RAW MATERIAL PRICES WILL GO DOWN, INFLATION WILL BE POSITIVELY AFFECTED
The ban on the import of Plastic Polyethylene waste was lifted by introducing "active control" criteria. While a letter of guarantee is required for companies, imported waste will be tracked from the port to the factory with a chip system.
The Ministry of Commerce released the ban on the import of polyethylene waste on May 18 subject to active control conditions. According to the new regulation, in which active control stands out, all licenses of 1350 recycling companies operating in Turkey will be reviewed thoroughly. In order to prevent abuse in the import of waste, a letter of credit was required. The letter of guarantee also aims to eliminate the companies that might abuse the regulation. In the past, importing companies could import up to 50 percent of their production capacity provided by crushers, while the remaining part was to be supplied domestically. According to the new regulation, the import rate will be determined not based on the capacity of the crushing machine, but on the heat treatment(extrusion) capacity, which requires greater investment and is a more value-added product stage. According to the new regulation of the Ministry of Commerce, companies will have to have the necessary machinery and equipment for more environmentally-friendly recycling. In addition, imported plastic waste will be included in the Mobile Waste Tracking System (MoTAT), which is used by the Ministry of Environment and Urbanization in hazardous waste transportation for the tracking of imported waste. This will ensure that imported wastes are tracked from the port to the factory with a chip-based tracking system. It will be possible to determine whether the product really goes to the factory or to an undeclared place. The aforementioned regulations aim to prevent the operation of trader companies in the market, who do not recycle the product after importing, and rather trade it.
NEW CRITERIA TO REGULATE THE INDUSTRY
PAGEV President Yavuz Eroğlu, who advocated active control instead of total ban on the importation of polyethylene waste, and demanded that restrictions on the recycling sector are lifted by introducing new, more stringent legislation, said that they held a series of meetings with the Minister of Commerce Mehmet Muş, the Ministry of Industry and Technology Mustafa Varank, and the Minister of Environment and Urbanization Murat Kurum. Recalling, he said: “We have been working with the relevant Ministries on various control mechanisms for more than a month, in consultation with the TOBB Waste and Recycling Assembly, the Chamber and our NGOs. At this point, the directive containing the new regulations on the import of polyethylene waste was finalized and the ban was lifted. The new regulation, which aims to reduce abuse by enforcing active control, has been a positive step for the sector. With the enactment of the legislation, the number of companies importing waste will decrease from the current 1350, depending on the criteria. The aim is to introduce further regulation to the recycling sector. Paper, iron-steel waste is also imported to Turkey, but there is no problem there because the number of companies is controlled and the licenses are balanced. License rehabilitation to be carried out in the plastic recycling sector is important. The letter of credit obligation will ensure that companies that can do their job properly and have the capacity and equipment will continue on their way.
PROHIBITION COST 547 MILLION DOLLARS
Stating that the ban on the import of polyethylene waste cost 547 million dollars in 45 days, Eroğlu reminded that the decision to cherry-pick and ban polyethylene among the imported wastes had other ulterior motives, and reminded that petrochemical companies reduced the supply with different and suspiciously simultaneous closures and caused the raw material prices to increase by an average of more than 150% in last 8 months: “The timing of decision to ban the import of polyethylene waste raised an eyebrow as it was right after the Turkish plastics industry decided to boycott and turn to recycled raw materials. With our boycott, we stopped the purchase of raw materials from petrochemical plants and thus due to reduced demand and the increased preference for recycled raw materials, original raw material prices decreased by a minimum of 30% in 3 months in our domestic market. While we, as the plastics industry, were fighting to reduce prices, the decline in the price of domestic virgin polyethylene was stopped with the ban decision. The total cost of the ban was $547 million. While the import price of waste for recycled polyethylene is 1.6 TL per kilogram, these wastes are sold for 6 liras when they are recycled and turned into raw materials. Meanwhile, the kilogram price of polyethylene purchased from petrochemical facilities is around 16 TL. So the price difference is almost 3 times. In 2020, 438 thousand tons of polyethylene waste was imported, and since these were purchased at affordable prices, products were delivered to our consumers at affordable prices as well. Unable to find recycled raw materials, industrialists paid an extra $547 million to petrochemical plants. The unfortunate implication of this cost increase on the consumer was inflation.
