Message from CEO
The plastic recycling industry continues to be plagued by the protracted adverse effects of country policy changes in recent years and the end of the tunnel is still not visible.
Aggravated by the threats of the Trade War and volatile oil prices, most of the recycling factories in East and Southeast Asia were forced to operate their businesses at loss, if not closed down entirely. The region holds over 25,000 recycling factories, and while many of them are not operating full-time, the over-capacity situation continues to worsen due to disruptive plastic scrap supplies. Some scrap items are easy to process and are in good market demand, but ended up with negative margins, while on the other hand, other scrap items are unwanted by certain Southeast Asian countries under new policies and must be landfilled or burned at exporting countries.
Apart from the policy to cut imports in different stages in individual countries in Southeast Asia over the next few years, a major challenge that the recycling industry is facing is the Basel Convention Amendment. This amendment will categorize plastic waste into hazardous waste thereby falling into their regime of controls. The new rules, to be in effect at the beginning of 2021, will restrict the trans-boundary movement of plastic scraps to non-OECD countries and implement measures of “prior notification” against free trade. Plastic scraps will be broadly re-categorized in the forms as shown below:
All in all, the macro changes in the supply-chain of plastic scraps and recycled pellets are perceived to cause a discrepancy in supply and demand in the market and hinder the production planning of brand-owners in terms of recycled contents. Whether the popular countries for product manufacturing can adopt this policy to enable factories to import adequate recycled materials to meet the production needs is yet to be seen.
Fukutomi is fully prepared to adjust to policy and market changes with greater flexibility in sourcing and distributions apart from recycling process. Continued efforts are being made in identifying a suitable location for recycling at the source and partnering with the local recyclers and/or investors.
The use of plastics has been bringing convenience to human for nearly a century, and the consciousness of its pollution to our environment and oceans is gathering steam nowadays. While different stakeholders may have different views, whether policy directions are in the best interest of all parties amid mixed perspectives, is yet to be seen.
FMBA (Hon), C. Mgr, D.Mgr, PhD (Hon)
Executive President, China Scrap Plastics Association