Recycling market commentary: 13 April 2018

There was more activity on the market this week, with the paper sector in particular appearing to be getting stronger week-by-week.

While plastics and metal prices were largely stable, there was some movement upwards for paper grades. The PRN market also saw some changes following the publication of the quarterly data last week.

In some respects, the stronger PRN values for paper and plastics helped to provide a little extra support to the physical price, while wood PRN values have also increased sharply.

Looking at macro-economic conditions, the situation in Syria and the potential for OPEC to push up oil prices too has increased the price of oil. While any impact is likely delayed, it could add to increased transport and shipping costs. It could also lead to higher plastics prices if virgin prices were to also increase, but this could require quite a dramatic oil price increase to have any impact – that looks unlikely at present.

For the time being though, shipping prices haven’t changed and there remains competition with the backhaul route to China much quieter as a result of the plastics and mixed paper ban.

The pound has also risen against the dollar to $1.42 compared to $1.40 last week, making UK material more expensive. It isn’t entirely clear why the pound has strengthened to this extent, but it appears to be based on an expectation that the Bank of England will increase interest rates next month. This is despite recent economic news being disappointing in the UK.

How high can sterling go? Some are starting to predict $1.43 to $1.45 by the end of the month, which would mean the pound was back to where it was prior to the Brexit referendum vote.

Let’s wait and see on that, but the FX benefit that UK material gained following the referendum vote has largely been wiped out now, and perhaps the market is more reflective of that too. It seems unlikely the higher exchange rate, plus the uncertainty around China will see OCC back up in the mid-£100s for example.

At the same time, the pound has also strengthened against the euro, breaking €1.15 in the last 24 hours. The market seems to think there is more potential for the pound to strengthen further against the euro, which could start to weigh on the market for paper, plastics and metals into Europe.

Prices are at the bottom of the page.

Plastics

While the latest quarterly data from the National Packaging Waste Database suggested the UK is set to meet its targets for 2018, helped by a record carry over from 2017, the PRN has still risen by a couple of quid this week. This appears to have been caused by some acting as market makers to keep the market moving rather than any particular reason why.

However, it does give a little bit more support to the physical price of packaging grades, but this has been countered by a stronger pound against the euro and dollar. As a result, nothing has really changed.

Fear remain that May will be a tough month, as South East Asian markets may start to get full up again, while port delays continue to be reported. This isn’t likely to become clear for a few weeks yet though.

UK plastics recyclers appear to be doing well at present, with a pick of material and the ability to negotiate favourable prices.

Paper

This was a good week for paper grades compared to the last few, with some recovery seen for OCC, but especially for mixed paper.

Indeed with the latter, German demand has helped to push up the price for the best quality material, while Vietnam still remains a good destination too. Will the price rise much further? The view is that there is a bit of momentum potentially for further price rises in this grade, but the days of a spread of just over £20 typically between OCC and mixed paper seem over.

OCC also increased in price this week, with Chinese buyers continuing to lead the market. While some were trying to compete with them at around £90, these buyers were more mid-£80s for most tonnage.

UK, European and Indian buyers held their prices in the high-£60s to low-£70s, hoping to pick up some tonnage, but more realistically looking to avoid buying it. This is because they have stocked up while prices have been low recently.

Metals

There were no real changes in scrap prices this week, which is unusual in such a typically volatile market. It gives traders a chance to take a breather and get a better sense of where the market is headed though.

Prices

To see the full prices including trend charts, please visit here

UK plastic bottles

UK HDPE, Wheelie Bins, HIPS, EPS, PP

UK LDPE film

UK pots, tubs, trays

UK OCC, ONP, Mixed paper

UK soft mixed, OIN, SOW

UK Multi, WHL, BW2

UK copper

UK brass

UK aluminium alloys

UK aluminum

UK stainless steel, zinc, lead

UK ferrous

UK engines, cans, plugs

UK glass

PRN paper, plastic, glass

PRNs wood, steel, alu, recovery

UK gate fees, RDF, landfill

UK Gate Fees - EFW, AD, MRF

China plastics

China paper

China metals

US plastics

US paper

US metals