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Traders of waste paper, scrap metal and soft commodities often see their profit margins destroyed by unforeseen costs arising from logistics errors, underweight loads and quality claims. Many exporters of waste paper budget $2 a ton to cover these costs because they assume there’s nothing they can do.

They’re wrong.

Back office mishaps

An inefficient back-office and poor risk controls are the main causes of profit erosion for traders in secondary raw materials. At the budget stage, the trader might over-estimate the profitability of an order because they don’t have a clear view of what is likely to go wrong on route. Logistical errors can cause trucks getting sent to the wrong places. Clerical mistakes can see documents getting rejected by customs. Invoicing mishaps can mess up accounting. Poor monitoring of suppliers can mean quality claims further down the line.

All of this is avoidable.

Stop the bleed

It starts by getting an active grip on the costs you can control. Accounting errors, compliance mistakes, and logistical failures are the ‘low-hanging fruit’ that cost traders dear but can be dealt with relatively easily by eliminating manual data entry and connecting your enterprise software to shippers and third parties who increasingly provide live data feeds for free.

Poor productivity is the other symptom of a creaky back-office: too many staff getting too little done. The answer to that is automation – which can be done by adopting a modern CTRM software solution.

Get a grip on claims

Quality claims are yet another big cost for waste paper traders who export. These are often considered a fact of life that cannot be avoided. Too often the trader ends up splitting the cost with the supplier, even when the claim itself deserves to be challenged.

It’s true that spurious claims will never disappear entirely, and sometimes need to be resolved through negotiation. But having a disorganised and ‘let-it-slide’ approach to claims both annoys the customer and encourages them to claim for more. In these circumstances a digital claims process and customer portal is needed to deal with customer claims fast while providing you with all the photographic and documentary evidence to rebut unreasonable complaints. Serial offenders get flagged.

Vigilance pays. Vigilance earns respect.

Monitor your suppliers

Another way of reducing claims it so improve your monitoring. If you’re not inspecting your suppliers regularly or keeping track of whether they’re delivering the quantities and quality promised – there’ll be a price to pay further down the line. With proper insights into the data, and a mobile app that makes supplier inspections quick and highly organised, claim costs can be reduced or avoided at source.

Accurate profit estimates improve strategy

Accurate profit estimates matter in the $315b global recyclables trade. If your estimates are consistently accurate, your trading strategy is on track. If not, you’re probably allocating your capital poorly, which is a polite way of saying that you’re wasting your time and money. With proper performance data, however, you can take the guesswork out of profit estimates and get your strategy right.

Modern risk management saves money

Some risks such as wars, pandemics and extreme weather are out of anyone’s control. But a more vigilant, data-driven approach can significantly reduce the costs that can occur unexpectedly over the life of an order – while radically improving back-office productivity.

The gap between what rules say and how they work in practice is a potential minefield for international traders of secondary raw material such as waste paper and metal recyclables.

To minimise costly delays and fines, most UK exporters rely on local agents in destination countries who have direct contact with port authorities and customs officials. These agents often cultivate long-term, trusting relationships with their clients and work hard to navigate the local bureaucracy. Traders still need to study the rules though because if something goes badly wrong and it ends up in court – guess who’s liable?

Know the rules, know the risks

In international trading, it always pays to know the risks. But how can you quantify the risks without knowing the rules – and where you might be falling short?

How many busy UK exporters of waste paper, for example, have actually familiarised themselves with the suite of 12 hazardous waste forms that the Central Pollution Control Board (CPCB) at the Ministry of Environment, Forest and Climate Change, Government of India, provide in accordance with its Hazardous Waste Management Rules (HWMR) 2016?

Maybe your documentation expert is a keen student of Indian regulations, but it’s also possible they’re simply following the instructions provided by the local agent based upon ‘what works on the ground’. That insidious gap between ‘what works’ and what the official rules require deserves scrutiny – because it’s where risks are sure to lurk.

How compliant are you?

As a fundamental risk assessment, you need to know whether:

1. You’re fully compliant.
2. You’re relying to some extent on facilitations and goodwill (‘the grey area’). 
3. You’re inadvertently breaching the rules on the basis of inaccurate advice. 

