Global brands drive China recycled packaging demand
In recent years, the recycled plastics market is shifting from low-cost alternatives to high-quality recycling promoted by environmental protection and carbon reduction. Argus interviewed Guo Jiawan, chairman of Guangxi Guolong, and Arnold Wang, founder of Shichai Environment, on the following topics before the Second International Rigid Polyolefin Recycling Summit hosted by Shichai Environment:
- Prospects of China’s recycled plastics exports
- Food contact applications of recycled plastics
- EU’s “mirror-clause” in the Single Use Plastics Directive, etc
How much demand do you see from export markets for your products, what are the key export markets, and for which products and end-use applications (rPET, rHDPE, rPP, Packaging grades)?
Guo: The application of recycled plastics in the packaging market is mainly driven by the demand from international brands. Large brands use environmentally friendly recycled products as a way to actively fulfill their social responsibility and promote the recycling and utilization of waste plastics through their actions. In the Chinese market, international brands have been testing and trialing small batches of recycled plastics over the past two years. In the Southeast Asia, Hong Kong and Macau markets, they have begun to introduce recycled plastic packaging products. Many international brands also have production sites in China, and their export products have started to use recycled plastics. In the personal care sector, they primarily use rHDPE and rPP, while in food packaging, rPET is the main material, all of which must meet food-grade requirements and obtain FDA or EFSA certification.
Most participants are focusing on food contact recycled materials, but China currently does not allow recyclates to be used in food-contact applications. In such a situation, how should Chinese recyclers develop their business? Would pyrolysis be an appropriate approach for Chinese recyclers to look towards?
Wang: Currently, the main applications for high-value products from Chinese PET recycling enterprises are textile fibers, industrial yarns, and other non-food grade uses. Food-grade rPET products can also meet specific needs in personal care products, and other food-grade rPET supplies include exports to Hong Kong and overseas markets.
Pyrolysis is still in the exploratory stage in China, and several commercial projects have been announced this year, but their operation will take some time and still requires market validation. On August 27-28 this year, we will have an International Rigid Polyolefin Recycling Summit in Shanghai, which will include topics related to chemical recycling and pyrolysis. Those who are interested are welcome to follow and participate.
The EU is mulling a “mirror-clause” in the Single Use Plastics Directive which would mean that recyclers from outside the EU that are sending material to the EU to count towards our recycled content targets will be held to the same feedstock, process and environmental targets as European recyclers. How do you expect this to develop and do you see any impact on your business?
Guo: [Complying with EU standards] is not difficult for Guolong Recycled Plastics, because the process technology, production equipment and environmental standards of Guolong are the same as those in Europe, as is the the use of PCR materials.
Over the past few years, Guolong have passed various tests, factory inspections, and production environment assessments required by more than twenty international brand companies, and safely met their requirements. But, if the EU pushes this policy, it might implement certification permits through factory inspections under a case-by-case basis, which might impose certain restrictions on many other recycling enterprises in China.
What is Guolong's future development target, and does Guolong plan to invest in chemical recycling in the near future?
Guo: After ten years of development, Guolong has now established sizeable capacity for producing recyclates for a range of different end-uses (see table). We have successfully implemented a business model that spans the entire industrial chain, encompassing both food-grade and industrial-grade products. Currently the company has no concrete expansion plans for the future.
| Recycling type | Capacity (t/yr) |
| Food-grade rPET | 60,000 |
| Food-grade rHDPE | 20,000 |
| Food-grade rPP | 20,000 |
| Pipe grade recyclates | 80,000 |
| Industrial grade rHDPE | 20,000 |
Do you expect to see a market start to develop for recyclates into the food packaging market in China in the near future (i.e. a change of regulation) and what other regulatory changes in China do you expect that could support the recycling industry?
Wang: China is currently researching the safety of using recycled materials in packaging applications, which includes not only recycled plastics but also recycled metals, such as whether recycled aluminum can be used for cans. The local market is also awaiting the issuance of relevant documents.
Presently, the government has introduced various policies such as the "trade-in" policy and the reverse invoicing policy, which have all promoted the expansion of the recycling industry. These allow recyclers to issue invoices to their waste suppliers (rather than the other way around), to enable recyclers to claim a VAT deduction even when the waste seller they are working with is too small to issue invoices. Government policy may also be directed towards waste classification in the future, this could be the direction for future government policy.
Of course, establishing a complete recycling system requires more implementation strategies and more time to explore development paths and undertake construction.
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