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When Chinese inspectors early last year unexpectedly began rejecting large quantities of recyclables imported from the United States and elsewhere for not meeting contamination standards,

the operation that became known as Green Fence created problems for a U.S. plastics recycling industry that experienced a major interruption in ability to sell to what had been their biggest customer. More than a year later, Green Fence appears to have ended, but its effects linger and promise to significantly change the plastics recycling industry here.

Brian Conners, president and chief operating officer of ARCA Advanced Processing in Philadelphia, said Chinese officials at a recent meeting clearly indicated that the stepped-up routine of inspections that characterized Green Fence was over. “The enforcement will continue although it won’t be as rigorous as far as checking everything,” he said. “But the message is clear: They don’t want waste coming to China.”

Conners said his own firm, which processes appliances for recyclable materials, including large quantities of plastics, was already meeting specifications required by regulation. These called for no more than one or two percent of unrelated material, depending on the material, in a shipment. Before Green Fence, some containers labeled as recyclable materials reportedly had up to 40 percent non-recyclable trash.

“Green Fence actually never impacted us because we sell really high quality,” Conners said. The company had only a single shipment rejected after Green Fence inspection, he said, and that was not because it had too much trash mixed in with the waste. What has changed as a result of the enforcement action, Conners said, is the disappearance of middlemen who purchased recyclables from processors for shipment to Chinese end users. “The customers that solicit us today are representatives of the actual separator or consumer in China,” he said.

Another observer said the result of Green Fence has been profound when it comes to the overall disposition of American-generated mixed plastic recyclables. “We are not seeing any mixed plastic going to China anymore,” said Patty Moore, president and CEO of Moore Recycling Associates, Inc., a Sonoma, California, recycling consulting firm.
Green Fence has generally increased costs for companies that buy plastics for importation into China, because of the added expense of the extra sorting required to meet the Chinese standards. Some Hong Kong traders’ companies are buying U.S. plastics and having them sorted in other Southeast Asian countries before sending them into China, according to Moore. The extra processing and shipping can significantly increase the costs for importing plastics to China, she said.

The extra costs on that end have caused prices paid to U.S. recyclable plastics suppliers to decline. The greatest drop in value has been in bales consisting of all rigid plastics unsorted by type. These fell up to 86 percent, from $140 per ton to $20 per ton, between January 2013 and May 2013, according to a study Moore did with the Association of Postconsumer Plastic Recyclers.

However, the effect of Green Fence grew less dramatic as plastic recyclables were better sorted. At the high end, the best-sorted bales lost only 8 percent of value, from $293 to $271 per ton, Moore’s figures showed. Conners said that prices for the plastics he was exporting had fallen by one or two cents per pound.

One side effect of Green Fence has been that domestic buyers of recyclables have been able to enforce their own specifications about the sorting and cleanliness of plastic bales, Moore said. Another is that plastics recycling facilities devoted to recycling plastics only, have begun to appear, she said.

Conners said that these days his company is seeing fewer buyers for plastic destined for China, but from his perspective, they are superior customers than the middlemen who formerly played a large role in the field. Selling to end users in China means dealing with more established firms who can also work with him to improve his product to meet their needs. “In some respects we’ve benefited by Green Fence,” Conners said.

Today, it seems likely that the new standards for Chinese recyclable imports will remain, and that U.S. suppliers will meet them or find other markets. Moore said many of those markets are likely to be domestic. She said it’s possible, however, that traders will find ways to compensate for the costs of extra processing and transportation and make Chinese markets again serious competitors for domestic users.

Moore is optimistic about the appearance of plastics recycling facilities. Because they specialize in plastic, they are able to cost-effectively recycle more kinds of plastic, she said. One problem holding back their further development, according to her, is that most recycled plastics are sold on spot markets where prices fluctuate. That makes it difficult for plastics recycling facilities developers to attract investments to build more of these facilities, she said.

“The infrastructure is not nearly built out as much as it should be, but it’s growing very rapidly,” Moore said. “It’s a great opportunity to keep the value of that material here in the U.S.”

Conners said one end result of Green Fence is to emphasize the importance of providing clean, well-sorted and accurately labeled recyclable materials. “I think it’s very important that recycling companies not ship wastes across borders,” he said. “The bad acts of a few make business more difficult for everybody. We need to produce excellent quality products.”

Published in the June 2014 Edition of American Recycler News