May/June 2014
Paper recyclers hope revised processing practices, new equipment, and clearer specifications can improve the quality of their recovered fiber and reverse some of the recent declines in export demand.
By Ken McEntee
In June 2012, Chinese authorities arrested seven people on charges of importing more than 4,000 tons of toxic waste mixed with recovered paper. Chinese customs officials reportedly developed respiratory and skin infections after inspecting a 30-container load of “waste paper” that was tainted with household chemicals. Officials sent the containers back to the Netherlands, where they had originated.
For China, it was the breaking point. The country continued to grow as the manufacturing center of the world—and the dominant market for recovered paper from which to make containerboard packaging—yet it had become the dumping ground for contaminated fiber that mills in the United States and Europe wouldn’t accept.
In early 2013, China implemented what became known as “Operation Green Fence” to strictly enforce laws that had been on the books for years regarding import quality, customs duties, and smuggling. Chinese environmental and customs officials subjected inbound scrap paper, plastic, and metals to close scrutiny for contaminated or prohibited materials. In effect from February to November 2013, Green Fence resulted in extensive—and expensive—rejections of unacceptable paper fiber and other recyclable commodities. The Chinese government sent rejected loads back to their country of origin at the expense of the shippers, who also were on the hook for demurrage and reloading charges. “It put us and everybody else on high alert,” says Jimmy Yang, owner of Newport CH International (Orange, Calif.).
Green Fence was China’s response to U.S. and European scrap recyclers who had, for much of the past decade, perceived that market as the place to send materials for which they couldn’t find domestic buyers. “It was quite right for China to impose its own restrictions on quality control—that was its way of telling the world that there is a difference between what you think we should accept and what we think we should accept,” says Ranjit Baxi, founder and managing director of J&H Sales International (London). “It isn’t only China,” he adds. “Mills in countries like India and Indonesia also are crying out, saying they have specifications about the fiber they are going to buy. But the suppliers are only sending them what they deem to be fit.”
Although the program sent shock waves through the industry, many exporters today think Green Fence was, in retrospect, a good thing for the paper recycling industry. They say it served as a wake-up call that has spurred those in the paper recovery chain to improve the overall quality of the recovered fiber supply—which has benefited both domestic and foreign mills.
The U.S. Quality Problem
The bulk of U.S. paper China rejected was from single-stream residential collections, exporters say. “Collections from the commercial stream have been well-tended-to for many years, but to meet the growth in demand from China, Europe and America had to look at the community recycling stream for additional volume,” Baxi says. “America resorted to single-stream immediately as the most convenient and cost-effective method of collecting—people can put everything into [one bin].”
Procurement officials and plant managers at North American newsprint mills have been complaining about contamination in their feedstock since municipal curbside collection programs took hold in the 1980s and 1990s. The advent of single-stream has intensified the problem, they say, because paper gets thrown in the bin with metal, plastic, and glass. The latter is the most serious concern because tiny glass fragments can cause substantial damage to the equipment used to turn recovered fiber into new paper. “Certainly single-stream is one of the reasons for the drop in quality,” Baxi says. “Single-stream collection is going to have to be looked at very carefully if it is going to be expected to produce quality fiber that mills can use.”
Recycling collectors and others have advocated for single-stream collection, asserting that it increases overall collections and reduces costs. In February, the U.S. Environmental Protection Agency (Washington, D.C.) published a surprising statistic, however: The U.S. recovery rate of recyclables from the municipal solid waste stream declined slightly, from 34.7 percent in 2011 to 34.5 percent in 2012. The recovery rate for postconsumer paper dropped 1 percentage point, from 65.6 percent in 2011 to 64.6 percent. This decline occurred despite continued growth in single-stream recycling programs.
The irony wasn’t lost on Valerie Androutsopoulos, principal of Vangel, a paper recycling company in Baltimore. “If single-stream is supposed to make recycling so easy, shouldn’t we be seeing a huge increase in the recovery rate as single-stream gains more traction?” she asks. “So now we’ve dirtied up all of the fiber with single-stream, and what did we get out of it?”
Cleaning Up Their Act
Some paper recyclers and brokers say single-stream collection doesn’t inevitably lead to poor-quality paper. “The problem was that as inbound levels of material increased, there was a strong emphasis on pushing volume through facilities—a lot of these [materials recovery facilities] were being pushed beyond capacity, especially when some additional, smaller communities began to feed into existing MRFs,” says broker Leno Bellomo, president and chief operating officer of Berg Mill Supply Co. (Los Angeles). “They were overcharging the lines with material,” he says. “You can’t expect sorters to handle the increased belt speed and the levels of contamination, and certainly the mechanical sorting equipment doesn’t have the capability to do it all.”
