Several trends are negatively affecting North American export markets for recovered materials, including what appears to be the return of China’s Green Fence customs initiative.
The surprise move by the Chinese government to devalue its currency – the yuan – has led to consternation by North American recycling shippers. The devaluation of the yuan makes the U.S. dollar even stronger. Thus, while the government action will make Chinese goods more attractive worldwide, it means that plastic recovered in the U.S. and Canada is more expensive than before devaluation, because such goods are dollar-denominated.
The currency action will spur added Chinese initiatives to acquire more scrap material internally, rather than relying so heavily on North American and European suppliers. Recycling market players fear that additional devaluation steps will further erode import demand by Chinese buyers and will push foreign-trade prices lower.
A second concern of many North American shippers is the resurgence in restrictive actions by Chinese custom inspectors. Some U.S. shippers of secondary materials say they are experiencing enhanced inspections of their loads as the Chinese government once again tightens controls to reduce or eliminate the likelihood of contaminated loads being received. Some U.S. exporters are calling the governmental action “Green Fence II.”
On the positive side, these same exporters say overseas shipping costs are at rock-bottom levels. According to ocean-freight analysts, these attractive container shipping rates reflect the low cost of fuel for shipping lines as well as the impact of a rate war among the major shipping lines.