By Wilhelmina Wahlin
A new, lucrative market is emerging in world trading, and it’s not high-end technologies or virgin natural resources. It’s rubbish.
As developed countries increasingly sink under the pressure of growing consumer waste, China is fast becoming the highest bidder in the rubbish trade, often undercutting local recyclers for the pick of the pile. Behind the waste grab is the growing Chinese economy’s appetite for the resources that recycled products can deliver.
It is estimated that 543,840 tons of PET (polyethylene terephthalate) bottles were consumed in Japan in 2006. Of those, only 66.3 percent were recycled—although it’s a lot when compared to the US, which only recycled 23.5 percent in the same year. However, the remaining 33.7 percent of Japan’s plastic bottles have to end up somewhere— and as you would expect, they mainly end up in problematic landfills and incinerators.
With waste now such a highly sought-after commodity, it is ensuring that a fair percentage is being diverted from landfills or incinerators in land-restricted countries like Japan, to the countries that need it most—like China.
The Japanese Ministry for the Environment, in its recently released paper New Action Plan Towards a Global Zero Waste Society, states that the growing global growth in both the economy and the population, particularly in Asia, has lead to a sharp rise in the amount of waste produced.
According to the report, global waste generation was about 12.7 billion tons in 2000, and is expected to rise to about 19.0 billion tons in 2025 and to about 27.0 billion tons in 2050. Japan’s Ministry of Environment also predicted the increase in the Asian region to be particularly significant.
Accordingly, the Ministry took particular interest in the recycling bureaus of China as a means of dealing with its increasing pile of recycling.
“Thriving demand for resources in China and elsewhere is reflected in inflated prices for natural resources,” says the government paper. “This, in turn, has had the effect of inflating prices for metal scrap, waste paper and other recyclable resources, and cross-border movements of these have become prominent recently.”
A survey by the Japan Iron and Steel Recycling Institute claims that the price of scrap iron in Japan was 20,000 yen per ton in December 2003, but had risen to over 30,000 yen in December 2006. The Paper Recycling Promotion Center also reports that the price hikes have not missed waste paper either. The price of corrugated cardboard, for example, rose from six yen per kilogram in 2002 to around 10 yen per kilogram in 2006.
"For Japanese recyclers, getting a hold of the 183,000 tons of plastic bottles that are not recycled is a valuable prospect."
For Japanese recyclers, getting a hold of the 183,000 tons of plastic bottles that are not recycled is a valuable prospect.
According to a Japanese documentary looking at the growing trend, the largest recycling network in Japan is now the Chinese Oto Trading Company, which collects PET bottles from around the country. As a result, Japanese companies such as Negoro Industry, which convert PET bottles into carpets, are having a hard time collecting enough bottles, losing to their Chinese counterparts, who often pay a higher price for the waste. “We would like to ease the financial pressures by selling to the highest bidders,” one municipal spokesman said in an interview during the documentary. Negoro Industry has now been forced to introduce collection boxes into schools and hospitals to boost its supplies.
The real winner in this scenario is, of course, the municipal councils. Still responsible for the collection of most waste, they have been able to boost their coffers with the increased competitiveness of the Chinese recyclers, who have been offering higher prices for not only PET, but also other plastics and paper.
The cost of recycling has also reduced, making the profit margins even higher. While costs for glass has not fallen significantly, other recyclable products, such as plastics, have decreased enormously. PET bottles in 2000 cost 88.25 yen per kilogram to recycle. Now, they cost just 1.8 yen per kilogram. Plastics, in general, have come down from 105 yen per kilogram to 85.8 yen per kilogram. The number of recycling companies is also rising—in 2000, there were only 41 plastics recyclers, but by 2007, there were 92. In fact, recyclers from every field except glass have increased in number.
In the US, recyclers are also facing an interesting situation. According to the National Association for PET Resources (NAPCOR), the number of PET bottles and jars available for recycling in 2006 was 5.424 billion, a 6.4 percent market growth in terms of waste sales. The US also saw a growth rate in recycling during that same year, and although this was just 0.4 percent, it was quickly snapped up by mostly Chinese exporters. Oddly and ironically, US producers were forced to import PET flakes from other countries to supplement their supplies.
The recycling of waste is important for a range of industries. The benefits of reusing metal is obvious but increasingly, paper and plastics are playing an increasingly important role. This is largely thanks to the huge price hikes over the past few years for virgin materials (any plastic compound or resin only processed once). PET, for instance, is turned into textiles, plastic sheeting, molded products and bottles. Other plastics are also useful for China’s industry, as they can be turned into synthetic oil, reducing agents in blast furnaces, chemical raw materials for coke ovens, synthetic gas and molding materials.
In some paper markets in China, stocks of recycled paper are completely sold out by 7am, and then used to make cardboard and other paper products that are essential to the exporting of China’s myriad of goods.
Another crucial aspect is energy. The world’s consumption of primary energy is forecast to increase by around 50 percent between the years 2003 to 2030, according to the International Energy Agency (IEA).
Emerging economies like China and India, with their vast and very real increase in demand for resources, will also ensure that the Asian region burns over 30 percent of global energy trade by the end of that same period. Clearly, reusing waste is nothing short of essential if the world is to cope with the growing demand for limited and finite resources.
The world is now standing on the edge of uncertainty in many respects. Natural resources are becoming increasingly scarce, the global economy is shaky, and the climate is anything but stable. These three factors alone mean the price of virgin materials are not the only figures rising. Recyclable resources that can be used by industry for a wide range of purposes are also on the increase. Investing in recycling is one way to ensure that at least the resources that have been used get a second or even third life, and if the market is anything to go by, the future of the garbage industry is looking solid.