Recycled PET bottle exports to China hurt domestic recyclers in Japan

06-Jul-06

Japanese companies that provide manufacturers with materials recycled from used polyethylene terephthalate bottles are on the brink of bankruptcy. Almost 30% of the recyclers are estimated to be in danger of going bust this year as used PET bottles are increasingly finding their way into the markets of China and possibly India. Interestingly, any significant contraction of the industry would threaten the development of environmentally friendly technologies in Japan. These companies are permitted to reprocess plastic bottles in a special scheme introduced under the Law for Promotion of Sorted Collection and Recycling of Containers and Packaging. Under the scheme, municipalities collect used plastic bottles from households and deliver all or part of them to the Japan Containers and Packaging Recycling Association free of charge. In Japan, nearly half of all used bottles come from households and are collected by municipalities. The association gives the bottles to the recyclers that have offered the highest bidding prices in a tender. Recyclers earn money by selling materials made from the bottles to automakers and other manufacturers. Until fiscal 2005, the association paid money to recyclers as reprocessing fees, but licensed recyclers are starting to pay the association to collect used bottles for them in the current year as demand now exceeds supply. More and more financially strapped municipalities are bypassing the association and selling used bottles to traders for cash. Most of the bottles municipalities have sold outside the scheme are traded by other brokers and ended up being shipped to China. Recyclers polyethylene terephthalate bottles in Japan are have been running their plants at less than 50% capacity. One of the recyclers- Japantech expects to secure only about 7,000 tons of plastic bottles for the current business year for its factory capable of processing 20,000 tons. A major industry group comprising 41 of the 59 companies projects their average factory operation rate will dip sharply to 36% in the current year from 55% the previous year. The Environment Ministry's Office of Recycling Promotion expresses that the government can take limited action as the current recycling process is led by the private sector.