China’s import ban on plastic waste will benefit producers of polyethylene

China’s impending ban of certain scrap imports, including a plethora of plastic waste, for recycling will have a negative economic impact on the United States, according to the Institute of Scrap Recycling Industries (ISRI; Washington, DC). But it’s a positive development for producers of polyethylene (PE), according to an article published yesterday by Reuters.

“China’s already soaring plastic demand may rise even further as the government plans to ban waste-plastic imports by the end of this year,” writes Reuters. “To make up for the loss of recycled plastic, petrochemical producers and exporters to China from the Middle East, South Korea, Thailand and Singapore are expected to receive more orders for products including polyethylene.”

China is the world’s top importer of rubbish. It received 7.3 million tonnes of waste plastics in 2016, more than half of the world’s discarded plastic, according to Reuters. Citing data from IHS Markit, the news organization notes that PE made up about 2.53 million tonnes of the total last year, and that is expected to fall to 1.7 million to 1.8 million tonnes this year. Yet, demand for PE in China is forecast to grow by 6.6% from 2017 to 2018, according to data from IHS Markit. Suppliers of virgin PE have done the math, and are preparing to profit from the gap in supply and demand.

China’s ban has a dual purpose—to shore up the domestic materials recovery infrastructure and reduce pollution, according to Resource Recyling. In its filing with the World Trade Organization on July 18, China’s environmental ministry noted that “large amounts of dirty wastes or even hazardous wastes are mixed in the solid waste that can be used as raw materials,” causing serious pollution of the environment and raising health concerns.

In the comments it filed with the WTO in response to the ban, ISRI noted that it “supports the efforts of the Chinese government to improve environmental protection and standards within its domestic recycling infrastructure, [but] disagrees that a ban on the import of specification-grade scrap materials will help with those efforts.”