China’s import ban on waste, known as the “Sword Action” initiative, is likely to increase the use of virgin plastics in the country in the coming years, according to a senior research analyst at Wood Mackenzie.
Commenting on the ban, which came into effect in January 2018, Ashish Chitalia predicts that a reduction in recycling volumes in China will strengthen demand and prices for virgin resin.
“We anticipate double-digit domestic demand growth of 10% in 2018,” said the research analyst.
While the ban will help reduce locally accumulated waste from Chinese consumption, the volumes are smaller than imported waste.
“The net effect is that China is expected to consume a higher percentage of virgin plastics in the coming years,” he noted.
This, according to Chitalia, could lead to higher prices in the region, as operating rates for Chinese assets increase. On the other hand, the United States and Europe are improving their capacity to recycle resin.
Since polypropylene (PP) prices in North America and Europe are higher than in Asia, domestic recyclers will try to keep the material in the region for better yields.
“With new polyethylene supply volumes affecting the global balance, more volumes from domestic recyclers could affect the price even more,” added the Wood Mackenzie expert.
