The import of solid waste will stop next year: what is the overall market impact on "foreign garbage"?

SMM: the Ministry of Ecology and Environment held a regular press conference today, and spokesman Liu Youbin answered questions about the ban on the import of foreign garbage. He said that in the first five months of this year, the import of solid waste was 3.226 million tons, down 45.3 percent from the same period last year. From 2021, the import of solid waste will be completely banned, and the Ministry of Ecology and Environment will no longer accept and approve applications related to the import of solid waste.

China was once one of the world's leading importers of waste. As early as 2016, China alone imported 7.3 million tons of waste plastic, with a total value of US $3.7 billion (25 billion yuan). In addition to plastic, there are scrap copper, scrap iron, scrap aluminum, waste paper and so on.

In July 2017, the State Council proposed a total ban on the entry of foreign garbage, and the 2018 government work report made the prohibition of "foreign garbage" a priority of the year for the first time, Huatai Securities said. its purpose is to effectively prevent the risks posed by garbage imports to China's natural environment and public health, and to prevent China from becoming a garbage dumping country. More importantly, we should improve the recovery rate of renewable resources, upgrade and transform China's manufacturing standards, and reduce the degree of external dependence of resources.

Starting from September 1, 2020, the revised Law on the Prevention and Control of Environmental pollution by solid waste will be implemented to further promote the comprehensive utilization of solid waste. Shanxi Securities believes that the newly revised solid waste law is expected to bring more investment demand in areas such as domestic waste classification and hazardous waste management.

Waste paper and waste plastics have taken the lead in banning the import of waste plastics as early as the end of 2017. at present, the import of waste plastics is basically zero. From January to May 2020, the import of waste paper was 2.47 million tons, a decrease of 44% compared with the same period in 2019. With the decline in the volume of waste paper, the price of national waste has changed from weak to strong, and it is expected that the price of waste will rise. Western Securities suggests that under the background of foreign waste tightening, we should pay attention to the profit space of paper enterprises with strong self-sufficiency in raw materials. Founder Securities recommended plate leader Sun Paper, Shanying Paper, Chenming Paper, Bohui Paper.

At the same time, plastic restrictions and the ban on the import of waste plastics have promoted the use of degradable plastics instead of ordinary plastics at home and abroad. At present, the listed companies that have the production capacity of degradable plastics in China are mainly blond technology.

In terms of scrap copper imports, on the one hand, the decline in import volume has narrowed, on the other hand, domestic scrap copper has replaced refined copper consumption. Citic Futures said that China's copper market is still tight, the $50 processing fee smelters are losing money, which supports copper prices, and the supply of scrap copper market is expected to ease in the second half of the year. Latin America is currently in tight supply, demand expectations are good, and inventories continue to decline. Oriental Securities suggests to focus on copper smelters with rich copper concentrate resources: Jiangxi Copper, Zijin Mining, Yunnan Copper, and lithium battery copper foil manufacturers: Jiayuan Technology, Norde shares and so on.

Imported scrap has been declining rapidly since 2011. Wang Weijia, an analyst at Huatai Securities, said that the increase in scrap production in the future will mainly come from the increase in social scrap supply. At present, there is a significant seasonal decline in construction steel demand in the rainy season, and Huatai Securities believes that the impact of the ban on scrap supply is limited.

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