China has become the latest country to ban single use plastic bags, joining more than 90 others trying to emerge from a plastic addiction.
Last week the National Development and Reform Commission and the Ministry of Ecology and Environment said it would restrict the production sale and use of single-use, non-degradable plastic products in major cities by the end of this year, and in all cities by 2022. Single-use straws are also out.
China is struggling to handle its waste.
Its mega dump, a landfill about the size of 25 football fields, is full a quarter century ahead of schedule.
In July 2017, the World #2 economy said it would stop importing 24 kinds of solid waste from foreign countries — a move that appeared to take Australia and its recycling exporters by surprise when implemented in January 2018.
There are a range of ASX companies caught up in the Australia’s waste ‘crisis’ stemming from the 2018 recycling ban, but just two specialise in biodegradable plastics.
Secos Group (ASX:SES) makes compostable resins that get turned into bags and other products and Leaf Resources (ASX:LER) is planning to produce renewable sugars that can be turned into almost any kind of plastic.
Leaf is still in a building phase, working on getting a factory financed and built in Malaysia. It has been working on this project since it backdoor-listed in 2016.
Secos already has a factory producing biodegradable resins and finished products in China, and another factory in Malaysia.
Under a 2015 merger Secos combined its traditional plastic film business (which still makes up the bulk of customers) with a bioplastics business.
It has struggled to shift customers from its legacy resins and plastics products onto the biodegradable ones, but said in December it was making enough headway that it expected to cut its half year loss in half, compared to the prior corresponding period.
In a December quarter report released today, Secos said biopolymer sales in calendar 2019 were up 26.4 per cent on the prior year to $8.3 million.
It cited bans and restrictions on regular plastics as the reason for rising demand in China, India, Mexico, Malaysia and the USA.
“Plastic bag bans are leading to more converters qualifying SECOS compostable resin in order to supply bags to retail outlets,” it said.
China’s ban will have ramifications for more than just plastic resin and bag makers, and users.
Wood Mackenzie senior consultant William Liu says it will affect the petrochemical industry somewhat, as polyethylene is the main feed to produce bags and packaging films.
“As the ban rolls out to more cities and substitute materials gain traction, China’s polyethylene consumption will be impacted. China is the largest polyethylene importer in the world. The country consumed more than 33 million tonnes of polyethylene in 2019 of which 40 per cent is imported from producers in the Middle East and other Asian countries.”