China no longer wants to receive garbage from other countries. As a result, enhanced import inspections by Chinese customs officials have led to severe recycling market confusion worldwide, especially for shippers of recovered paper and plastics.

China’s new president, Xi Jinping, says that checking containers of recyclables for waste must be a top priority for customs officials. Existing regulations limit the amount of non-recyclable materials in bales, but enforcement of these rules has been lax. According to many sources, this laxity is going away.

Inspectors are now operating under a new program, “Operation Green Fence,” and are reportedly inspecting nearly every container. A special team of inspection officials has been created to attack the problem of high levels of waste in bales imported from Europe, North America and elsewhere. Because inspections slow down port operations, shippers are now seeing rising demurrage costs as they pay ports to hold containers until they are inspected.

Definitive assessments of the market impact of enhanced inspections are not available, with much of the current analysis relying on rumor. It is known, however, that a number of containers have been rejected in China, especially for mixed paper and mixed rigid plastics scrap.

It is also known that several large exporters, such as America Chung Nam, have increased their container inspections here in the U.S., before the containers are delivered to the port for shipping. Resource Recycling has obtained a “Supplier Letter of Awareness” from ACN, the largest exporter of recovered paper from the U.S., which details numerous “items of concern” including:

  • Zero tolerance for banned items, such as e-scrap, textiles, green waste, animal/human waste, insects, animals, food waste, medical waste, etc.
  • Prohibitive levels must be maintained below 1.5 percent on a bale-by-bale basis. Common examples include wood, metal, glass and plastic.
  • Material shipped as “waste paper” but incorrectly declared is cause for customs penalty, including shipment of convertible items such as rolls, reels, boxed or plastic-wrapped paper, cut sheets, etc. Wire baling is the only acceptable form of packaging for “waste paper.”
  • Wet material (exceeding 12 percent “air-dry” standard) creates an environment for degradation where material can pick up dirt, inviting additional scrutiny, regardless of prohibitive level.
  • Loading photos for each container must be sent on or before the cut-off date for each booking, so that they may be reviewed in a timely manner. Shipment will be suspended and potentially returned for any failure to do so.
  • Make sure each container is clear of foreign matter/debris before loading (items such as those for blocking/bracing and items such as moisture absorbent gel packs left by previous shipper).

Some recycling market analysts contend that this changing situation in China is the key reason why prices for some recovered materials in the U.S, have declined over the past few weeks. Several recovered paper shippers say they are more and more unwilling to ship to China, and they are seeking domestic orders instead. They contend this has resulted in domestic mills being able to push prices down by about $10 per ton. Other recycling industry players report the same activity in the plastics market.

And demand in China has slumped. For example, global shipments of recovered paper to China in the first two months of this year, at 5.1 million tons, were down 18.4 percent in comparison to the same period in 2012.

Several observers have offered ideas on what may now happen under Operation Green Fence. For one, some plastics shippers say their Chinese buyers will begin pushing for washed or granulated plastics and no longer seek bales of mixed material. And some market players feel Vietnamese buyers will jump in the void by buying bales of paper or plastics containing high levels of contaminants. These buyers will then manually sort the bales, remove the garbage and rebale the fibers or plastics before shipping the containers to China.

One likely effect of the Chinese bale inspection program will be revised bale specifications by U.S. consumers of fibers and plastics. This was a topic at this week’s annual convention of the Institute of Scrap Recycling Industries in Orlando. An executive of a domestic recycled paper producer said his company was likely to tighten the specifications soon for the bulk grades consumed at the firm’s mills. “We’re pleased that the Chinese government has taken this action,” he said. And a large plastics reclaimer said his company had already started to reject bales that previously, before the Chinese crackdown, it would have been forced to buy.