China’s environmental push away from plastics having knock on effects in paper industry, bubble tea shops

Sidney Leng
·4-min read

Over the past few weeks, bubble tea lovers in China have been trying to get used to one thing that many of them were prepared for: paper straws.

The roll-out of paper straws at numerous bubble tea shops across China to replace the traditional plastic alternative is down to Beijing’s new policy initiative to reduce environmental pollution by cutting down on the use of plastic products.

By the end of last year, single-use plastic straws were banned in all restaurants, while factories must stop producing and selling non-biodegradable disposable plastic tableware, including plates and utensils, according to a policy document released by the central government last year.

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The increasing demand for alternatives to plastic has since sent a ripple effect through the papermaking industry, and at the end of January, the price of paper pulp soared to 5,540 yuan (US$859) per tonne, a near two-year high, according to data tracked by the National Bureau of Statistics.

In the futures market, the price of pulp shot above 6,500 yuan per tonne this week, based on daily trade data from the Shanghai Futures Exchange.

Some Chinese paper mills have increased their prices at least three times since the end of last year, citing the rising costs of raw materials and fuel such as coal, and industry analysts have said the price of pulp could continue to rise this year due to supply shortages.

One of the key raw material for making paper usually comes from waste paper, much of which was imported by China in the past, but Beijing has been gradually reducing its imports of solid waste over the past five years, with waste paper completely banned from this year.

The second impact is that imported waste paper is a very important source of long fibres used for papermaking. We will need to find substitutes, but they all have their own bottlenecks. So this can cause further increase in pulp prices

Fang Juntao

“This will have a very big impact on our raw material costs for making paper because [the ban] will lead to a shortage of waste paper supply. We did a rough calculation that after the import ban, we could have a gap of 7 million tonnes in waste paper,” said Fang Juntao, an senior analyst focused on the waste paper industry from Zhuochuang, a commodities consultancy based in Shandong.

“The second impact is that imported waste paper is a very important source of long fibres used for papermaking. We will need to find substitutes, but they all have their own bottlenecks. So this can cause further increase in pulp prices.”

In 2020, China imported a total of 30.6 million tonnes of paper pulp, an increase of 12.6 per cent from a year earlier, according to data from Chinese customs.

But the country’s imports of waste paper fell by 38 per cent from a year earlier to around 6.6 million tonnes last year, according to a calculation by commodities analysts from Zheshang Securities led by Shi Fanke, based on approved import quotas.

I plan to buy a non-disposable straw by myself. This is awful

Weibo user

The problem facing China is that its waste paper recycling rate has not improved much over the past decade, meaning some leading paper mills will have to expand production of waste paper pulp or use some non-wood pulp made from wheat straw or bamboo as a replacement, Shi said.

Combined, these could lead to additional demand for 3 million tonnes of pulp in 2021.

While the surging price of pulp has not yet trickled down to the retail price of consumer products, based on the latest inflation figures, there are looming worries, particularly among downstream industries such as publishing and packaging, which may be forced to eventually increase prices for items such as toilet paper and books.

As one of the most prominent groups of consumers hit by the plastic ban, China’s bubble tea lovers have had a hard time adjusting to paper straws, complaining they swell in their drinks and destroy the taste.

“I plan to buy a non-disposable straw by myself. This is awful,” said one top comment on Weibo, China’s version of Twitter, which received more than 64,000 upvotes.

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