I. Basic Development Status of China's Recycled Resource Recycling Industry

In 2014, China's economic development entered a new normal. Affected by the domestic and international market environment, the prices of major recycled resources continued to fall. Coupled with the rapid increase in raw material and labor costs, the economic benefits of recycled resource recycling enterprises were sluggish, and the industry's development environment became increasingly severe.
 

II. Industry Development Trend Analysis - Overall Industry and Variety Trend Prediction

2015 was the closing year of the "Twelfth Five-Year Plan" and a key period for China's economy to smoothly transition to a new growth stage. Macro policies need to follow the current adjustment trend and remain vigilant against short-term unexpected shocks, keeping economic fluctuations within a smaller range. Considering both internal and external conditions, after the government's consumption withdrawal and the rapid decline in the growth rate of real estate and related consumption in 2015, the cultivation of new consumption hotspots will be further strengthened. The automotive industry, including new energy vehicles, is in a stage of rapid development, and the state is increasing its support for the automotive production and consumption sectors. Further increasing investment in information infrastructure and lowering the threshold for information consumption will drive the informatization transformation and upgrading of traditional businesses and industries.

2015 was a planning year, and the "Thirteenth Five-Year Plan" plays an important role in "carrying forward and inheriting." The "Thirteenth Five-Year Plan" period is the sprint stage to achieve the first centenary goal. It focuses on promoting the transformation of China's economy from the low-to-mid end to the mid-to-high end. Actively promoting technological innovation and system innovation will significantly improve the independent innovation capabilities of some strategic industries (automobiles, energy conservation and environmental protection industries). Support for industries that have already formed certain new advantages (such as high-speed rail, photovoltaic industry, shipbuilding industry, and regional aircraft) will continue to grow stronger. Overcapacity is serious in industries such as steel, coal, flat glass, cement, electrolytic aluminum, and photovoltaics. Controlling the increase in capacity and optimizing existing capacity, actively and steadily promoting industrial transformation and upgrading, and eliminating backward production capacity are also being carried out in an orderly manner, such as Hebei Province's reduction of steel production capacity by tens of millions of tons.

It is expected that the total amount of recycled resources in China in 2015 will increase slightly; the prices of some recycled resources will continue to fluctuate and decline; the operation of traditional recycled resource enterprises will become more difficult, and recycled resource recycling enterprises with innovative business models will continue to emerge; mergers and acquisitions among enterprises will further accelerate, which will play a positive role in resolving overcapacity; the "Internet +" thinking will inject new vitality into traditional recycled resource recycling. Specifically, by variety:

1. Waste Steel Recycling Trend Prediction

In 2015, the operation of the domestic economy weakened the consumption intensity of steel, and the steel market was in a state of oversupply, and the situation of low prices and low efficiency will continue. The external conditions for the development of the waste steel industry will not change significantly. The development of China's waste steel industry will continue to operate in the new normal stage of "low consumption trough, low price downturn, and enterprise survival and development adjustment." In 2015, the trend of a slight increase in crude steel production, a slight increase in the total consumption of waste steel, and a slight decrease in waste steel prices will continue. It will be difficult to change the situation of declining waste steel consumption by steel enterprises, and the operating conditions of waste steel processing enterprises will become increasingly difficult.

2. Waste Non-ferrous Metal Recycling Trend Prediction

With the economy entering the "new normal" and the continued overcapacity of domestic non-ferrous metal production, the demand for recycled non-ferrous metals in China in 2015 will not increase significantly, and market prices will not increase significantly. In addition, in recent years, the price of imported copper and aluminum scrap has continued to be inverted, and using more domestically recycled non-ferrous metals will be an irreversible trend in the next few years. The consumption and social accumulation of domestic non-ferrous metal products are constantly increasing. It is estimated that the amount of domestic waste non-ferrous metal recycling in 2015 will continue to remain stable, and the possibility of a significant increase is relatively small. As the government further increases the simplification of administration and delegation of power, the market environment for non-ferrous metal recycling and utilization is expected to be further optimized in 2015.

The "Catalog of Value-Added Tax Preferential Policies for Resource Comprehensive Utilization Products and Services" is about to be revised and issued, and more non-ferrous metal recycling enterprises are expected to enjoy value-added tax preferential policies, which will help improve the competitiveness of enterprises; the promulgation of the "Long-term Plan for the Construction of the Recycled Resource Recycling System" will also accelerate the construction of China's waste commodity recycling system, which will play a positive role in the development of recycled metal enterprises using domestic scrap.
3. Waste Plastic Recycling Trend Prediction

In 2015, insufficient demand in the plastic market and increased downward pressure on the plastics processing industry will directly affect the growth of waste plastic recycling. However, in 2015, the state implemented new economic policies, and the plastics processing industry will make achievements due to the construction of key projects. Recently, the low operation of oil prices and the significant drop in plastic raw material prices have stabilized, and other factors affecting business operations have not changed significantly, which can bring short-term benefits to plastics processing enterprises.
 

In the next few years, Asia, especially China, will continue to act as the engine of growth in the global polymer market, and the continuous urbanization process and economic development will accelerate the growth of plastic demand. These countries, backed by prosperous domestic and re-export markets, are actively improving their recycled plastic processing capabilities. Recycled plastic producers in mature markets such as Japan and South Korea will enter niche differentiated markets by improving the industrial chain and gradually giving up low-end market share.
 

4. Waste Paper Recycling Trend Prediction

Due to the slowdown in economic development and the decline in demand growth, which is difficult to improve effectively in the short term, the prosperity of the paper industry will not rebound quickly. Coupled with the structural and phased overcapacity of some products, it is expected that the production and consumption of the domestic pulp and paper and paper products industry in 2015 will continue the trend of 2014. The waste paper recycling industry will generally remain stable, but the market will not improve much, and the overall performance should be slightly better than in 2014.
 

