China moves to ban waste plastics imports; PE, PP futures surge

Focus article by Angie Li

SINGAPORE (ICIS)–China has formally informed the World Trade Organisation (WTO) of its intention to ban imports of waste plastics, triggering the price surge in the polyolefins futures markets on Thursday.

China’s Ministry of Environmental Protection (MEP) held on Thursday a briefing about the government’s move.

A notification being circulated by the WTO states that 20 July is the final date for comments on China’s policy on what the country termed as “foreign garbage”, with the proposed date of entry into force set in September and the proposed date of adoption still to be determined.

The move was meant “to protect China’s environmental interests and people’s health, we urgently adjust the imported solid wastes list, and forbid the import of solid wastes that are highly polluted”, based on the WTO document.

The ban covers imports of 24 kinds of solid wastes by the end of the year, including the wastes of polyvinyl and other plastics, which are both classified into life source waste plastics, according to industry sources.

The measure is expected to translate to higher demand for polyolefins going forward, fueling the spikes in linear low density polyethylene (LLDPE) and polypropylene (PP) prices in the futures markets.

At the close of trade on Thursday, China’s LLDPE futures surged 4.16% to Chinese yuan (CNY) 9,650/tonne, while PP futures jumped 2.98% to CNY8,495/tonne.

In 2016, China imported 2.53m tonnes of wastes of polyvinyl, and 1.74m tonnes of wastes of other plastics, according to official data. Industry sources said that wastes of PP accounted for around 1m tonnes of the total.

Domestic PE and PP wastes outputs are at 6m-8m tonnes, while total wastes supply, inclusive of imports, exceeds 10m tonnes. When the import ban is implemented, demand for virgin materials will increase, according to industry sources.

Market participants await further clarifications on the classification of the banned waste plastics.

($1 = CNY6.75)