China Market Situation report on paper and plastics 2011

Overview

Welcome to the China market situation report update, part of our series of reports that examine current economic conditions in the markets for recovered materials.

We published our first China market situation report in spring 2009. This update looks at the key developments in the Chinese markets for recovered paper and plastic since that report was published, including trends in demand, prices and the balance between imported and domestically recovered material.

In addition, the Special Focus explores the wide array of end uses for recovered plastics in China.

The main themes to emerge are:

• China remains the key trading partner of recovered paper and plastics for the UK;
• UK exports of recovered paper and plastic to China recovered quickly after the market disruption in late 2008. More recently, however, trends have diverged with exports of recovered paper to China falling while those of recovered plastics have continued to increase. The latter broadly mirror the trends in overall Chinese imports, with a significant decline in Chinese imports of recovered paper in 2010 contrasting with fast growth in Chinese imports of recovered plastics
• Prices of recovered paper and plastics have mostly recovered since the 2008 downturn, and many prices currently stand close to the peaks they reached in early to mid 2008
• China’s economy seems poised for a soft landing. The economy is forecast to keep on growing at a solid, albeit slower, pace in the medium term;
• Accordingly, Chinese demand for recovered materials is also expected to continue to grow
• However, growth in Chinese demand for imported recovered materials may be somewhat slower than in recent years as its own collection and recycling systems develop.

The Chinese economy

Over the past three decades, Chinese economic growth has averaged around 10% a year. This has fuelled strong demand for raw materials, including recovered paper and plastics, to feed into a fast growing manufacturing sector.

Following the global economic slowdown, China appears to have achieved a soft landing, with inflation rather than economic growth the chief immediate policy concern. China now seems poised to be entering a phase of slightly slower (albeit still high by global standards) and more domestically-driven economic growth.

Plastics recycling in China

Since the previous edition of this report, growth in Chinese demand for recovered plastics has moderated as a consequence of the global economic slowdown. Whereas demand for recovered plastics is estimated to have grown from 4 million tonnes to 15 million tonnes between 2000 and 2007, or around 21% per annum on average, demand grew at a more modest 8% per annum on average between 2007 and 2009, to just over 17.5 million tonnes.