NEW REGULATION TO LOWER RAW MATERIAL PRICES, REDUCE INFLATION
In 2020, 438 thousand tons of polyethylene waste was imported, and since these were purchased at affordable prices, products were delivered to our consumers at affordable prices as well. PETKİM's total polyethylene capacity of 446,000 tons meets 20% of the domestic polyethylene need in Turkey. The ban eliminated a source of raw material as large as PETKİM's polyethylene capacity. Petrochemical plants producing plastic raw materials determine their prices according to the supply-demand balance, as in petroleum. For this reason, banning the import of waste polyethylene has increased not only the products or uniform raw materials produced from recycling raw materials, but also the price of virgin raw material produced by petrochemical plants, as it disrupted the supply-demand balance. In other words, it put an upward pressure on all raw material prices, whether it is produced from recycled raw materials or not, polyethylene or not. Now, with the lifting of the ban, an excess of recycled polyethylene raw material will enter the market to match PETKİM's production capacity. This will put downward pressure on raw material prices. As a result, these cost reductions will reflect positively on inflation.
TURKEY MUST NOT MISS THE RECYCLING TREND
Stating that Turkey has been importing and recycling paper and metal waste for years without any problems, Eroğlu said that plastic waste is imported both within and outside the union in European Union countries. Eroğlu explained that while Turkey imported a total of 438 thousand tons of polyethylene waste in 2020, the EU imported approximately 800 thousand tons of polyethylene waste, twice the rate of Turkey, continuing, “Wastes that are a part of Circular Economy have become valuable raw materials all over the world. As in the paper and metal industry, Turkey should be importing plastic waste without any problems. It is of course very important that Turkey will implement new regulations with effective inspection mechanisms in line with the EU's waste import processes. With the new regulation, Turkey will both provide the recycling raw material needed by the industry with plastic waste imports, and will also eliminate environmental risks with active control.”
Contact: PAGEV Corporate Communication Director
Cesur Caca cesur.caca@pagev.net.tr
ABOUT PAGEV
PAGEV is one of the leading nongovernmental organizations in Turkey focusing on the Plastics Industry. PAGEV is composed of over 800 trustees and relevant 1750 member companies that account for more than 88% of the plastics value chain in Turkey.
The Turkey plastics industry makes a significant contribution to the welfare in Turkey by enabling innovation, creating quality of life to citizens and facilitating resource efficiency and climate protection. More than 300 thousand people are working in about 11,000 companies (mainly small and medium sized companies in the plastic sector) to create a turnover in excess of 34 billion $ per year. The value chain represented by PAGEV includes polymer manufacturers, product manufacturers, equipment builders and casting companies.
PlastEurasia Istanbul, the largest annual international plastics industry fair in Turkey and Eurasia, and the second largest event of its kind in the world, is held with the partnership of PAGEV and TÜYAP Fairs.
PAGEV have built vocational schools in Turkey in pursuit of our education mission, where we support an employment-based education model and help to meet the need for well-trained technical personnel in the industry. The PAGEV Küçükçekmece Vocational High School has a capacity of 1500 students while the PAGEV Gebze Vocational High School has 500.
Our subsidiary organization PAGÇEV has been supporting the recycling industry since January 2014 to fulfill its mission of "Responsible industry, problem-free environment." PAGÇEV, the Recycling Economic Entity of PAGEV, is an Authorized Institution of the Ministry of Environment and Urban Planning for segregation of packaging wastes at source to improve recycling performance. PAGÇEV undertakes the recycling and documentation requirements of businesses that market packaged products in Turkey, and cooperates with municipal facilities to enable the segregation and recycling of packaging wastes at the source. The organization also conducts education and awareness campaigns on packaging wastes and recycling, encourages recycling activities, and prepares public service announcements.
