China ban on scrap plastic a boon for new plastic producers

CHINA has started buying new plastic to replace plastic scrap it recently rejected, which is good news to the US chemical sector that has a lot of new plastic to sell.

"It's a good time to be bringing on some new assets," said Chevron Phillips Chemical CEO Mark Lashier as he opened two polyethylene plants in Old Ocean, Texas.

Mr Phillips said he expects the new plastic market to increase five fold in two years. "If you pull recycled plastic out, that market demand is going to increase," he told Bloomberg.

China is undoing decades of effort that built a massive scrap recycling industry - the cheapest way to produce plastic products for its growing economy.

The country accounted for 51 per cent of the world's plastic scrap imports last year, with the biggest contribution coming from the US, according to the Institute of Scrap Recycling Industries, an international trade group.

Now China is changing course, telling the World Trade Organisation in July 2017 that it will stop accepting imports of used plastics and paper by January 1 2018 in a bid to clean up industrial pollution.

The China ban could shift about two per cent of global polyethylene plastics supply from recycled to new material, said Morgan Stanley analyst Vincent Andrews.

Thirty per cent of North America's recyclables were exported to China, said Mr Andrews. China is creating a void in the market that will have a "devastating impact" on recycling worldwide.

The US west coast is the hardest hit, particularly Portland, Oregon. Waste haulers in rural parts of the state recently began steering some plastic to the trash dump because the market is drying up, said Peter Spendelow, a recycling policy analyst for the Oregon Department of Environmental Quality.