Amid Trade Feud, Recycling Is in Danger of Landing on Trash Pile
Chinese trade barriers are compounding the problems faced by companies that recycle scrap paper, plastic and metal.
The U.S. generates more recyclable waste than any other country. China is the top customer for that scrap. China bought two-thirds of the used paper and half the scrap aluminum that the U.S. sold overseas last year, according to the Institute of Scrap Recycling Industries Inc., part of an overall haul of 13 million metric tons of cast-off American packaging, periodicals and shredded car bodies.
China’s 25% tariff on U.S. scrap aluminum would make reusable metal from other countries more appealing. China also recently imposed tougher quality standards on other imported recyclables, sending the U.S. recycling industry into a tailspin.
Prices for discarded newspaper, office paper and magazines have fallen to zero in the U.S. Inventories of paper, crushed milk jugs and old cardboard are swelling. No other country wants to buy as much U.S. junk as China had during the past several years.
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China imposed a 0.5% waste limit on imported recyclables from any country at the beginning of the year. That is roughly 9 pounds of waste in an 1,850-pound bale of paper. As exporters reacted to China’s new quality standards, U.S. exports of scrap plastic to China dropped from October to January by 80% to 5,000 metric tons.
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The 25% tariff on U.S. scrap aluminum that Chinese officials imposed in retaliation for duties the Trump administration placed on foreign-made steel and aluminum in March has pushed down prices for mixed aluminum scrap by about 15% in the past month, to 60 cents a pound. That effectively wipes out the profit margin for processors and brokers that sell scrap aluminum to China.
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U.S. aluminum prices initially weakened after the new 10% tariff on imported metal because of oversupply concerns. Prices climbed this week after the U.S. government sanctioned a major Russian aluminum supplier. U.S. aluminum prices are up about 6% since March 1.
If China buys less scrap aluminum, U.S. dealers will likely try to sell more domestically to processors that melt scrap into new aluminum. That could drive down demand for raw aluminum from domestic smelters that have benefited the most from the tariff. But finding a new home in the U.S. for aluminum scrap dislocated from China will require aluminum processors to invest in more scrap-melting capacity, said Bruce Keizler, a vice president for SA Recycling LLC, a California-based processor and exporter of scrap aluminum to China.
https://www.wsj.com/articles/amid-trade-feud-recycling-is-in-danger-of-landing-on-trash-pile-1523525401