So just in case a copy of the HWMR isn’t on your bedside table, here are some key details about the two forms that are directly relevant to UK exporters: Form 6 and Form 9 Transboundary Movement documents. This should arm you with the basics to periodically quiz your agent and make an assessment of how compliant you really are.

Rules keep changing

The first edition of the hazardous waste management rules were published in the Gazette of India in 2008. A significant update then came into force in 2016. The Hazardous and other Wastes (Management and Transboundary Movement) Rules 2016 relate to the generation, management, transport, treatment, recovery, processing, recycling, use, sale, transfer and disposal of hazardous waste in India.

Amendments have continued to crop up since then, such as in 2022, when end-of-life tyres were added to the list of wastes that are covered by India’s extended producer responsibility (EPR) rules. So it’s worth visiting the CPCB site on a regular basis (see link above).

Form 6 and form 9

Form 6 and Form 9 are downloadable documents that any UK trader exporting waste paper to India will be filling out and couriering to their bank on a regular basis. Chapter III – Import and Export of Hazardous Wastes in the HWMR 2016 sets out the related rules. So let’s look at some of what it actually says.

Form 6 information is primarily the importer’s responsibility

‘For the import of other wastes listed in Part D of Schedule III, the importer shall not require the permission of the Ministry of Environment, Forest and Climate Change. However, the importer shall furnish the required information as per Form 6 to the Customs authorities’ [Chapter III, Section 13 (2), HWMR 2016]

Here, the responsibility for providing the information in Form 6 to the Customs authorities is assigned to the importer, not the exporter. So why are UK exporters being advised to fill out the information themselves? The clue lies on the form. Form 6 states that both the importer and exporter can furnish the information – even though the Rules themselves do not mention it.

The form-filling work has basically been shifted onto you, the exporter.

Form 9 is primarily the exporter’s responsibility 

Furnishing the information required by Form 9 (movement document) can be done by either the importer or exporter as with Form 6. This too is written on the form. The rules only specify that the port and customs authorities need to ensure that the movement document is there with the shipment. 

‘The Port and Customs authorities shall ensure that shipment is accompanied with the movement document as given in Form 6 and the test report of analysis of the waste, consignment, wherever applicable from a laboratory accredited or recognised by the exporting country.’ [Chapter III, Section 13 (10), HWMR 2016]

Once past Customs, Form 9 is the owner’s responsibility

Once the shipments has got past Customs, the information contained within Form 9 then needs to be communicated to the transporter by the ‘occupier’ which in these circumstances means ‘the person in possession of the hazardous or other waste’ [as defined in Chapter I, Section 3, 21. HWMR 2016]. 

‘The occupier shall provide the transporter with the relevant information in Form 9, regarding the hazardous nature of the wastes and measures to be taken in case of an emergency and shall label the hazardous and other wastes containers as per Form 8.’ [Chapter V, Section 18 (2) HWMR 2016]

So this clause is effectively telling the new owner of the material – most likely your customer – that they are responsible for giving the relevant Form 9 information to whoever’s been hired to drive the waste to its place of recycling.

Compliance matters

There’s a reason why compliance is a big business: it’s because the costs of not being compliant are potentially enormous. So am I suggesting that you need to hire a fancy compliance consultant? No. But you do need to assess, score and monitor your risks on a regular basis right across your trading business as a matter of common sense. Fortunately modern risk management software does exist to help you do this far more efficiently and cheaply than before.

Just remember: read the rules for yourself – and know your risks!

Exporters sending certain secondary raw materials such as waste paper to India for recycling need to complete Form 6 and Form 9 transboundary movement documents.

These documents relate to the international movement of hazardous waste and are required by Indian Customs – even though the UK for example does not classify waste paper as hazardous, and Italy no longer classifies waste paper as waste at all.

Form 6 and Form 9 documents are drawn from a suite of 12 hazardous waste forms that the Central Pollution Control Board (CPCB) at the Ministry of Environment, Forest and Climate Change, Government of India, require in accordance with its Hazardous Waste Management Rules (HWMR). They relate to the generation, management, transport, treatment, recovery, processing, recycling, use, sale, transfer and disposal of hazardous waste in India. 

What information is needed for Form 6 and Form 9?