With the right incentives, recyclers say, MRFs can improve their separation to create a cleaner product—and that’s exactly what they have started to do. In March, The Paper Stock Report (which I edit and publish) surveyed buyers and sellers of recovered paper about fiber quality in today’s market. Out of 81 respondents to the nonscientific, online survey, 33 percent identified themselves as mill buyers or mill operations officials, with the rest consisting of packers, brokers, exporters, and MRF operators. More than 77 percent agreed that Green Fence resulted in necessary changes in the quality of recovered fiber packed in the United States.
“Something had to be done,” Bellomo says. “Green Fence certainly was the impetus for processors to better manage the burden depth on conveyor belts and to slow belt speeds to better manage the contaminants that might slip through into the finished product, such as resins, film, and nonfiber products. As a result, they ended up with some far cleaner products than they had before.”
Prior to Green Fence, “the corporate single-stream systems were run for throughput, not quality, and thus [paper with] 30-percent contamination was being sent,” one anonymous respondent commented. “China was its own worst enemy for allowing it to happen for several years before the crackdown.”
Although Waste Management (Houston) is a large recycling corporation, “we’re not sending that kind of contamination to China, as a rule—not even close to that—and we’re not getting feedback that we’re sending that kind of contamination,” says Michael Timpane, director of municipal recycling and diversion. In 2013, Waste Management processed about 12 million tons of recyclables through 146 MRFs, 48 of which are single-stream facilities. “Single-stream is clearly a more-than-acceptable trade-off for customers interested in recycling the most material—from 30 percent up to 100 percent more volume per program—as well as efficiency and convenience,” Timpane says. “It’s the most effective collection—in terms of overall system cost and recyclables yield—of any residential or commercial methodology.”
As for the EPA’s data that the recovery rate has declined, several factors attributed to that decrease, Timpane says, including that—according to the EPA—per-person waste generation has been declining since 2005, packaging materials are more efficient and weigh less, and “recycling reflects the economy. So this decline is not surprising given the poor market conditions and the sluggish economy.”
Waste Management did not experience significant downgrades or rejections due to Green Fence, Timpane says. However, following that initiative, the company “had to reduce prohibitive material and contamination, both from nonrecyclable materials in paper [and from] paper grades mixed with unacceptable levels of other grades of recyclable paper and containers,” he says.
One processing solution was to slow down the system to give sorters more time to pull contaminants off the belts. “The Green Fence system also [resulted in our adding] several quality checks in the value chain, from inbound audits to understand customer quality, to on-site mill inspections at MRFs, to frequent pre- and post-shipment inspections at export destinations,” Timpane says. “Feedback from these audits allowed [us to make] sorting adjustments to improve quality.
“Green Fence had a real impact on our and everyone else’s costs in the industry,” Timpane adds. “Previous standards accepted for the last 10 years in the export market were no longer accepted. We were affected less than many, but we were affected. We did not recover all of the additional costs caused by Green Fence in 2013; however, our expectation for this year is to recover those expenses.”
Since Green Fence, Berg Mill Supply also has worked closely with its suppliers to upgrade their level of quality and reduce contamination. “We have spent an enormous amount of time with our client base and have put boots on the ground at their facilities to help them work through this,” Bellomo says. Members of the company’s sales staff visit clients weekly and work with the plant and operating managers to review inbound material as well as baled material before it ships, and the company has hired inspectors from the North American offices of the China Certification and Inspection Group Co., known as CCIC (West Covina, Calif.), to prequalify paper fiber shipments. “Prequalifying the material doesn’t necessarily mean that material will pass customs when it lands at its Chinese port, but it is a way of reducing the risk,” Bellomo says—and it is making a difference. “What we have seen coming out of those facilities during the third and fourth quarters of last year was a big improvement. The number of claims on quality were significantly reduced.”
Like Berg, Newport CH International also took proactive measures to ship cleaner bales. “We had to crack down on our suppliers,” Yang says. “We had to hire more inspectors to go to their plants and inspect their material. We had to spend more time monitoring pictures of the bales.” The company also decided to cut ties with some suppliers that were not on board with improving their stock, but Yang says some have since cleaned up their acts and made their products exportable.
The increased attention to sorting out contaminants presents additional costs, but companies say they are able to justify them. “Labor costs have risen slightly with production somewhat impacted; however, the end result eliminates costly claims and the potential long-term black mark against a facility’s material,” Bellomo says.
At least one municipal facility reports investing in new separation equipment to improve paper quality. In West Palm Beach, Fla., the county’s solid waste authority upgraded the equipment at its MRF to what it calls a “paper cleaning system.” The high-capacity equipment can remove 99.75 percent of glass and other fines from its ONP and mixed paper grades with trommel-screening technology, according to RRT Design & Construction (Melville, N.Y.), which designed the system. Even though the county’s municipal recycling collection program is not single-stream, the MRF removes 10 tons of glass every eight hours of runtime, the firm says.
