Zhang Cheng, CNCIC

Supply of plastic scraps has been decreasing greatly since the restriction of scrap imports

China is a major plastic producer and consumer, with its plastic production largely fed by domestic raw materials. A whopping number of plastic scraps accompanies the huge plastic production and consumption. Figure 1 shows the supply of plastic scraps and the recycling proportion of plastic scraps in China from 2012 to 2020. According to statistics, the consumption of plastic products in 2020 was 74.1 million tons, while the recycled volume was only 16 million tons due to the outbreak of COVID-19, a decrease of 2.9 million tons from that in 2019, so the recycling rate was about 22%.

Figure 1: Supply of plastic scraps and recycling proportion of plastic scraps        in China from 2012 to 2020

The recycling of plastic scraps in most areas of China is still carried out in the traditional way – collectors walked from blocks to blocks to buy plastic scraps, but it is low-efficient and the sorting is rough. With the rollout of supportive policies such as garbage classification, the recycling rate and the recycled volume in China are expected to increase steadily in the future.

It is worth noting that the State Council printed and distributed the Implementation Plan on Banning the Entry of Foreign Garbage and Promoting the Reform of Management System of Solid Waste Import in July 2017, which stipulated that China stopped importing plastic scraps from source of life, unsorted waste paper, textile waste, and vanadium slag from the end of 2017. As a result, imported plastic scraps have completely disappeared in China since the middle of 2018, which reflects that any key change in the development course of China's plastic scraps recycling industry is obviously guided by policies and China's recycled plastics industry has been gradually bracing a well-disciplined development stage.

Recycled plastic industry is on the track to structural adjustment, and the output is expected to rebound in the future 

Figure 2 shows the output and estimated output of recycled plastics in China from 2015 to 2025. In general, the supply of recycled plastics industry slightly exceeds the demand. The supply of recycled plastics totaled 13.77 million tons in 2020, down by 1.49 million tons from that in 2019 and 4.66 million tons from that in 2015. According to the development goal of the Industrial Green Development Plan (2016-2020), China's plastic recycling volume should have reached 23 million tons by 2020. However, the industry missed the target due to the virus, but the goal of increasing plastic recycling is always firm.  

Figure 2: Output and estimated output of recycled plastics in China             from 2015 to 2025

The recycling system of domestic plastic scraps has yet to be improved, so the supply tightness is a normalcy, which has a significant impact on the producers of recycled plastics. Affected by the widespread virus, the economic downturn, and stricter environmental protection inspection, the recycled plastics producers reported difficulties in business operation in 2020, and many small plants were shut. Therefore, the domestic supply of recycled plastics decreased continuously. In addition, there were rumors that the standard for recycled plastic particles will be issued soon and by then, the amount of recycled plastic particles will be further compressed. Therefore, the output of recycled plastics decreased sharply in 2020.

However, with higher awareness of environmental protection, the implementation of relevant standards and incentive policies, as well as escalated commercial production, the output of recycled plastics in China is expected to increase steadily in the next five years, and CAGR will remain at about 5.3%. It is estimated that China's output of recycled plastics will be up to about 17 million tons by 2025, a level equivalent to pre-ban in 2017.

According to the statistics of the recycled plastics branch of China National Resources Recycling Association, about 30% of plastic scraps in China were recycled in 2020, while nearly 40% of plastic scraps were landfilled or abandoned, and the remaining 30% were for energy recovering by incineration-power generation. To sum up, landfill and incineration are still the main methods of plastic scraps treatment.

Multiple problems in recycling system, technology R&D and environmental protection need to be solved

Based on the development model of green circular economy, China's plastic scraps recycling industry will make great efforts to be large-scale, standardized, centralized and clean in the future; to improve the recycling system in the upstream, upgrade the midstream treatment technology, and expand the application fields of downstream recycled products. The plastic scraps recycling and regeneration industry will enter a mature stage of development, and large-scale technical and service-oriented enterprises with R&D capacity and pollutant treatment system will become the main subject of the industry. The industrial centralization will bind the upstream and downstream of the industrial chain more closely and hence, a number of large-scale enterprises will flock to resource recycling bases and parks. The industrial supervision will be more efficient, and the recycling efficiency will be higher.

     Today, the recycling industry is highly dispersed, leaving big room for improvement and creating investment opportunities for enterprises’ industrialization and integration. Initiatives such as industrial standardization and specialization, and investment in the latest technology can improve production efficiency, output, product quality and enterprise profitability as well. To be specific, they include: taking advantage of the tailwinds brought by the policy of garbage classification to improve the sorting and recycling efficiency and reduce the production cost; conducting industrial upgrading to reduce energy consumption and secondary pollution in the processing of recycled plastics; carrying out technological innovations, reducing possibilities of quality degradation of plastics in the recycling process through chemical recycling so as to compete with high-end primary plastics; working out novel business models, integrating the supply side of raw materials, investing and engaging in the operation of garbage recycling stations of all levels to ensure the supply of raw materials.