Both Form 6 and Form 9 require information about where the shipment came from, how it travelled, where it’s going – and what the material is. They both require a declaration by the exporter that they have abided by the relevant rules and regulations relating to the transboundary movement of waste, and a declaration by the importer or waste processor that the material is destined for recycling. 

These documents need to be accompanied by a certificate of chemical analysis report ‘from a laboratory accredited or recognised by the exporting country’ in line with the CPCB’s updated Hazardous and other Wastes (Management and Transboundary Movement) Rules, 2024.

How do the forms differ?

According to HWMR, Form 6 is the responsibility of the recycler or re-processor rather than the exporter, although the form itself states that details can be furnished by either.

Form 9 differs from Form 6 in that it goes into greater detail about the nature of the materials being shipped. The relevant information contained in Form 9 is provided to the transporter of the consignment for its onward journey from its port of arrival in India to its place of recycling. This will tell the emergency services what material they are dealing with, and measures to be taken if there’s a spillage for example. The waste also needs to be labelled in line with the requirements of Form 8.

Who do the forms get sent to?

UK exporters typically include the completed Form 6 and Form 9 in document packs that are forwarded to the bank handling the transaction. These documents need to be received by the bank before the shipment arrives at port. Some banks require receipt of the relevant documentation 10 days in advance. Other export documentation needs to be lodged with Indian Customs before the shipment arrives.

Once the shipment has arrived in India and been paid for, the bank then releases the forms to the customer. The customer submits the forms to the port’s Customs authority. This enables the goods to leave the port and continue their onward journey to their recycling destination.

Why are there so many forms?

For digital natives, the duplication of information across Form 6, Form 9, the UK and EU’s Annex VII, and the bill of lading can appear unnecessary and inefficient. Delays, fines and penalties arising from data discrepancies in paper documents are a significant cost to exporters that only modern CTRM software can reduce.

Does digitalisation offer a better way?

Legislative efforts are underway to digitalise international waste trading, especially customs formalities. The UK Electronic Trade Documents Act came into force on 20 September 2023. It puts digital documents such as electronic bills of lading on the same legal footing as their paper originals. Obstacles remain however. While some Indian port authorities have shown interest in digitalisation, many Indian banks for example still require original paper documents with a wet signature.

HM Revenue and Customs launches the new Customs Declaration Service (CDS) for exporters on 30 November, aiming to modernise the declaration process for goods being sent out of the UK, as a precursor to the government’s long term goal of creating a single trade window. 

The old system, Customs Handling of Import and Export Freight (CHIEF) closes for good on 30 March 2024. Before then, traders must decide whether to invest in modern software that digitalises their back office and interfaces directly with HMRC’s new CDS system – or find some other way to adapt. 

What’s new about CDS?

The UK government wants a fully digitised border that can boost trade and competitiveness, while reducing costs for the taxpayer. CHIEF was designed around traditional paper processes whereas CDS is designed for electronic communication and automation. It uses Union Customs Codes and data processing rules that are in line with the EU’s customs requirements, meaning that CDS procedure codes and data elements are different from those of CHIEF.

Direct communication with HMRC

All exporters who trade from the UK will be affected by HMRC’s new customs declaration system – and many will experience benefits once the transition is complete. Import declarations already run on CDS and lessons have been learned that will hopefully avoid the outages and VAT issues that caused significant problems for importers in 2022.

For exporters with modern CTRM software, CDS promises to make filing customs declarations online more efficient and accurate. Export declaration glitches should be easier to fix as well. The new CDS has only 200 error codes compared to CHIEF’s 4,000. Reduced dependence on consultants, brokers and agents could be an additional potential saving for exporters of waste paper, waste plastic and metal recyclables for example.

Getting ready for 30 March 2024

Of course many exporters won’t be persuaded that the benefits of CDS are worth the effort and disruption of moving across from CHIEF. But like it or not, CDS is happening. Decisions need to be made and action needs to be taken well before the 30 March 2024 deadline. So what are your options?

Option 1: Do nothing

This is not an option for anyone who plans to continue trading across international borders and making export declarations to HMRC after 30 March 2024. At the very least, you need to get to grips with the new requirements of CDS – assuming you have the in-house resources to do so.