Sandy Rosen, CEO of Great Lakes Recycling (Roseville, Mich.) and president of ISRI’s Paper Stock Industries Chapter, says the quality of material that comes out of single-stream MRFs will depend on the equipment a facility uses, but more important, how it uses it. Great Lakes Recycling operated two MRFs before selling them to ReCommunity Recycling (Charlotte, N.C.) in 2011. “Some equipment manufacturers are better than others—they will tell you what their systems have done [to remove contaminants] in certain installations, but it is usually more a matter of how the system is operated,” Rosen says. “My experience is that the equipment dealers have given me very accurate representations of what their machines were capable of, but I don’t believe any systems are able to give you a high throughput at the same time as a very good sort and do it efficiently.”
Bellomo believes that machinery alone will not provide an adequate sort to produce a quality fiber pack. “You have to have some manual sorting,” he says. “Even with the technology of disk screens, magnets, eddy currents, and optical sorters, you still need to employ the human element.”
Revising the Specifications
Rosen hopes revisions to the PSI paper stock specifications will help reduce disputes over quality. About half of all respondents to The Paper Stock Report survey said the PSI specs serve as a general guideline for transactions and are widely superseded by the specification of particular mills. Further, 59 percent of all respondents said the specs reflect the realities of the recovered paper available in today’s market, while 41 percent said they do not.
Rosen agrees that the specs often do not reflect market realities. He plans to have the PSI Specifications Committee rewrite the grade definitions for Nos. 6, 7, and 8 newspapers, as a start. “In my opinion, [the specs] are completely irrelevant as they are written. I don’t think there is a grade out there that represents the majority of the news being packed today,” Rosen says. “There is a 4-percent limit on outthrows and prohibitive materials for No. 6 ONP and a 2-percent limit for No. 8 deinking news. There is no single-stream plant in the world that can pack a news pack with just 4-percent contamination,” he points out. “Buyers see a specification that says prohibitive materials may not exceed 1 percent for No. 8 news, when most of the material they get is more like 10 percent [prohibitives]. My feeling is if we are going to have specs, let’s have them be consistent with what is in the market.”
New ONP specs could include distinctions for the origin of the paper: single-stream, dual stream, and collection-program or paper-drive news, for example, Rosen says. “I don’t think the descriptions—regular news and deinking news—are really valid because that’s not what they are,” he says. “In reality, No. 6 is dirty news; No. 8 is cleaner news; and No. 9 is the real clean news because it’s the undistributed papers.”
The PSI Specifications Committee also might address OCC and office paper grades, Rosen says. “There has been some concern about increased Asian fiber content in OCC, so that’s something that they’ll have to take a look at,” he says. The concern is that the fiber in the Asian OCC (which is a certain type of box, and not every box made in Asia is Asian OCC) tends to be shorter than in kraft, the common OCC paper, and shorter fiber results in weaker sheet strength, Rosen explains. Mills that want to produce strong sheet strength and thus reject Asian OCC would likely get less finished product per ton purchased, and the residue disposal is increased.
“I also think the sorted office paper grades need to be looked at,” Rosen says. “There have been some changes in those grades, especially with the growth of new technologies that allow mills to handle the contaminated office paper that comes with document destruction, and [they are] going by a lot of different names, like sorted office paper and dirty office waste—and some mills have their own packs, like Kimberly Clark’s [office pack].”
The current specifications identify two office paper grades: No. 36, unsorted office paper, includes shredded paper. Prohibitive materials may not exceed 2 percent, and outthrows plus prohibitives may not exceed 10 percent. In No. 37, sorted office paper, prohibitive materials cannot exceed 1 percent, and outthrows plus prohibitives may not exceed 5 percent.
Rosen hopes to have a draft of the proposed revisions for PSI Chapter members to review by the fall, with final adoption by the ReMA board of directors in spring 2015. Between those two events, PSI also plans to hold a conference (date and location to be determined) where ReMA members and nonmembers can offer feedback on the specs before they go to the board for approval.
The Unanswered Question
U.S. recovered paper exports to China were down about 7 percent from 2012 to 2013, from 15.6 million to 14.6 million short tons, according to the U.S. Department of Commerce (Washington, D.C.). Chinese recovered paper imports from all sources in 2013 dropped 3 percent, to 32.2 million short tons, according to China’s General Administration of Customs (Beijing).
Most traders believe the decline was more likely attributable to global economic conditions, which reduced China’s demand for containerboard, than it was to Green Fence. U.S. scrap paper exports to China have declined in three of the last four years, falling 9 percent from 2009 to 2010, rebounding 23 percent in 2011, then falling 1 percent from 2011 to 2012 in addition to the 7-percent decline last year.
