Japan's waste paper prices fell to a new low of more than five years due to Chinese demand

Source: Observer Network

According to the Nikkei Chinese Network reported on March 7, the domestic price of waste paper fell to the lowest level in 5 years and 4 months. As the largest export destination, China is restricting imports due to environmental protection and other reasons, while local demand for cartons is decreasing. On the one hand, Japan is under pressure due to a decline in exports to China. If the export continues to be sluggish, it will put downward pressure on the raw paper price of corrugated boxes made from waste paper.

The price of used corrugated paper purchased by Japanese waste paper wholesalers from recycling companies is currently 7-10 days per kilogram (Note: 1 day is equal to 0.06011 RMB). Compared with the beginning of the year, it fell by 30%, the lowest point since the fall of 2013. The magazine waste paper, which is the raw material of the corrugated box, is 4-6 days, and the newspaper waste paper is 8-11 days. Both fell about 15% from the beginning of the year.

In addition to environmental protection measures, China is also promoting waste paper recycling as an initiative to reduce waste disposal costs. Import quotas granted to paper companies are being reduced year by year. Total imports in 2018 were 17.03 million tons, a decrease of 34% from the previous year.

Many people believe that the overall import quota will be further reduced by 40% in 2019, and the import of Japanese products with high quality reputation is also likely to decrease. Nakahara Masahiro, chairman of the National Papermaking and Raw Materials Business and Industry Federation of Japan (Taiwan District, Tokyo), said that “(China) local enterprises retain import quotas and are reducing imports in order to purchase at the lowest point”.

In China, carton demand is considered to be decreasing and paper companies are also cutting production. In the autumn of 2018, the export price to China for more than 30 days per kilogram has dropped to around 12-13 days.

The Chinese government has also strengthened inspections of impurities contained in imported waste paper. Since February 15th, a full inspection is required before shipment in Japan. When loading containers, professionals are required to present and export costs are rising.

Exports at current prices will face losses, so there are very few trading companies that accept export offers. The Japanese Kanto paper raw materials direct supply and commercial combination (located in Taitung District, Tokyo), which consists of waste paper wholesalers, has been shipped for the fourth consecutive month. The inventory of used corrugated paper in January of the 32 member companies of the portfolio reached 22,022 tons, which was more than twice that of November 2018.

After the fall of 2018, various paper manufacturers in Japan who used the waste paper to make the raw paper for corrugated boxes made price increases due to the price increase of raw materials. However, the transfer price increase of the corrugated carton enterprises as the demand side only involves partial, and the transaction price of the original paper is still firm. Japan’s Rengo’s deputy director, Ichiro Tanikawa, said that “the current supply is in short supply, not a price cut”.

In Japan, demand for corrugated boxes for e-commerce, beverages and processed foods is strong. According to data from the Japan Paper Federation (central Tokyo), domestic demand for base paper in 2019 is expected to increase by 1.3% from the previous year. However, due to the increase in the stock of waste paper, the price of waste paper purchased by various paper companies from wholesalers has also been sluggish. Some people think that "if the cost of waste paper, which was the reason for price increases, is further reduced, it will affect the price of the original paper" (waste paper wholesaler).

According to the observer network, the main raw material of corrugated paper and cardboard paper is waste paper, and China's waste paper has long relied on imports. In mid-August 2017, in the new edition of the “Import Waste Management Catalogue” issued by the Ministry of Environmental Protection, unsorted waste paper has been included in the Catalogue of Prohibited Imported Solid Wastes from the Catalogue of Solid Wastes Restricted Imports Used as Raw Materials. ", and (waste) paper and cardboard, including waste specialty paper, are also on the "banned list."

On August 22, 2017, the Ministry of Environmental Protection held a symposium to implement the “Implementation Plan for the Reform of the Importation of Solid Waste Import Management System for the Prohibition of Foreign Waste Entry” and proposed to strengthen the regulatory process in the future and continue to maintain the high pressure of law enforcement.

The "Regulations on the Environmental Protection of Imported Waste Paper" issued by the Ministry of Environmental Protection on December 20, 2017 clarifies that enterprises that import waste paper shall comply with the requirements of the "Regulations on Environmental Protection Management of Solid Wastes Restricted by Imports as Raw Materials". It must also have a production capacity of not less than 50,000 tons/year, and have production and processing equipment such as pulp and paper, which are compatible with the processing and utilization capacity; it must comply with the "Paper Industry Development Policy" and the "Industrial Structure Adjustment Guidance Catalogue" and other related The requirements of industrial policy, waste paper enterprises or related production lines are not included in the "industrial industry to eliminate backward production capacity enterprises list."

In addition, the importing enterprises need not treat the residual waste generated by the process of sorting or processing waste papers for harmless utilization or disposal in the past year, including processing the waste plastics in the above-mentioned residual wastes without processing and cleaning. Clean and direct sale, and use or disposal by individuals or enterprises that do not meet environmental protection requirements; the deinking slag produced by the deinking process is not managed according to hazardous waste.” Administrative punishment has been imposed.

Editor in charge: Ge Hongyan

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