Option 2: Employ customs agents and brokers

Agents and brokers will be ready for CDS and most possess in-house software to facilitate the declaration process for you – although this comes at a price. Leveraging the expertise of specialists made sense to many busy traders when customs declarations involved complex paper-based processes. Under the simpler CDS regime, most of the information still needs to come from you, the trader.

Option 3: Digitalise your back office

The advent of application programming interfaces (API) and affordable trading software solutions for smaller traders mean that data can travel securely into CDS directly from your own system. Moving to a modern digital back office has many advantages for exporters beyond communicating with HMRC. With all of your data in one place, you can start automating documentation, managing your photos better, generating accurate reports and exchanging data in real time with partners such as shipping lines and freight forwarders.

You’ll also be prepared for a digital future that is set to include electronic bills of lading and other innovations that the recently-passed UK Electronic Trade Documents Act is ushering in. The CDS is just one element of a wider digital transition that is gathering momentum across international trade. 

UK exporters need to complete an Annex VII document when they are shipping non-hazardous green list waste such as waste paper.

The Annex VII pdf download accompanies the material being sent overseas. It records who has arranged the waste shipment, who is transporting it, and where it is being taken. It also describes what the waste is, along with the relevant identification codes. 

When the waste arrives at its destination, the importer and the recovery facility (if different) need to sign and complete relevant sections in the Annex VII form. Copies of all Annex VII forms need to be kept for 3 years, and competent authorities such as England’s Environment Agency can ask to inspect them at any time.

Green list requirements

In addition to completing and signing the Annex VII, exporters of green list waste need to ensure that the waste is properly sorted in a way that conforms with green list requirements, and will be accepted by the destination country, whose rules may differ. India, for example, classifies waste paper as hazardous, meaning that such shipments are subject to the country’s hazardous waste management rules.

Exporters must create a written contract with the importer in which the exporter undertakes to take the waste back or recover it in some other way if the shipment cannot be completed as planned, or is found to be illegal. The exporter also needs to confirm that the waste will be treated in an environmentally sound way at its destination. 

Examples of green list waste

In England, paper, paperboard and paper product wastes (B3020) qualify as green list waste provided they are not mixed with that country’s definition of hazardous wastes. So do textile wastes (B3030) such as silk waste or waste of wool and yarn, and rubber wastes (B3040) such as waste and scrap of hard rubber, ebonite being one example. Other secondary raw materials such as certain types of waste plastic also qualify.

Pre-shipment submissions for Scotland and Northern Ireland

For exporters in Scotland, information contained in Annex VII forms has to be submitted to the Scottish Environment Protection Agency (SEPA) before the shipment gets moving. A similar pre-shipment submission requirement exists in Northern Ireland. This requirement does not apply in England and Wales.

What are Article 18 controls?

Green list requirements are sometimes referred to as Article 18 controls. This refers to the Basel Convention on the Control of Transboundary Movement of Hazardous Wastes. Almost all UN member states are parties to this legally binding treaty, including the UK. The United States however is not a signatory.

Notification controls

Waste that fails to qualify as green list requires the exporter to operate under notification controls. In these cases the exporter needs to notify all the competent authorities involved in the waste journey and receive their consent before proceeding. Annex VII documents are not used for these types of shipment.

Electronic Annex VII

The Annex VII is a physical paper document – for now. The UK’s Department for Environment, Food & Rural Affairs (DEFRA) plans to introduce mandatory digital waste tracking (MDWT) in April 2025, although this deadline may slip. This reform runs alongside the introduction of Extended Producer Responsibility (EPR) within the framework of the UK Electronic Trade Documents Act (ETDA) which came into force in September 2023.

The Act updates the UK legal framework so that digital documentation such as electronic bills of lading is effectively on the same legal footing as original paper versions, with the proviso that a ‘reliable system’ is in place. The objective of the ETDA is to bring the benefits of digitalisation to international trade which include greater efficiency and traceability. 

Electronic reporting of Annex VII data

Data relating to Annex 7 documents can already be digitally transmitted to authorities such as SEPA and the National Packaging Waste Database (NPWD) to assist with their monitoring and reporting duties. An electronic Annex VII document would be a further step towards modernisation of the international waste trade, which various governments including the UK, Singapore and India are taking steps to advance.

