The breakneck expansion of China's PET recycling industry may be slowing, as most companies are reporting losses for 2007.
China currently produces 85 percent of the world's recycled PET fiber, said Tan Yiwu, vice president of the recycling committee of the China Plastics Processing Industry Association in Beijing.
The nation's total capacity to convert PET waste to polyester fiber has more than tripled in the past five years, from 3.3 billion pounds in 2002 to 11 billion pounds in 2007.
The expansion frenzy has lead to overcapacity and forced the operating rate to drop from 90 percent in 2002 to around 65 percent in 2007, Tan told the audience at the Plastics Recycling 2008 conference, held Feb. 26-27 in Jacksonville.
China has achieved an exceptionally high rate of PET recycling, a national average of 80 percent with higher figures in urban areas. Still, domestic supply, including post-industrial and post-consumer waste, totals 3 billion pounds. Counting in the 7.7 billion pound annual demand of the fiber industry as well as other applications, China needs around 6.6 billion pounds of PET waste from the rest of the world per year.
But China only managed to import 4.6 billion pounds last year, Tan said. He compiled that figure based on official records from China Customs, estimates of smuggling, and estimates of imported PET waste labeled as other types of plastics - a popular way to manipulate claimed import value and save on taxes.
Chinese companies also are paying a premium for imported PET waste. Prices nearly have doubled from 2000 to 2006, Tan said.
Other issues facing PET recyclers in China include antidumping charges on fiber by the European Union and United States, rising labor costs, material quality, taxation, and competitive and environmental protection concerns.
``Companies tend to stick to the conventional strategy of grabbing market share by lowering prices,'' Tan said. ``They don't invest on product development or scientific research.''
With recyclers losing money, the sector should be at a turning point now, he said.
Hurdles exist, however, on the domestic policy front.
``National policymakers have different ideas on how to regulate plastic waste,'' he said. ``The enforcement of inspection varies at local ports. The allocation of import quota doesn't take into account the distribution of capacity. The unreasonable taxation system encourages illegal operation.''
The Chinese government recently has tightened control on plastic waste import. Tan said the recycling industry suffers from a bad image in the eyes of the government and public. ``[It's caused by] some companies that lack the sense of social responsibility and cause serious pollution.''
One potential solution is to find new markets for recycled PET with domestic Chinese customers.
Using recycled PET toward a great variety of applications will help invigorate the industry. Currently, 86 percent of processed PET waste ends up as staple fiber and 12 percent goes back to bottles. In addition, China also has the annual capacity of converting recycled PET to 26.5 million pounds of amorphous PET sheet, more than 132 million pounds of strapping, and 26 million pounds of zip fasteners.
Tan said the industry will shift to nonfiber applications and expand in areas including carpet, synthetic silk and filament.