons, an increase of 89.67% year-on-year. It is expected that after the comprehensive ban on waste, the import volume of packaging base paper will see a substantial increase next year, especially the finished paper of better quality.

3. Scrap metal: policy hedge with limited impact

Scrap steel is a recyclable ferrite resource, mainly used for steel smelting in a short process. Judging from the history of the development of the steel industry in the United States, the European Union, and Japan, when the output of crude steel reaches a certain level, the proportion of short-process steelmaking with scrap steel as the main raw material is increasing. This is the general law of the development of the steel industry. In addition, from a production point of view, the short process based on scrap steel is more energy-efficient, more environmentally friendly, and more cost-effective than the long process based on blast furnaces, and it also has an obvious substitute for iron ore.

Since 2017, the country has continuously tightened its scrap import policy, resulting in a sharp decline in domestic scrap imports (as shown in Figure 3). However, the highest import volume of scrap steel in recent years is only more than 2 million tons, which is not worth mentioning compared with China’s scrap steel resource output of more than 200 million tons. Therefore, the impact of scrap ban on scrap steel is relatively limited. In addition, at this stage, many units in the industry have joined together to accelerate the formulation and implementation of the national standard for "Recycled Steel Raw Materials". The national standard "Recycled Steel Raw Materials" classifies and regulates high-quality recycled steel raw materials, and prohibits low-grade, The import of scrap steel with dangerous goods and pollutants can standardize and improve the level of domestic renewable resource recycling and make full use of domestic and international high-quality renewable resources. The possibility of liberalizing the import of high-quality steel scrap will not be ruled out in the later period

Regarding scrap copper , in October 2020, the state adjusted the import policy of recycled copper, stipulating that from November 1, 2020, it shall comply with "Recycled Brass Raw Materials" (GB/T 38470-2019) and "Recycled Copper Raw Materials" (GB/ T 38471-2019), "Recycled Cast Aluminum Alloy Raw Materials" (GB/T 38472-2019) standard recycled brass raw materials, recycled copper raw materials and recycled cast aluminum alloy raw materials are not solid waste and can be freely imported. At the same time, we see that the amount of copper scrap imported by my country is relatively limited. If the above-mentioned recycled copper raw materials are removed, the impact of the ban on scrap copper is extremely limited.

The impact of the ban on scrap aluminum is relatively small. Since 2016, China’s annual average import volume of scrap aluminum has only been about 2 million tons, which is limited compared with domestic primary aluminum production. In the past, the reason why enterprises would purchase imported aluminum scrap was that they needed aluminum shredded material, but now the domestic shredded material is relatively increasing, and some enterprises are no longer willing to use imported scrap aluminum. Due to the slight difference in alloy composition and hardness between American and Japanese standards, some companies will respond that foreign aluminum scrap is harder, but it is not suitable for further processing. In addition, the prohibition of waste is also beneficial to the self-sufficient development of the domestic aluminum industry. The influx of foreign waste, domestic waste will be in relative surplus state, will undoubtedly suppress waste aluminum grid. my country is now also in the scrap cycle, which is bound to increase the amount of domestic aluminum scrap. The ban on the import of scrap aluminum will make the digestion of scrap aluminum in our country faster, so a comprehensive ban on scrap will support the sound development of the domestic market.

On the whole, the comprehensive ban on waste from 2021 will have little impact on China’s plastics and metal industries, but it will have a certain impact on the paper industry. The cancellation of waste paper imports can be compensated by importing waste paper pulp, imported finished paper, and increasing national waste recycling, but these measures are likely to increase the production costs of paper companies to a certain extent. However, from a positive perspective, a comprehensive ban on waste will promote the "two networks" of my country’s recycling of renewable resources and waste sorting and recycling, improve the waste sorting system, and take advantage of the wind of waste sorting to form a relatively complete network for recycling and utilization of renewable resources to improve recycling. Resource recovery efficiency, strengthen the development of the entire industry chain.