China's Recyclers: Is a Rebound Ahead?

The Shanghai Sigma scrap aluminum recycling smelter. Frederik Balfour

For years China has been the world's dumping ground. Mountains of discarded plastic bottles, cereal boxes, cars, and other castaway items are shipped there to be melted, ground, or mashed into materials used by Chinese makers of everything from toys to packaging to steel girders. Some scrap dealers, such as paper maker Nine Dragons Holdings, made billions from the business. But the party came to an abrupt halt last fall as scrap prices fell by as much as 70% in the face of plunging demand. A pound of crushed soda bottles fell from 29¢ a pound on the U.S. West Coast to less than a dime as cash-strapped dealers in China couldn't pay up. "Even if you gave them the material for free, they couldn't afford to pay the customs duty," says Kathy Xuan, president of Romeoville (Ill.) plastics recycler PARC.

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