Even though it happened as recently as 2017, the days when China was importing 28 million tonnes of recovered fibre in a single calendar year are now a fast-fading memory. According to Ercan Yürekli, guest speaker at our Budapest meeting in October 2019, Chinese fibre import volumes are likely to drop as low as 5 million tonnes in 2020, thereby further redrawing the international trading landscape of yesteryear.
But as an industry, we have always seen challenges as opportunities. Moments after outlining the daunting scale of the decline in China’s overseas fibre purchases, Mr Yürekli from the national association of Turkish paper and plastic recyclers and collectors (TÜDAM) was focusing on possible alternative outlets. His own country, he revealed, is expecting domestic paper industry capacity to jump from around 4.2 million tonnes in 2019 to between 6 and 7 million tonnes by the year 2023 – and yet the country is struggling to push its collection rate beyond 40%. Turkish recovered fibre imports have already soared from just over 300,000 tonnes in 2015 to nearer 1 million tonnes in 2019, with further growth to perhaps 2 to 3 million tonnes envisaged by 2023.
As noted at our meeting in Singapore last May, 2019 also brought a significant increase in sales opportunities in other countries too, including most notably India, Malaysia, Indonesia and the Philippines.
Such observations provide us with much-needed hope for the future given that, in Europe for example, there is a differential of almost 8 million tonnes between the 56.7 million tonnes of paper and board collected for recycling each year in Europe and the 48.8 million tonnes consumed. This surplus is structural in nature, with exports to markets outside of Europe representing the only obvious pressure valve.
Even though China was buying in 2019, its focus was on purchases of US material. Thus, last year was characterized largely by a combination of high stocks along the chain, difficulties in finding export markets for our fibre and pressure on prices. Indeed, values close to zero or even into negative territory have been widely mentioned by industry members, alongside comments about the near impossibility of imposing recycling fees on suppliers to render viable some of our more marginal sorting and processing operations.
The bottom line is that margins have been so compromised on certain grades that there has been no incentive to sort. Was this in the dream scenario when the circular economy was first envisaged? And how should we as an industry respond to such challenging market conditions? More than ever before, our point of difference must be production of high-quality materials that conform absolutely to the standards, needs and expectations of our individual customers. If we fail in this regard, a significant proportion of materials will struggle to find profitable outlets or, indeed, any outlets at all.
As pointed out in Budapest by our General Delegate Sébastien Ricard of Paprec Recyclage, the purchase of manufactured goods from China and the subsequent return of the recyclable packaging to that same country for production of new packaging materials had created over many years the perfect example of a circular economy. But there has been little credit or appreciation for the carbon dioxide emissions saved in this way.
What these people should also know is that mills and governments throughout the world – not just in China – have become increasingly demanding with regard to the quality they are prepared to accept. Quality is not an add-on extra; it is an absolute necessity if business is to be done.
With more limited export options and new capacity developments insufficient to absorb a recovered fibre surplus, it is clear that Europe and other traditional exporting regions of the world will need to devote more time and research to developing new markets – and potentially new product outlets – for recovered fibre. It was therefore interesting and encouraging to hear from our Division’s Vice President Martin Leander that the insulation and hygiene sectors in Sweden have been trialling wider use of recovered fibre in their products.
Another inspiring thought was voiced in Singapore by our Honorary President Dominique Maguin. Overall demand for paper would expand as a result of global population growth, he said, and the best way to produce that paper would be from recycled fibre because it was less expensive and less polluting.