Quarterly Report – February 2021

Before December 31 2020, markets were very active in most parts of Asia. Demand is still high for quality recyclables in South and South East Asia. However, two main issues started to disrupt the markets at the end of last year and the beginning of 2021, namely sky-rocketing shipping costs and implementation of Basel Convention amendments. 

Container rates for shipping to Asia are at unprecedented highs, with European exporters now paying up to twice the regular amount. It is even worse for shipments from Asia to Europe, with container exports up to four times more expensive than in normal times. As a result, there are virtually no exports of flakes or pellets from Asia to Europe these days.

Since the implementation of the Basel Convention amendments on January 1 this year Western exporters have been left with few options and are now basically limited to exports to OECD countries, with Turkey the only viable market for most lower-grade materials.

High-grade materials, which in theory can still go to non-OECD countries (albeit with more paperwork involved), are attracting higher premiums in their country of origin where demand is also increasing and where there is less administrative and logistical hassle. Thus, local and regional sales are increasing rather than wider exports. 

Demand in Asia is strong as, in early February, India overturned its previous ban and reopened its doors to (clean) plastic scrap for a period of 18 months; this includes baled LDPE film still limited to Special Economic Zones (SEZs) and Export Oriented Units (EOUs).

Malaysia has also clarified its position regarding the Basel Convention and has eased import restrictions. In June, the country will introduce an imported waste tax of MYR 20 per tonne (rather than the previously proposed MYR 50). Malaysia is also looking at legalizing currently-illegal factories through possible relocation to Eco Parks, etc. 

But despite these loosening import restrictions, a major drop in exports to Asia is foreseen for at least the first two quarters of 2021, mostly due to logistics constraints and Basel Convention-related restrictions which still need additional clarification, especially from European countries.