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Insight | Time:Dec 30 2016 9:47AM
What does environmental protection campaign in Guangdong means to recycled polyester fiber industry
 
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Background:

On November 28, the fourth group of Central Environmental Protection Inspectorate held a meeting in Guangzhou, Guangdong Province in a bid to tackle environmental problems. Luhao, the group leader, delivered a speech that the main purpose of the Inspectorate group was to encourage and supervise Guangdong government and its standing committee to implement the central government' s decision and plan to handle serious environmental issues and push forward ecological civilization construction and green development.

The meeting symbolized the dawn of local environmental regulation. In the past one month, Guangdong experienced various events: many plants were shut down, went bankrupt or had day offs ahead of schedule and feedstock prices surged. And till this day, this campaign continued to intensify, an ambitious move that covered various industries and places and lasted for a long time compared with those of past years.

Influence on the recycled polyester fiber market



Just like many other plants, local recycled polyester fiber plants and bottle flake cleaning and processing plants could not free themselves from this intensified campaign. Those small bottle flake cleaning and processing plants, in particular, were bitterly shut down due to unqualified environmental protection utilities, so that almost immediately, somewhat weak recycled bottle flake price significantly trended upward and even surpassed the price in Zhejiang in recent days amid tightened market supply. Downstream plants were hard to secure raw materials even with higher price.



Recycled polyester fiber in turn hiked all the way on rising feedstock. HC re-PSF skyrocketed by 1500yuan/mt in just half a month from 6900yuahn/mt. And plant inventory also slumped. Some plants even had to cut or stop production because of the shortage of feedstock supply.

Concerns:

This environmental regulation in Guangdong is just a miniature of the whole picture in China. More of such an initiative as the air pollution campaign in Hebei and the overhaul of many waste plastic plants in Laiwu, Shandong Province and Gengche town of Suqian City, Jiangsu Province all signaled that environment issues shall be taken seriously in their operation.

At this point, recycled polyester fiber industry was quite depressed on rising feedstock. Many plants stopped or cut production and suspended offers. The influence of such regulation would never stop here. Many small bottle flake cleaning plants are not equipped with waste processing utilities. They used to stop production while the government regulations came and resume when they left. However, this time, in the face of massive negatives of environmental decay on social and economic development, the country worked to solve this problem in a comprehensive and scientific way. Take Guangdong for example, this move was aimed to eliminate those unqualified enterprises and inspect and encourage plants to operate in line with the law and order. From this perspective, many small and medium-sized enterprises may find it hard to survive as they can’t bear the high cost of upgrading their facilities and affiliated equipment to meet discharge or emission standards and the daily maintenance also requires more money.

In this respect, the number of bottle flake cleaning plants may greatly decrease while large-scale enterprises will see obvious increase. The quality of recycled bottle flake will have better standards to follow and its price be more reasonable. For recycled polyester fiber plants, they may face rising feedstock cost in the short tun while upgrading themselves to meet the environmental rules and regulations.
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