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Letsrecycle : Plastic reprocessors decree end of price boom

Date: Mon, 23 May 2011

The price paid for bottles - particularly PET and HDPE – has reached unprecedented highs in recent months. This saw the value of clear and light PET bottles reach a height of £340 to £370 per tonne in April 2011, while natural HDPE bottles were valued at £330 to £360 per tonne in the same month.

However, May 2011 marks the first time since October 2010 that reprocessors have reported a drop in value for both bottle grades.

One reprocessing manager said: “In general we have heard that the prices are rolling off and we know that the European market has dropped the price being paid for PET bottles by around €50 (£43).

“I think [the price for] PET is still high, around the £350 mark for a tonne, but it all depends really what the quality is like. I don’t see how the price can go any higher, even if demand came back in the export market.”

This was corroborated by a sales and purchasing manager at a rival firm, who told letsrecycle.com: “We are starting to hear that there has been a slight dip on all of the various grades. The main reason is that there is a slight drop is that the virgin PET price, which seems to be coming down and the [recovered] PET price is tied to that.”

Inflated

There had been some discussion among industry sources that the PET price had been inflated by a number of factors. These include increased competition among domestic plastics recycling firms embarking on food grade plastic production, known as rPET, which has seen an ‘arms race’ to commandeer large quantities of usable feedstock.

And, in a more global context, a reputed shortage of cotton in India and Pakistan, with prices paid for pound of cotton nearly tripling over the past 12 months. This had led to a number of manufacturers purchasing an increased level of recovered PET bottles to act as a substitute in manufacturing items such as fleeces and jerseys.

However, prices for cotton are said to be dropping slightly, with the price paid per pound of cotton falling for the first time since July 2010 between April and May 2011. This decline is said to be due to a sudden drop in demand for the material in India.

Film

Meanwhile, the price paid for recovered film appears to have fallen as well. A purchasing manager at one plastic film recycling firm said that this was strongly linked to a decline in demand for material from China in particular.

He said: “I think the high grades [of film] have been hit a bit and the demand in China, at the moment, is pretty low. I think that their stocks are still fairly high.”

Further to this, another sales manager said that Hong Kong – a prime destination for UK exported plastics – was being subjected to more stringent inspections by Chinese authorities on material being exported into the mainland.

The increased inspections has apparently cooled Chinese interest in material and led to the price being paid for exported film falling by between £5 and £15 per tonne across all grades. One plastic reprocessor foresaw a further drop in plastic film prices based on this slump in demand.

He said: “The export prices, from our point-of-view, are $20 (£12) down in the last seven days and the prediction is that there will be another $20 (£12) drop in the next week or two. What we are seeing is that the lower grades are going to be harder to move.

“I think we might see the lower grades drop a bit more than that. At the end of the day I could see it dropping by around $40 (£24).”

Category: Recycling
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