You are on page 1of 2

February 21, 2018

In July of 2017, the Chinese government notified the World Trade Organization (WTO) of its intent to ban the
import of certain scrap materials by year end. Since that time more details have emerged with Mixed Paper,
one of the largest commodities by weight included in single stream recycling, being one of the recycled
materials banned by the Chinese government. In addition, the quality specifications have been revised and
are much stricter than those used in the United States and the rest of the world thereby significantly limiting
what can be imported into China. Considering that anywhere from one third to one half for Corrugated (OCC)
and Mixed Paper respectively has been exported out of the United States, this has disrupted the global
markets for these commodities.
Single stream recycling has become the standard for most residential programs based on convenience but
requires the recycling industry to separate the various commodities in order for them to be used as raw
materials. This is not a perfect process and while the technology has improved, the process still relies heavily
on people to manually sort the material. The immediate response to the Chinese quality standards by Sonoco
Recycling, and the industry as a whole, has been to slow down the process and to increase where possible the
number of sorters. There are some longer term options but these require additional capital investments. In
either case this increases the cost to separate the commodities from any single stream recycling program, and
Sonoco Recycling has incurred these additional costs for the last six months but cannot do so indefinitely.
Therefore, we are revising our price structure effective March 1, to the following:

Weighted Average Price Residential Single Stream Pricing Glass included

WAP ≤ $67.50/ton Charge of $35/ton plus the difference between the WAP and $67.50

$67.50/ton < WAP ≤ Charge of $30/ton plus 50% of the difference between the WAP and $77.50

$77.50/ton < WAP ≤ Charge of $30/ton

Charge of $30/ton minus 50% of the difference between the WAP and
WAP > $127.50/ton

WAP > $187.50/ton Rebate of 50% of the difference between the WAP and $187.50

Example WAP = $54/ton $48.50/ton charge ($35 + 100% of $13.50)

Example: WAP = $74/ton $31.75/ton charge ($30 + 50% of $3.5)

Example WAP = $100/ton $30/ton charge

Example: WAP = $146/ton $20.75/ton charge ($30 - 50% of $18.50)
Specifically now that the Chinese government has banned imports of Mixed Paper there is not enough
demand globally for this material. As a result we have seen the published prices for Mixed Paper drop
substantially however the index does not accurately reflect the current market. In some cases the freight
costs are more than the value of the material itself resulting in a net cost at our recycling facilities. Based on
the current price index and market conditions, we are valuing Mix Paper to reflect current markets on our
Weighted Average Price, also effective March 1, until the market corrects itself.
Reducing cross contamination and improving the final quality of the recycled commodities is in the best
interest of everyone. Unfortunately, the actions taken by the Chinese government have disrupted the global
recycling industry and have forced us to implement these surcharges. We will continue to monitor these
impacts, and any further actions or changes.
Meanwhile, your support in reducing the amount of contamination included with the single stream will both
reduce the costs associated with disposal as well as improving the sorting process and the quality of the
individual commodities.
We recognize that these costs were not anticipated and while we’ve done all that we can to minimize and
mitigated them, we cannot continue to operate without implementing these changes. Please feel free to
contact me with any questions.

Thank you

Kevin Fisher
Manager, Field Procurement