China's import ban on plastic waste to boost global run rates – analyst

Source: ICIS News

2018/01/29

HOUSTON (ICIS)--China's import ban on plastic waste will increase demand for virgin resin, causing a rise in utilisation rates for plants, an analyst for Alembic Global Advisors said on Monday.

Recycling plastic waste helps China meet about 40% of its domestic demand for primary plastics, said Hassan Ahmed, head of research at Alembic Global Advisors. He made his comments in a research note.

In July 2017, China made two filings with the World Trade Organization saying that it would ban 24 types of solid waste because of worries about pollution. Hazardous materials were making their way into the plastic waste. The ban was to take effect on 1 January 2018.

Ahmed doubts that pre-sorting the waste would address China's concerns about hazardous materials. In the US, pre-sorting costs $460/tonne, while landfill charges are just $100/tonne.

With that, Ahmed expects that the import ban would amount to about 8m tonnes of primary plastics. This would account for 4m tonnes of new ethylene demand.

To meet that increase in demand, Ahmed said global ethylene utilisation rates would have to increase by 200 basis points for 2017-2023. Global utilisation rates and margins would be at peak levels during that period, he said.

Plastics with ethylene content include polyethylene (PE), polyethylene terephthalate (PET), polystyrene (PS) and polyvinyl chloride (PVC).