Mixed paper by definition is, different types of paper mixed together. For instance, phone books, magazines, junk mail, office paper, paperboard packaging, or any kind of paper that doesn't fall into the category of corrugated cardboard or newspaper is considered mixed paper.
For commercial recycling purposes, any bale that mixes of 2 of the following 3 grades is defined as mixed paper:
1) groundwood (newspaper), 2) office waste (free sheet), 3) kraft (cardboard).
Wikipedia defines Single-stream recycling as all paper fibers, plastics, metals, and other containers that are received and mixed in a collection truck, instead of being sorted by the depositor into separate commodities (newspaper, paperboard, corrugated fiberboard, plastic, glass, etc.) and handled separately throughout the collection process. (More information can be found at Wikipedia’s page: Here)
Single-stream recycling programs were first developed in several California communities in the 1990s. Subsequently, many large and small municipalities across the United States began single-stream programs.
China’s ban on mixed paper imports, revised contamination standard and cutting down of OCC import licenses, at the back of environmental concerns, is causing serious damage to the global recycling industry. During the second half of 2017, Chinese domestic OCC prices have been skyrocketing against significantly decreasing import prices. Packaging buyers in China are thus facing harder times in acquiring corrugated boxes owing to higher prices.
Increasing garbage and pollution had forced China to notify WTO of a ban on 24 types of waste that included mixed paper. Though OCC was not named in the ban, it was still subjected to import restriction with a revised contamination standard. Consequently, the corrugate box prices in China have been witnessing significant increases, considering increasing raw material prices.
China is the largest importer of recovered paper in the world.
What is banned?
- The import of two subcategories of customs code 47079000 (4707900010 and 4707900090), applicable to mixed paper, were banned effective 1st January 2018.
- Adding to this import ban, China reduced the contamination percentage in imported recovered paper (which also includes OCC) from 1.5 percent to 0.3 percent, and later proposed revised contamination standard to 0.5 percent, though recycling organizations had urged it to increase the cap to 1 percent.
Why China wants to Ban?
- Poor quality of recycled paper with high contamination levels were being injected into China
- Protect the safety of the natural environment and people's health
- To reduce dependency on imports, and leverage domestic recycling in China, which includes infrastructure developments for collection, distribution, processing, and so on
What is banned?
- The import of two subcategories of customs code 47079000 (4707900010 and 4707900090), applicable to mixed paper, were banned effective 1st January 2018.
- Adding to this import ban, China reduced the contamination percentage in imported recovered paper (which also includes OCC) from 1.5 percent to 0.3 percent, and later proposed revised contamination standard to 0.5 percent, though recycling organizations had urged it to increase the cap to 1 percent.
Why China wants to Ban?
- Poor quality of recycled paper with high contamination levels were being injected into China
- Protect the safety of the natural environment and people's health
- To reduce dependency on imports, and leverage domestic recycling in China, which includes infrastructure developments for collection, distribution, processing, and so on
Even if containerboard producers look to switch to unbleached Kraft pulp, the supply of grade is very limited, and prices would surge (price hikes already announced in China)
Chinese converters will start depending more on imported containerboard owing to rising OCC prices in China. When such a situation arises, the demand for imported containerboard in China will increase, causing price increases in the respective domestic market. Global packaging buyers will face the heat due to a strong demand for imported containerboard in China.
As far as the mixed paper is concerned, waste will pile up in major exporting regions and exporters might look for other Asian countries such as India and Vietnam to ship the scrap at a cheaper rate. We will have to wait and watch as to whether it would be the same process as it was for China i.e. the case of backhaul journey from North America/Europe.
For now, domestic OCC prices in the U.S. have remained more stable according to RISI data and other industry sources. Depending on the region, MRFs may find some options on that front. Yet many of the service providers, brokers and buyers that have long relied on Chinese markets are still hoping for an OCC comeback.
This could happen when new import permits are issued toward the end of the year, or perhaps earlier if the Chinese government heeds complaints from its paper mills about high domestic prices. Or those mills could start sourcing more virgin pulp. Or manufacturers in China could start sourcing more finished containerboard and circumvent the recycling process entirely. Or new Southeast Asian markets such as Vietnam could take off faster than expected to fill the gap.
Anyone in or following the recycling industry has heard about the recent fall in single stream recyclables, mixed paper, and OCC (cardboard). In August 2017, municipalities and commercial haulers were being paid for their single-stream recyclables, mixed paper was valued at $125 per ton and being exported to China, and OCC was valued at $225 by the export market. Fast forward to now, March 2018, where municipalities are being charged close to landfill prices for single stream recyclables, mixed paper is no longer permitted to be imported into China, and OCC have been cut in half.
These price changes are due to China’s ban on mixed paper imports, revised contamination standard, and reducing OCC import licenses. Since August 2017, Chinese domestic OCC prices have been skyrocketing. China is the largest importer of recovered paper in the world and if containerboard producers cannot import recovered paper, this will lead to the prices of domestic OCC and the limited raw material pulp to surge. The question remains, how long can China and their containerboard producers withstand a limited supply of recovered paper due to their revised contamination standard and reduced OCC import licenses?
China has stated that the purpose of these changes is to increase the quality of recycled paper with high contamination levels, to protect the safety of the natural environment and people’s health, and to reduce dependency on imports and leveraging domestic recycling in China. Or are China’s political motivations behind these decisions?
So where does this leave the U.S. recyclers? High grade sorted paper recyclables with minimal contamination such as sorted office paper has had export prices remain steady of the past 9 months. However, mixed paper, which is different types of paper mixed together, and needs further processing, is close to worthless. Further, with the processing required to get high grade sorted recyclables out of single stream recyclables, and to meet the new contamination requirements of OCC pulled from the mixed stream, is very expensive. This has driven the cost of disposal of single stream to levels just below that of landfilling the material.
Domestic OCC process have remained stable and has provided some relief for recyclers. Many U.S. recyclers, brokers and buyers have relied on Chinese markets and are still hoping these markets will make a comeback when new import permits are issued at the end of the year. In the long term, new Southeast Asian markets such as Vietnam are hoping to take China’s share of the U.S. export market by accepting lower contamination levels and accepting mixed paper for further processing. Further, U.S. recyclers, if economically feasible, will be investing in new technology and increasing human resources to ensure they can meet the lower contamination levels required by China and domestic mills.