5. Waste Electrical and Electronic Product Recycling Trend Prediction

In 2015, the theoretical scrap volume of the first batch of catalog products (four machines and one brain) in China's waste electrical and electronic products will continue to grow. The theoretical scrap volume of black and white televisions will continue to decline. Due to the huge processing volume of televisions and high subsidy standards in the first batch of catalog products, the fund for processing has been severely imbalanced. Currently, the Ministry of Finance is studying the adjustment of the collection and subsidy standards for processing funds. It is expected that in 2015, under the new collection and subsidy standards for funds, the number of recycled and processed products in the first batch of catalogs will remain flat or slightly decrease compared to 2014.

With the release of the list of enterprises that received processing fund subsidies from the Ministry of Finance for the fourth batch, most qualified processing enterprises have already engaged in the recycling and processing of waste electrical and electronic products. Competition for raw materials among processing enterprises will further intensify. In addition, with the continuous increase in labor costs and management costs, the profit margin of the processing industry will continue to shrink. Mergers and acquisitions among enterprises will become more active.
 

6. Waste Tire Recycling Trend Prediction

In 2015, China's annual output of waste tires was approximately 11 million tons. Due to the national standard "Technical Conditions for Motor Vehicle Operation Safety" (GB7258) and the "three no guarantees" policy (no repair, no replacement, no return) for tires, nearly 70% of tire retreading companies were either shut down or operating at half capacity. The number of retreaded tires is expected to decrease by more than 50% year-on-year. Due to the price of natural rubber and environmental concerns, the demand for reclaimed rubber has decreased significantly, and reclaimed rubber production is expected to decrease by about 30% compared to 2014. Large-scale, well-managed companies will receive government support. Rubber powder production was approximately 350,000 tons, of which 150,000 tons were used in modified asphalt production. In 2015, China expanded the pilot program for importing used tires to alleviate the shortage of tire carcasses domestically.

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7. Forecast of End-of-Life Vehicle Recycling Trends

In 2015, China's macroeconomic growth continued to weaken, and the market demand recovery momentum was insufficient. Particularly, the structural adjustment of China's steel industry led to a decline in steel production capacity and sluggish scrap steel prices, which negatively impacted the recycling and dismantling of end-of-life vehicles. However, 2015 was a year in which the end-of-life vehicle recycling and dismantling industry faced both operational difficulties and development opportunities. It is estimated that the amount of end-of-life vehicles recycled reached 2.8 million, a year-on-year increase of 27.3%, and the economic benefits of enterprises will further improve.

The factors that have the greatest positive impact on the end-of-life vehicle recycling and dismantling industry are: firstly, 2015 was a key year for the government's implementation of mandatory elimination of yellow-label vehicles, which will promote the development of the end-of-life vehicle recycling and dismantling industry; secondly, the low-level rebound in the price of dismantling materials, and the expected improvement in the reuse rate of reusable parts from dismantling, will drive the growth of economic benefits for end-of-life vehicle recycling and dismantling enterprises.
 

8. Forecast of End-of-Life Vessel Recycling Trends

In 2015, the situation of insufficient global economic growth momentum remained difficult to change, and the international environment remained complex and uncertain. From the analysis of the supply market for scrapped vessels, the domestic and international shipping industries remained sluggish in recent years, and the overcapacity situation was difficult to reverse. Coupled with the Hong Kong Convention (HKC), the EU Ship Recycling Regulation (EUSRR), the Energy Efficiency Design Index (EEDI), and the delivery of new vessels, the pace of old vessels exiting the international market will not stop in the short term. In China, with the continued implementation of policies to accelerate the elimination of old transport vessels, a large number of scrapped vessels will still face elimination and dismantling in 2015. It is estimated that the amount of scrapped vessels dismantled in the domestic ship dismantling industry in 2015 will continue to decline, and is expected to fall by more than 20%.
 

9. Analysis of Waste Glass Recycling

Reviewing the 2014 glass spot market trend, the overall performance was "price trend lower than expected, continued increase in new production capacity, intensified regional competition, and brewing a new round of integration." Currently, the glass spot price is vastly different from the predictions of most industry insiders at the beginning of the year. The main reasons are the excessive reduction in demand for glass from downstream industries such as real estate and the impact of new production capacity. According to data released by the National Bureau of Statistics, the economic operation of the glass industry is severe, with 22% of enterprises in a state of loss, and the loss exceeding 3.7 billion yuan, an increase of 67%. Therefore, the glass industry situation in 2015 is not optimistic. In 2015, the total industrial output value of large-scale daily-use glass production enterprises in China will reach about 200 billion yuan, and the total output will reach about 28 million tons. It is estimated that the amount of waste glass recycled in 2015 will slightly decrease compared to the previous year, and the recycling price will fluctuate and fall.

10. Analysis of Waste Battery Recycling

In 2014, 78,499 new energy vehicles were produced and 74,763 were sold, representing a 3.5-fold and 3.2-fold increase year-on-year, respectively. Among them, the production and sales of pure electric vehicles reached 48,605 and 45,048 respectively, representing a 2.4-fold and 2.1-fold increase year-on-year, respectively; the production and sales of plug-in hybrid vehicles reached 29,894 and 29,715 respectively, representing an 8.1-fold and 8.8-fold increase year-on-year, respectively. It is estimated that the sales of new energy vehicles in 2015 will double to 150,000. The booming production and sales of new energy vehicles have led to a significant increase in the production of lithium-ion batteries, and the amount of waste batteries recycled in 2015 will remain basically the same as in 2014.