Recycling software helps the waste sector manage its logistics, processing, trading and back-office activities – with the aim of recycling waste into new products. 

The recycling trade uses a variety of recycling software products depending on which materials they are trading and what role they play in the waste supply chain. It’s a fragmented picture technologically speaking, partly because the sector has been slow to embrace digitalisation. 

However new legislation and rising compliance requirements such as mandatory digital waste tracking are now driving a move towards greater connectivity and traceability, requiring recycling software with new capabilities. 

3 categories of recycling software

Recycling software falls into three broad categories. The first category is focused on logistics and helps firms manage the collection and handling of used materials. For materials like scrap metal, they might also help manage regulatory compliance and reporting.

The second category helps to manage the sorting, cleaning and processing of waste such as paper and plastic packaging. Recycling software in this category often includes hardware such as scanners. This phase of the recycling process results in graded secondary raw materials such as baled waste paper OCC that can be sold on as a traded commodity.

The third recycling software category helps traders buy, sell and export secondary raw materials for reprocessing overseas, enabling these recovered materials to have a second life within new products such as paper and cardboard packaging.

End-to-end recycling management software

Some larger waste management businesses use recycling software to manage multiple stages of the recycling process. Others develop proprietary recycling software of their own. These recycling technology stacks can include enterprise resource planning (ERP) features such as accountancy and customer relationship management (CRM), for example.

A new generation of commodity trading and risk management solutions (CTRM) are coming on stream, that use live data and third party integrations to enhance trading performance, and reduce human error. However, the majority of small and medium enterprises (SME) working in the resource and waste management sector still rely on Microsoft 365, Excel spreadsheets and photo-laden email threads to manage their back-office – with varying degrees of success.

Legislation enables new recycling software solutions

The UK Electronic Trade Documents Act, which came into force on 20 September 2023, puts digital documents such as electronic bills of lading (eB/L) on the same legal footing as paper originals. Singapore has enacted similar legislation. The United States is also tabling proposals to amend its Uniform Commercial Code (UCC) to enable digital documentation. These reforms are opening the way to recycling software solutions that could significantly improve the traceability and efficiency of recyclables trading worldwide.

There used to be three obstacles to the widespread adoption of electronic bills of lading (eBL): technology, the law, and industry standards. 

The first obstacle, technology, has essentially been resolved since blockchain and application programming interfaces (API) arrived on the scene. When the UK Electronic Trade Documents Act (ETDA) came into force on 20 September 2023, a major legal obstacle to eBL also disappeared. The one remaining obstacle to digital bills of lading is the industry itself. 

Limited eBL adoption so far

Achieving international consensus on the acceptability of eBLs, and reaching agreement on what an industry standard eBL might look like, is a big challenge. Businesses that have adopted eBLs already, or are piloting them, do so within closed legal ecosystems. These are specific contractual arrangements that everyone in the chain of custody needs to sign up to, ensuring that the eBL is accepted and can perform the functions of a traditional paper original. This makes them very limited in scope.

So let’s figure out how the first two obstacles to electronic bills of lading have been overcome, and what makes the industry itself – which has so much to gain from digitalisation – reluctant to modernise its handling of contracts and data.

Obstacle 1: Technology

Modern enterprise software and APIs already enable UK exporters of recyclable commodities like waste paper OCC to interface with shipping lines. This allows both sides to update in real time the sort of key information that electronic bills of lading also contain. Pilot eBL projects conducted by shipping lines and innovators like WAVE BL are already opening the way to a range of services underpinned by blockchain technology to improve traceability and risk management.

Not all traders and exporters have woken up to the benefits of digitalisation, of course. Sooner or later however, everyone in the recyclables supply chain is going to need a modern digital back-office that enables document automation based on a single source of truth. 

Obstacle 2: Legislation

The UK Electronic Trade and Documentation Act governs about 80% of bills of lading and puts eBLs on the same legal footing as their traditional paper equivalents. This overturns centuries of paper-based tradition and is therefore a big deal.

The UK is not alone in updating its legislation to enable digital documentation. Legislators in Singapore have passed the Singapore Electronic Transaction Act. The U.S. has also tabled proposals to modernise the Uniform Commercial Code (UCC), which is sure to accelerate the adoption of digital documentation once it passes into law.

