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Happy Anniversary, National Sword

Two years in, has the crisis started to abate?

This February marks the second anniversary of the National Sword campaign. Launched to attack smuggling, it was largely unnoticed in the United States. At WasteExpo in the spring of 2017, National Sword was mentioned in passing as something that could have an impact on plastics recycling. 

Five months later, in July, China’s government announced it was planning to ban imports of 24 types of recyclables. Mixed paper and mixed plastics were among the banned items. A draconian contamination limit of 0.3 percent would be applied to imported recyclables. This was a far more serious move. Eventually though, the government raised the contamination limit to 0.5 percent, still a significant barrier even for commercially generated recyclables.   

Mixed paper and mixed plastics are the heart of residential recycling programs. Panic hit the recycling community. Some programs were abandoned. Some recyclables were (and still are) sent to disposal facilities. Processors began demanding contract changes in order to avoid massive losses as they searched for new markets for those two mixed recyclables. In some cases, they were successful as their local government partners realized that it was better to share the pain than to see their processors bleed without relief.

Legislators also got into the act but did little harm in 2018. This year might be different as states consider a number of responses. Laws that encourage the development of increased domestic demand will be welcomed. Laws that punish the recycling industry or impose unrealistic requirements on recycling won’t be.

In one sense, this latest crisis is nothing new. Recycling markets have had six major downturns since the explosion of curbside programs in the late '80s. I’ve lost count of the number of “how do we save recycling?” meetings and conferences I have attended in my 40-some years in recycling. Twenty-one years ago, I was at the White House Conference on Recycling, called in response to an earlier crisis.

Just as happened in the first big crisis in 1990, entrepreneurs are smelling opportunity. Seventeen paper mills have announced expanded capacity for secondary fiber. Seven of those have specifically said they want to use residential mixed paper as a feedstock. Other expansions are rumored but not yet announced. Of course, it takes a while to site, permit and build a new facility or even to convert an existing machine from printed to packaging grade paper. But I expect that within two years, markets for recycled paper will be humming. 

Mixed plastics haven’t fared as well. However, the Chinese government has made it clear it will accept pellets or resin made from recycled plastics. While exports of recycled plastic to China have all but disappeared, pellet imports have gone up. The government seems to be happy with recycled plastics as long as they are processed elsewhere. In addition, new processing capacity in the United States has been announced, but none have specified that they want mixed plastics. 

The biggest uncertainty has been the willingness of the Chinese government to listen to the pleas of paper mills that are dependent on the strong fibers in used American-made paper boxes. Chinese manufacturers who need corrugated boxes in order to ship their products overseas have also voiced their concerns. At first, it appeared the government was indifferent. Now, it seems the government has found a way to ensure the mills will have the raw material supply they need so that manufacturers can have the boxes they need. Import permits for 2019 are up. However, a weakening Chinese economy is not helping old corrugated containers prices.

Clearly, American recyclers need to learn from this lesson. Traditional scrap and waste paper dealers know markets go up and down. They plan for bad times. Publicly-traded companies that operate materials recovery facilities seem to suffer from amnesia. They need to start planning for hard times. While they are making strides toward this in their new contract models, the test will come when markets are hot again. Will they remember the past or throw caution to the wind? Curbside programs need to start thinking long term, not short term. Focus on five-, 10- or 15-year market averages, not the price of the day.

I remain an optimist. Markets will rebound. Our domestic recycling industry will expand. But I wonder, two or three years from now, will we remember this crisis, or will we get giddy and be unprepared for the next market collapse?

*Coverage of the National Sword and the ban in the print, television and online media has not been very good. However, the trade press has proved to be a reliable source of solid data. I relied on the timeline of events published by Resource Recycling when writing this column.

Chaz Miller is a longtime veteran of the waste and recycling industry. He can be reached at chazmiller9@gmail.com.

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