Analysis of the Impact of China's Waste Paper Recycling Policy in 2018

Since 2017, China's waste paper import related policies have been launched one after another, and the control of waste paper imports has become stricter. In December 2017, the Ministry of Environmental Protection issued the “Regulations on the Environmental Protection of Imported Waste Papers” and the “Regulations on Environmental Protection of Imported Solid Wastes as Raw Materials” to regulate the import of waste paper. Compared with the old regulations, the restrictions on the import of waste paper are more stringent: 1) the paper enterprises with a limit of 50,000 tons or more are eligible to apply for an external waste; and 2) the qualification for the waste import of waste paper traders is cancelled, and it will be implemented from the date of publication. .

On December 29, 2017, the Ministry of Environmental Protection issued the “Environmental Control Standard for Solid Wastes Imported as Raw Materials – Waste Paper or Paperboard”. Compared with the current implementation version, the biggest change is the import waste paper with a contamination rate of 1.5%. Dropped to 0.5%. And it will be implemented as of March 1, 2018.

With the strictening of the relevant policies on the import of waste paper, since the second half of 2017, the amount of foreign waste imports has fallen sharply year-on-year. The total amount of approval for the first nine batches of waste paper in 2018 was 901,560 tons, down 67% from 2017, and the number of companies allocated was 85, down 45.86% year-on-year. Due to the high dependence of overseas countries on China's import of waste paper, driven by the weakening of demand, some of the substandard foreign waste prices fell.

Second, the import volume has dropped significantly

In 2017, the Ministry of Environmental Protection issued the “Environmental Control Standard for Importing Solid Wastes as Raw Materials—Waste Paper or Paperboard”. Since its official implementation in March 2018, it has required the import waste paper to have a tolerance of 0.5% or less. Quality control standards. Subsequently, in May 2018, the State General Administration of Customs issued a special document "Notice of the General Administration of Customs on the implementation of risk warning measures for the import of US waste materials", and the US waste import supervision was again overweight to implement the implementation of waste materials from the United States. 100% out of the box, 100% inspection and quarantine of the "General Administration of Customs".

At present, China's waste paper imports mainly come from the United States, Europe and Japan. Among them, the United States is the largest source of imported waste paper, and the total amount of imported waste paper accounts for more than 30%. At present, high-quality external waste (such as supermarket-grade OCC) has a miscellaneous rate of 0.7%. With the implementation of the policy, most of the external waste will not be imported, and the US import will be greatly affected. According to data released by the General Administration of Customs, in the first half of 2018, China's waste paper imports amounted to 7.1 million tons, down 52.2% from the same period in 2017.

Third, domestic prices continue to rise

In China, a large part of the waste used in papermaking comes from imports. According to the statistics of the Paper Industry Association, the consumption of waste paper pulp in China was 63.02 million tons in 2017, of which 20.63 million tons were from imported waste paper pulp, and the dependence was 32.7%. With the implementation of stringent foreign waste import standards, the sharp decline in the import of waste paper has led to a shortage of domestic raw material supply, prompting the market to form a waste paper supply gap, and the country's alternative demand for waste has risen, pushing the country's waste price to rise. According to the statistics of the Waste Paper Branch of China Recycling Resources Recycling Association, the average daily waste paper price index was 2343 from January to April 2018, while the average daily waste paper price index was 1656 in the first four months of last year, up 41.4% year-on-year.

Fourth, the leading enterprises benefit

The leaders of the Party Central Committee attach great importance to the import of foreign garbage, and the law enforcement of environmental protection is becoming more and more strict. The examination and approval of the total amount of imported waste paper has become more stringent, from 54.43 million tons in 2015 to 27.13 million tons in 2017 and 2018. 10.88 million tons. The tightening of policy has led to a sharp decline in the volume of imported waste paper in China in 2018. In the first half of the year, China’s cumulative waste paper imports amounted to 7.1 million tons, down 52.2% year-on-year.

Although the total import volume of papermaking leading enterprises also showed a downward trend, the proportion in the total amount of the country increased rapidly. From the perspective of the distribution of waste in 2018, the proportion of leading enterprises increased significantly. The top three (Qianlong, Liwenshan) Eagle's quota increased from 47.0% in 2016 to 49.1% in 2017 and 56.7% in 2018. The proportion of top ten companies increased from 65.4% in 2016 to 87.6%. . The number of companies that received quotas fell from 160 to 66. The concentration of waste paper imports continued to increase, and the cost advantage of leading companies was further expanded. Due to the widening of the national waste price difference, only the external waste quota, the extra profits of Xiaolong, Liwen and Shanying reached 45.6, 21.6 and 1.62 billion respectively.