Life is back to normal in mainland China; the country is now COVID-free with no masks seen in the streets and all workers back at their factories. However, production levels are still lower than usual, affected by the trade war and by China’s traditional outlet countries continuing to be badly affected by the pandemic.
This situation has led to low demand for virgin pellets. Despite a 25% increase in virgin PE prices since the end of June, the prices offered for r-PE granules remain at historically low levels. As a result, more than 50% of recycling factories in South East Asia have been stopping production, with more to come because of stricter import regulations in China for recycled pellets.
As mentioned in our Chairman’s report, from September 1 Chinese customs have been imposing penalties of between RMB 500,000 (US$ 75,000) and RMB 5 million (US$ 750,000) per cargo for violating rules regarding the “three uniformities” of colour, size and packaging. A new standard for these uniformities, currently being drafted and to come into force on January 1 2021, will set even stricter conditions and make it increasingly complicated for China’s r-pellet buyers to import them.
In Eastern Europe, the news is brighter from packaging-related segments as the market is being supported more and more by mandated recycled content regulations and brand commitments, which are helping to bring about a price decoupling between virgin and recycled.
*A new member of the BIR Plastics Committee, Mr Craipeau’s business operates r-plastic factories in Indonesia and Poland.
Greencore Resources Limited (CHN), Board Member of the BIR Plastics Committee