Dive Brief:

• Analysis from Steven Wong, executive president of the China Scrap Plastics Association, shows a global oil glut and shrinking Chinese economy are two main factors behind ongoing challenges in the Chinese recovery market.
• Wong reports that recovered plastic imports to China have dropped by 5% from last year and prices for plastics numbered 3-7 have dropped by 30-50% as compared to March.
• CDs, DVDs, polycarbonate bottles, high-grade polyethylene film, and high-yield agricultural scraps are selling, though demand on contaminated scraps remains low amid talk of increased government regulations.

Dive Insight:

Many experts agree that a main issue in recycling markets is a shift in China's economy from rapid expansion to more sustainable growth. Wong predicts little change in the overcapacity situation as technology efficiencies create more output and smaller factories are replaced with larger ones. As Patty Moore, president of Moore Recycling Associates, described in a recent article, China's past economic growth has also created more source material within the country and reduced the need for imports.

Another factor is the 2013 "Operation Green Fence" which led to more aggressive enforcement of existing regulations on contaminated material coming in from other countries. Chinese buyers are understandably less interested in dealing with the cleanup costs for this material, which has in turn increased processing costs for U.S. recyclers and reduced margins for all involved. 

For these reasons and others, Wong writes that Southeast Asian countries have become more competitive. Unless the levels of supply and demand can come into balance, this could create an opening for developing countries that were once in the same position as China decades ago. What this will all mean for future environmental standards, expected material quality, and commodity prices remains to be seen.