Why China will remain key market

From scrap-ex.com

For over 15 years, Eurokey Recycling has been involved in exporting materials all over the world. The company primarily specialises in plastics taken from waste management companies, supermarkets and manufacturers.

At present, the company exports 80 per cent of its material to China, 15 per cent is bought by UK recyclers and 5 per cent of its plastics go to Europe. This includes many grades including bottles, packaging plastics, film and thermoplastics. It also deals in some cardboard and metal cans.

As revealed first by the SCM news service on www.scrap-ex.com and in the news pages of that issue, China plans to increase its domestic recycling rate to 70 per cent from virtually nothing in the next five years.

But Eurokey commercial director Joe Bisland is not concerned about this.

“We take the view that in five to ten years China might recycle two thirds of its own plastic and import one third.

“The Chinese economy is showing signs of slowing down, but even with that, it is still going to grow at 8 to 9 per cent. Even a slowed down growth is very strong, and we expect that with this growth there will still be significant demand from China and it will remain a very important market.”

However, he adds that countries such as Vietnam, Taiwan and some South American countries are seeing China as a model for growth and are likely to be buyers of more material in future.

He says: “It is a world market and there is demand for European material. But Europe has to ensure its material is good quality. Developing countries will continue to see growth in the amount of products they consume and they will want to recycle it. The developed countries are also improving quality, so the market will become more competitive in which to sell.

“The waste management companies need to stop measuring the tonnage that goes through MRFs and should measure quality.

“We really need a quality protocol so that we can define the product that is coming out of MRFs. Some MRFs are producing good quality material, but there are some that aren’t so good.

“We need to bring up those MRFs that are not producing the good quality material to the level of those that are.”

Eurokey Recycling was started in 1995 in a 400 sq ft council rented unit in Leicester where it would collect mainly cardboard and some polythene.

But the company grew quickly and by 1998 was turning over £2.5 million and so Countyrecycling was formed that dealt with cardboard and paper. This meant that Eurokey could concentrate on the collection and processing of plastics.

By 2000, the Group had an annual turnover of £4.5 million and was handling over 20,000 tonnes of material.

In 2005 a collection and reprocessing facility was opened in India, and in 2007 the same in Australia.

As a result of this, the Group of which Eurokey is part now has a turnover of £17 million, operates on four continents and a year ago moved into new premises in Hinckley in Leicester after a fire devastated its previous site.

Recently, the company invested over £1 million in two balers (pictured being installed below). These were bought from Blue Machinery and are its Marathon balers that are manufactured in the United States.

“These are robust and reliable,” says Bisland. “They allow more density into the bales, which will save us on haulage costs. We also have a picking area, so that will allow us to sort the materials before baling after they have been through a MRF.

“Blue have excellent infrastructure so we know we will have excellent after sales support, which is important.”
Despite this recent investment, Eurokey are wanting to see further growth and have identified ways to do this.

“We are developing a closed loop system that will involve sending materials to the Far East and importing back finished product,” says Bisland.

“We will be providing this service for film. Our business plan is that we will look to export the material to the Far East and send back a finished food grade film.

“It is difficult to do that in the UK as energy and labour costs are much higher here. Manufacturing as a whole has gone to China and it makes sense for us to send a product there and get a product back.”