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Letsrecycle : Materials sectors closely watch impact of Japan crisis

Date: Wed, 16 Mar 2011

Some in the waste paper sector expect more cardboard to be diverted to making plasterboard for housing construction while others point to Japan being an important exporter of material to China.

In the markets this week, it appears that the price for used cardboard (OCC or Old KLS) has edged down by a few pounds and prices for plastic film have also fallen slightly.

However, commentators suggest that this is not directly related to the Japanese situation and potentially more due to typical ups and downs in the marketplace and some credit tightening in China.

Within the UK arisings are said to be slow and, because of the short weeks in April caused by Easter and the Royal Wedding holidays, competition for material in March is strong and this is also a factor in keeping prices firm for used cardboard.

In the newspaper sector, demand remains firm and export demand had picked up with some overseas buyers, who had opted out, now returning to the UK market.

Volatility

Speaking to letsrecycle.com, Simon Ellin, chief executive of The Recycling Association, said: “We are obviously all wishing those in Japan well in very difficult circumstances. With regard to world markets, I think the volatility that might occur as far as Japan is involved is really an unknown. It could end up being a short term blip up and down as the country eventually gets back on its feet.”

Mr Ellin added: “You can’t get away from the fact that across all materials, and especially the recycled fibre side of things, that volumes of arisings are down across the board. While there is still demand from China, prices are likely to remain relatively high and because of this it may be that the Japan situation will have little effect.”

Paul Briggs, managing director of Mark Lyndon Paper, a major exporter of recovered material to China, said that his thoughts too were with those affected by the tsunami and earthquake in Japan. He said that there would be some impacts in the marketplace as ships may be diverted and material not available in the short term.

“This will add some volatility to what has been a stable market and the Japan impact is really an unknown at the moment. However, the current high prices don’t seem to be sustainable in the long term. The Chinese economy is not as strong as it has been and a weakening in the market has been anticipated,” he said.

Another export manager told letsrecycle.com that he fully expected that eventually the recovery in Japan will mean demand for more materials. “Products will be needed for rebuilding and these will have to be packaged and plasterboard, which uses paper as a liner, will be in demand for new homes.”

Plastics

In the plastics sector, the market is seeing a slight fall in film prices, but bottles remain at a firm level.

Commenting on the Japanese situation, one plastics purchasing manager said: “We have yet to see the impact on the plastics sector caused by what is going on Japan but it could have a knock on effect for trading between China and Japan, which would then affect us as we are dependent on China [for exports].”

He added: “But we can’t deny that plastics is a global market and it will affect manufacturing and shipping. They have already started to limit manufacturing to save power, so that will affect the car industry and a lot of virgin plastic goes into new cars.”

Another view in the plastics came from a UK-based sales manager who said: “I have had a lot of discussion about [Japan] in the past few days and what we are seeing is actually more interest in Libya.

“There are constantly people trying to get a better rate because of the unrest in Libya and how that affects oil prices. At the end of the day, the price of recovered plastic is going to be driven by the price of virgin [plastic], which is affected by the oil price.”

Category: Recycling
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