U.S. shipments to China of old cardboard, newspaper and discarded plastic slowed after China this year implemented more-stringent standards on the purity of imported scrap. That change has left Chinese packaging companies and plastics manufacturers short on materials. As a result, some of them are buying or building plants in the U.S. to manufacture the paper for corrugated boxes, pulp and plastic pellets for which they can’t find enough raw material in China. Companies including some of China’s biggest paper makers are discovering a glut of cheap recycled material in the U.S.

“Right now, plastic waste is everywhere after China stopped taking it,” said Song Lin, a longtime broker of plastic scrap in the U.S. who is preparing to open a factory in Georgia that will turn discarded plastic into pellets for export to China. The moves are a boost to the U.S. scrap industry, which collapsed in recent months amid sharply lower exports to China. For now, investors are mostly subsidiaries of Chinese plastic and paper producers, or firms supplying large clients in China, and have experience navigating the logistical and regulatory challenges of exporting to the country.

ND Paper LLC, a unit of China’s Nine Dragons Paper (Holdings) Ltd. , in recent months acquired paper mills in Biron, Wis., and Rumford, Maine, for $175 million from British Columbia-based Catalyst Paper Corp. The firm also bought a pulp mill in Fairmont, W.Va., for $55 million and a pulp mill in Old Town, Maine, this month from OTM Holdings. That mill had been idle since 2015, and ND Paper expects to restart operations early next year.

“All four of our mills will have a heavy focus on exports,” said Ken Liu, chief executive of ND Paper. Shanying International Holdings Co., a rival, has also jumped into the U.S. market. Its subsidiary, Global Win Wickliffe LLC, acquired an idle paper mill in Wickliffe, Ky., in August for $16 million and plans to invest $150 million to restart the mill, which closed two years ago, and eventually employ about 500 people. Global Win declined to comment on the purchase.

Restarting idle plants could revive demand for U.S. recycled paper. China is already buying more finished paper from U.S. mills, particularly a variety known as kraftliner that is usually made from wood pulp and used in corrugated boxes. U.S. exports of kraftliner rose 36% between January and August from the same period a year earlier, according to forest-products markets researcher RISI Inc.
To read the full story, visit https://www.wsj.com/articles/chinese-firms-snap-up-u-s-sites-to-process-scrap-1540641611.

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