What impact will China’s quota delays have on the UK?

China’s potential delay in issuing 2019 waste paper and card licences until the end of the year has caused concern that excess stock levels could build up from the end of October.

The licences depict the quotas to the Chinese paper mills, as a result of the uncertainty surrounding this some in the industry are predicting that UK stock prices could be pushed down. But is this necessarily the case?

The potential delays around the licences from China derive from the nation’s move to decrease the amount of contaminated recyclate entering the country from overseas, a move which is part of president Xi Jinping’s drive to create a “beautiful China” with a clean environment. As part of these measures the level of stock usually allowed into China for board making could reduce and there is a worry that there could be a knock-on effect on shipping lines who, from November, may be reluctant to accept materials due to the fear it may not be accepted in China.

Although these factors have led to speculation around price falls, robust recycling businesses such as Cawleys are aware of the challenges that may lie ahead and are taking measures to ensure that any impact will be as minimal as possible.

At Cawleys for example, we are placing a huge focus on ensuring the paper and card stock we receive is as clean as possible with contamination kept to an absolute minimum. This will make it as attractive as possible for the China market. Schemes such as our Infinity programme allow us to segregate waste streams at the point of disposal and we urge all of our clients and partners to do as much as they can through education and infrastructure to ensure that paper and card waste remains separated and uncontaminated wherever possible.

Along with others in the industry we are also investigating alternative markets for our paper and card. Although the concerns over China’s imports come at a time when arisings are likely to increase ahead of Christmas, other purchasing nations such as India and Vietnam have been investigated in relation to their capacity to absorb the over-supply if it gets to that point.

Ultimately no decisions have yet been made by China and whatever the outcome there will still be a demand for good quality recyclable paper and card. Those businesses who are producing consistent levels of uncontaminated stock are in the best position to deal with these changes and the industry is staying widely positive that quotas will be issued soon so that business can resume as normal.