“Green Fence may have caused a lull in exports for a couple of weeks, but another important influencing factor was also the general economic weakness in 2012 and 2013,” Baxi says. “China is the global manufacturing center. When demand for [Chinese] products declines, [China has] less need for packaging.”
The unanswered question is, without that reduction in fiber demand, could China have successfully implemented Green Fence? And when global economic conditions improve, boosting the demand for corrugated packaging, will China continue to be choosy about the recovered fiber it imports? Baxi believes so. “We have seen new sources coming online to provide fiber to China, and at the same time [Chinese] domestic collections are also on the rise, so I don’t predict any compromise in quality,” he says. “In fact, I think quality will be the biggest factor for the buyer to determine what region he wants to buy fiber from because he now has more sources than before.” Countries such as South Korea, India, and Indonesia also are increasing their domestic collections, Baxi says. “It all comes down to fiber yield,” he adds. “If the amount of contamination or moisture increases in the fiber that people are exporting, the buyer is going to find it difficult to use it because it increases his cost of production.”
If Baxi is right, U.S. paper suppliers will have to be vigilant because the municipal market is sold on the single-stream collection concept. “Municipalities have pushed hard over the past five years to use single-stream to increase landfill diversion by adding marginal materials” to what they collect, Timpane says. “Out of the thousands of cities that offer single-stream, less than a half-dozen have abandoned the practice, while more than 150 cities have added it in the last five years.”
“Green Fence was a request from the Chinese government to enforce existing regulations to improve quality, which Waste Management takes seriously,” he says. “We are committed to our markets to make acceptable material.” But any recycling program will have challenges enforcing quality if it doesn’t precede that by educating residents on the merits of recycling, Timpane says. “We’re all in this boat together. You do get more nonrecyclables, so you have to sort more, but single-stream recycling is an effective method of collection that allows us the best chance to recycle the most items,” he adds. “It’s up to municipalities, recyclers, packagers, and recycled commodity users to work with their customers to educate them on the need for acceptable commodity quality in the national recycling system.”
Unlike Timpane, Androutsopoulos is skeptical that paper quality will improve in the long term. “I hope the mills keep up the pressure and force everybody to keep sending a clean pack, but I don’t think the quality is going to get better with single-stream,” she says. “The mills will do what they need to do to stay in business, and if that means substituting virgin pulp for recovered fiber, that’s what is going to happen.”
Yang, however, is more optimistic. “Ever since Green Fence was implemented, quality has improved and claims have dropped,” he says. “Keeping it going will take the work of everybody working together, from the MRFs to the brokers to CCIC and the mills. I think people realize that maintaining quality of supply is good for the industry. It’s less risk and fewer headaches for everybody.”
Ken McEntee is editor and publisher of The Paper Stock Report and Paper Recycling Online (www.recycle.cc), based in Strongsville, Ohio.
What About Europe?
Referencing incidents like the toxic waste shipment from the Netherlands mentioned on p. 55, several brokers interviewed for this story note that the Chinese consider European shipments a larger quality problem than those from U.S. suppliers. “All of the Chinese mill groups that I spoke to told me that the Europeans were the biggest culprits,” says broker Leno Bellomo, president and chief operating officer of Berg Mill Supply Co. (Los Angeles). “Some of the big buyers were pulling out [of] European mixed paper markets for some time before Green Fence.”
European paper quality problems are less likely to be due to collection methods, say those who study the industry. Although single-stream is on the rise in Europe, it’s less prevalent than in the United States, according to Bill Moore, president of Moore & Associates, a paper recycling consulting firm in Atlanta. Single-stream collection in Europe “varies widely by country. For example, the [United Kingdom] has a much higher level of mixed or single-stream collection than, say, Austria or the Netherlands,” Moore says. Ilpo Ervasti, an associate leading adviser for Indufor Oy, a forestry consulting company in Heslingfors, Finland, and a Ph.D. student at Aalto University in Esbo, Finland, points out that while it’s common to think of Europe as a uniform region, “it instead consists of several different countries with different collection practices and industry infrastructure.”
Rather than the collection method, it’s the European paper fiber itself that’s different from what’s used in North America. “In general, European recovered paper is lower quality than North American material when it comes to fiber length, [which is] an important parameter,” Moore says. “It has to do with how many times a fiber or recovered paper is recycled because the fiber breaks down with multiple uses.” Moore adds that for a time there was a feeling that Asian countries, especially China, could use lower-quality recovered paper, more so than European mills, because the newest wave of Chinese mills was built to do so. The Dutch shipments that were highly contaminated were limited in number, but they did reportedly touch off Green Fence—not due to poor quality fiber, however, but to garbage contamination, Moore says.
Paper recyclers hope revised processing practices, new equipment, and clearer specifications can improve the quality of their recovered fiber and reverse some of the recent declines in export demand.