U.S. containerized exports of scrap metals, plastics and paper to China have increased at a remarkable pace over the last 20 years. Between 1992 and 2012, scrap exports to China increased at a compound annual growth rate of 20.2 percent, allowing China to take 67 percent of the market in 2012, up from 7 percent in 1992, according to PIERS, a sister company of The Journal of Commerce. Over that same period, U.S. scrap exports to all other markets increased just 1.8 percent a year.
China is by far the largest market by containerized volume for U.S. scrap products, accounting for more than 1.2 million 20-foot-equivalent units last year.
“When China was admitted into the WTO back in 2001, demand for Chinese consumer goods strengthened almost immediately, and that boosted container traffic markedly in the eastbound trans-Pacific lane,” JOC Economist Mario Moreno said. “At the same time, the sharp demand for consumer goods boosted China’s appetite for raw materials, benefiting U.S. recycling companies.”
But recent anecdotal evidence indicates U.S. exports of recycled metals, plastics and paper to China are taking a beating due to the country’s recently enacted “Green Fence” policy, which aims to crack down on the importation of adulterated products. Advanced estimates from PIERS signal a significant year-over-year deceleration in U.S. containerized exports of scrap paper to China, from 14.3 percent growth in February to 3 percent growth in March. A more sizeable impact, however, is likely in the next few months.
The ocean carriers most exposed to the Green Fence policy are Mediterranean Shipping Co., with a 20.1 percent market share in the trade, followed by COSCO with 15.8 percent and China Shipping Container Lines with 11.7 percent.
The U.S. ports most exposed to the policy are Los Angeles with a 23.9 percent share of outbound scrap exports to China, Long Beach with 21.8 percent, and New York-New Jersey with 18.3 percent.
The Chinese ports handling the most inbound traffic of U.S. scrap metals, plastics and paper are Qingdao taking 14.1 percent of the traffic, followed by Tianjin with a 10.5 percent share and Shanghai with 9 percent.
Scrap metals, plastics and paper are the largest U.S. containerized export commodities, together accounting for 15.5 percent of all U.S. outbound container trade last year.
By volume, scrap paper shipments to China totaled nearly 1.1 million TEUs last year and accounted for a staggering 79 percent of the overall scrap paper export market. Shipments of scrap plastics to China totaled 97,000 TEUs last year, accounting for 49 percent of overall scrap plastics exports, while metals shipments to China totaled 82,000 TEUs for a 27 percent piece of the metals export market. China is the top market for U.S. scrap exports of paper and plastic, but second-ranked market for scrap metals after Taiwan.
By value, U.S. scrap exports totaled $21.5 billion last year, with China accounting for 43 percent. Scrap metals exports to China totaled nearly $6.7 billion last year for a 39 percent of the scrap metals export market. Scrap paper exports to China totaled $2.2 billion, for a 65 percent of that market, while scrap plastics totaled $499 million and represented 53 percent. China is the top-ranked market for all U.S. scrap metals, paper, and plastics.