But is this growing patchwork of digital-friendly legislation enough to persuade the trade finance industry that it can begin to accept and enforce electronic bills of lading as collateral?

Obstacle 3: An industry standard eBL

Unfortunately not. An industry-wide agreement on standards is still the big blocker. Legislation is introducing requirements about the reliability of eBL SaaS systems. But it’s the industry’s responsibility to develop standards around eBL possession, transferability and other trade-specific processes such as the ability to endorse. Only consensus on standards will enable the widespread implementation and acceptance of eBLs in global trade. 

In the meantime, closed-shop contractual arrangements may be the only way forward. This incremental progress is a risk for software developers however. All that customised work could rapidly become obsolete should the industry get its act together and adopt a systematic law-based approach.

A long term solution to trade digitalisation

The difficulties of achieving consensus in international trade cannot be underestimated. Many actors continue to benefit from inefficiencies and a lack of transparency. But let’s not forget the enormous gains in efficiency that the digitalisation of recyclables trading could bring to the global circular economy. Judging by the experience of other industries that were slow to change, it is only a matter of time before the digital floodgates open.

Chain of custody offers a new approach to the international trade in secondary raw materials and soft commodities where compliance requires evidence of its source and end-point.

What is chain of custody?

A chain of custody (CoC) is essentially a paper-trail – digital or otherwise – that documents what is being shipped, where it originated, where it is, and who’s in charge of it, every step of the way. In the case of a commodity, this typically includes details of the material in question, such as its grade, quality, quantity and provenance; information on participants; and details about when, where and how the shipment changes hands. Documenting where the shipment ends up, and where it came from, is particularly important for transboundary movements of hazardous waste, for example.

Chain of custody examples

In the past, chains of custody have been used to govern the movement of everything from scientific samples to criminal evidence – basically any situation where it’s important that the contents of a shipment are not altered or inaccurately described. In the timber trade, customers want evidence that their goods have been sustainably sourced. So they set up a credible certification scheme backed by chain of custody principles.

Traditional chains of custody mostly used paper documents and wet signatures, but digital signatures and smart contracts are now putting the benefits of the chain of custody approach within the reach of many industries where traceability and verification are required.

Digital waste tracking

The UK government is supposed to be introducing mandatory digital waste tracking in April 2025, replacing paper-based documentation with a unified digital database, enshrining chain of custody principles in the rules that govern the UK waste trade. Worldwide, governments and port authorities are beginning to embrace live data-sharing, especially in the field of compliance. Legislation in the UK and Singapore already enables electronic bills of lading, which represents another step towards a global CoC network.

Commercial benefits of chains of custody

Because chains of custody have rules that all participants need to agree on, they help to determine who takes the blame in the event of a dispute or claim. A CoC also deters participants from making unsubstantiated claims for compensation or refunds – because the digital paper trail is there for all to see. A digital chain of custody solution provides opportunities to drive greater transparency, trust and growth in both waste and soft commodities trading, for example, where provenance is key.

Recent legislation enabling CoC

The UK Electronic Trade Documents Act, which came into force on 20 September 2023, puts digital documents such as electronic bills of lading (EBOL) on the same legal footing as paper originals. The United States is also tabling proposals to amend its Uniform Commercial Code (UCC) to enable digital documentation.

ISO standard 22095

The growing need for a broader set of standards to govern chain of custody systems has resulted in the creation of chain of custody ISO standard 22095. It contains 32 pages of text and diagrams that provide unambiguous definitions of different chain of custody models, and the corresponding requirements, which are independent of sectors, materials, products and issues addressed. Circularise provide a useful overview of the four main types of chain of custody.

It’s not just waste paper traders who monitor the ups and downs of waste paper OCC prices.

Old corrugated containers (OCC) is a globally traded waste paper grade that’s the main material used for shipping and merchandising goods. It’s considered the bellwether grade because it can give useful signals about where the wider market is heading.

Investors, fund managers and stock market traders all monitor OCC prices because it’s one of a range of health indicators for the global economy.

What is waste paper OCC?

