DE4CC0DE-5FC3-4494-BCBF-4D50B00366B5
Packaging And Design

Europe 'Under Pressure' To Invest In Recycling Infrastructure, Says Rabobank

By Steve Wynne-Jones
Share this article
Europe 'Under Pressure' To Invest In Recycling Infrastructure, Says Rabobank

Europe’s packaging supply chain is ‘under pressure’ to invest in its recycling infrastructure, with China expected to ban recovered paper imports in the near future, a new report by Rabobank has said.

China imposed restrictions on recovered paper imports last year, which are expected to be tightened by the end of 2020, with Europe now under pressure to up its game in terms of recycling capability, according to the report, An Unsettled Future of China’s RCP Market.

Major Exporters

The two biggest exporters of recovered paper, Europe – which currently exports four million tonnes of recovered paper to China – and the US, have to-date opted to redirect large flows of the product to India and Southeast Asia to ease pressure on potential oversupply caused by the decreased demand from China, Rabobank said.

However, a total ban on recovered paper imports is likely to lead to increased oversupply, with the packaging supply chain needing to ‘significantly invest’ in recycling infrastructure to account for this phenomenon.

Chinese legislation has led to average prices for corrugated containers and mixed paper falling by 30% and 40% respectively, with lower prices set to persist over the next two years as imports to China continue to diminish.

ADVERTISEMENT

Oversupply Issue

“China’s move towards zero recovered paper imports will likely leave those in the industry with an oversupply that won’t be nullified by exporting to other markets,” said Natasha Valeeva, packaging supply chain analyst at Rabobank. “Last year, the tonnage of exports to alternative Asian markets were not enough to make up for the volumes lost from China.

“A different approach will be called for. Europe’s recycling infrastructure wasn’t designed for the volume of packaging it is currently handling. Quantities have increased in recent years as a result of the rise of global e-commerce giants and often ends up unsorted in household waste bins.”

Rabobank says that investing in infrastructure and re-examining collection, sorting and recycling methods are ‘obvious solutions’ for those in the trade, however “stringent regulations and sustainability measures across Europe make this easier said than done,” said Valetta. “Other options exist, whether through placing more of a focus on separation methods or setting recycling targets to be hit.

“We’re already seeing some collaboration and more vertical integration across the supply chain between recycling firms, paper packaging companies and local authorities in response – as well as a rise in M&A activity – but the clock is ticking down.

ADVERTISEMENT

“Europe’s packagers won’t be able to paper over the cracks that emerge out of China’s import ban and will be required to place a greater focus on the recycling infrastructure in the years ahead.”

© 2019 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.

Get the week's top grocery retail news

The most important stories from European grocery retail direct to your inbox every Thursday

Processing your request...

Thanks! please check your email to confirm your subscription.

By signing up you are agreeing to our terms & conditions and privacy policy. You can unsubscribe at any time.