In the prosperous waste paper recycling industry, weak recyclers have no bargaining power.
A truck loaded with cupboards. Photo from CFP
By XU Ning
WANG Liang is at the peak of the waste paper recycling process. He collects paper and cardboard from homes and offices and sells them to a Guangzhou packing station.
If he collects 500 kilograms a day, he can earn about 300 yuan, but generally, he doesn’t. “I usually only make about 0.4 yuan per kilogram, and I don’t collect 500 kilograms every day,” he said.
But Wange enjoys his job anyway. “There is nothing curious about it,” he said. “There is money in waste paper.”
At the beginning of the year, the price of domestic waste paper was between 2000 yuan (US$308) per ton and 2,500 yuan per ton. Since May, huge demand from e-commerce shopping festivals has driven up the price of corrugated paper and cardboard paper. In June, led by Nine Dragons Paper Holdings, one of the world’s largest paper manufacturers, more than 60 paper companies raised their prices.
“It is simply a question of supply and demand,” analyst LIU Jian told Jiemian news. The waste paper market is in short supply. China will consume as much as 60 million tons of waste paper this year. There will be a shortfall of around 4 million tons because of the ban on imports of waste, which accounted for one-third of raw material in the past.
Imported waste paper is banned, but recycled fiber pulp and finished paper are not. COVID-19, of course, has its part to play, pushing up the price of ocean freight, and causing paper companies to rely on local waste paper, but at a cost. Many key companies are building waste paper sorting centers. The cost, of course, is transferred downstream.
The pulp produced overseas can help solve the problem. Imports are allowed because pulp is a product, not waste. Some companies have set up pulp plants overseas. Pulp quickly deteriorates so most of these plants are in Southeast Asia. Nine Dragons Paper plans to produce 11.07 million tons of pulp by 2024, most from China and Malaysia.
The pandemic reduced the supply of foreign waste pulp as transportation became more expansive. Overseas waste paper is better, but Liu believes imported pulp is a solution only if the amount of recycled pulp returns to normal levels. China imported only 12,000 tons in 2017. This year, it is estimated the imports could reach 3.6 million tons.
In the long run, today’s difficulties will probably lead to more unified recycling standards and the emergence of a fully sustainable supply chain. But it is a big problem for smaller domestic recyclers. With neither capacity to seek raw materials, nor the resources to engage in price wars with big operators, many appear set to either disappear or be consumed by a bigger fish.
Waste paper recycling is not easy. There were 22 new online waste paper recycling enterprises registered in 2019 and 11 more have appeared this year, making more than 200.
The majority of these online platforms put an app between someone like Wang and the person who wants wastepaper collected. Wang will do more or less what he always does, weighing and bundling the paper. But the customer no longer pays Wang. The app directs the customers’ money into a distant back office. Wang, new as he is to the business, prefers to remain independent. He tried working for a delivery company but quit because of the high platform fee.
Wang peddles his small tricycle under the scorching sun every day, collecting waste paper from the old residential compounds of Guangzhou. He is 26, he only started work after Spring Festival. He has a healthy, outdoor lifestyle, and enjoys meeting his customers.
In a world in pursuit of sustainability, and an industry devoted to the acknowledged social good of recycling, Wang is under threat. An honest workman, doing a simple, healthy local job, being paid only just enough to get by, cannot be expected to compete with industrial pulp plants. But, as Wang himself said, “There is money in waste paper.”