Those brown cardboard boxes that arrive on your doorstep are probably OCC. The entire supply chain is full of OCC because it’s light, cheap, and easy to recycle. Once used, most of it gets fed right back into the recycling system to live again as a new paper product or cardboard container. 

OCC is intimately connected to the daily rhythms of consumer-driven economies because it’s what everything gets shipped in. It’s a measure of economic health, and potentially a predictor of impending recession.

What do waste paper traders do?

Waste paper traders make their living by buying used cardboard or other grades of paper and selling it on at a higher price to paper mills which are mostly overseas because energy is cheaper there. These often enormous mills use bales of shredded OCC as raw material to turn back into boxes and packaging. 

The waste paper trader is basically the middle-man who buys OCC from suppliers who might have relationships with supermarkets, for example. The trader then arranges for its delivery to the mill in the hope of making a profit.

So on the one hand there’s supply, and on the hand there’s demand. The trader tries to build trusting relationships with both sides of the equation, while juggling the costs and risks of shipping containers halfway round the world to places like Malaysia and India. Margins are typically very thin – and a lot of things can go wrong. It’s certainly not a job for the faint-hearted.

What do OCC prices tell us?

Ok, so what are traders and investors looking for when they open their laptop, sip their tea and check in on the price of waste paper OCC? Basically, they’re trying to figure out what’s happening to supply and demand. 

If OCC price is low, this might have something to do with supply.

The supply of recyclables comes mainly from consumer-led economies such as the UK, EU and U.S. If consumers are buying and consuming plenty of goods in these parts of the world, they are also generating plenty of OCC for recycling, which means that prices might go lower. So the theory goes.

On the other hand, if consumers stop spending, the supply of OCC for recycling drops, and prices might go up, but only if demand is there. If OCC demand is low and consumption is low, price drops can be dramatic, which is rarely good news.

Demand or supply?

Clearly then, demand for OCC is just as important as supply – if not more so. You need buyers – otherwise all that OCC ends up sitting in warehouses, which costs money and leaves the trader short of cash. Traders hate being short of cash, because if they run out of cash they go bust.

So let’s say the U.S. economy is growing and sucking in lots of imported goods from places like Malaysia or India. Those Indian paper mills will be working hard to produce the packaging for their busy exporters. They’ll also be buying all the used OCC they can get their hands on from places like the UK to feed the mills.

In other words, demand for bales of uncontaminated shredded OCC in South East Asian markets will be high, sending prices up. When the UK supply of recyclable OCC is tight, prices might go higher still if mills start bidding against one another.

Is it that simple?

No. Price signals can be contradictory. Time-lags can play havoc with your predictions. And there are a host of other factors that can influence the price of secondary raw materials, such as the fluctuating cost of energy, the outbreak of war, and natural disasters such as typhoons and pandemics that disrupt the waste paper OCC supply chain and impact demand.

But if you get it right, and make use of modern commodity trading risk management software, there’s money to be made.

Yet another delay to the launch of the Extended Producer Responsibility (EPR) scheme – now scheduled for October 2025 – might come as a relief to some UK producers of packaging waste.

The new scheme shifts additional costs and reporting requirements onto businesses that were previously shouldered by councils. It aims to make producers pay for the full net costs of managing and recycling their packaging. The idea is to discourage ‘excessive’ packaging, incentivise the adoption of more recyclable packaging, and drive up the overall rate of recycling. 

Costs of red tape led to delay

However, fears that the scheme would push up prices and increase red tape led to a temporary reprieve. This means that packaging producers and traders will be spared additional costs that the reform would have introduced in 2024 – having been pushed back before from 2018. Due to these delays, packaging recovery notes (PRN) and packaging export recovery notes (PERN) will be around for another year or two at least.

Digital waste tracking due in April 2025?

Mandatory digital waste tracking (MDWT) is another UK government-backed reform which it is rumoured will be delayed beyond its current launch date of April 2025. However, the increased availability of digital solutions such as CTRM software, that are capable of bringing efficiencies to trading businesses while connecting to live data with third parties such as government agencies, suggest that change in on the way.

Exporters of secondary raw materials and recyclables such as waste paper, OCC, scrap metal and waste plastics should expect greater scrutiny in the years ahead. These challenges will require digital solutions such as chain of custody platforms that can mitigate risk and build trust along the supply chain.