Asia – China’s ban on imports of millions of tonnes of plastic waste is causing a build-up at UK recycling plants. As a result, many businesses in the sector face chaos and financial stress in the short term, according to consultancy bureau Duff & Phelps.
The UK ‘has been trying to locate newer markets since the possibility emerged that China might shut its door’, explains Duff & Phelps’ managing director Geoff Bouchier. ‘In the absence of alternatives, those operating in a commodity market will face chaos in the short term, creating a huge strain on financial resources, with cashflow being particularly badly hit in many cases.’
According to Bouchier, this has come at a bad time for the sector which has seen tight margins for a number of years as well as cuts in government funding to local authority environmental services budgets.
‘The UK recycling industry has already admitted that a build-up of waste is inevitable, which may lead to much of the material going to landfill or incineration, adding to bottom-line pressures due to the cost of landfill taxes and the like,’ he points out.
Bouchier adds that the UK ‘won’t be alone in experiencing considerable disruption’, with an estimated 7.3 million tonnes of plastic scrap and 27 million tonnes of recovered paper going to China from Europe, Japan and the USA in 2016.
‘For many leading companies, the restrictions imposed by China have moved them to seek out new markets to send recyclable waste materials to, including Vietnam, Indonesia, Malaysia and Thailand, among others,’ says Bouchier.
‘However, other regions globally are also targeting these markets, which will mean that UK recycling businesses will need to do much more to ensure improvements in quality so that they become preferred suppliers. But that takes time and investment in a period when the industry is in short supply of both,’ it is added.