Reports are emerging that Chinese buyers of film are requesting longer contracts in an effort to take advantage of higher domestic prices in the autumn.
With LDPE prices falling at present, it seems that Chinese buyers are seeking to fix a price now to take advantage of an expected market pick-up in the autumn.
LDPE 98/2 was trading at around £265 to £320 per tonne at the beginning of June, but had dropped to £240 to £280 by last week on the scrap-ex weekly price report.
Next Gen Recycling director Dan Robinson said that in his opinion this is a seasonal habit from Chinese buyers, but that the Chinese crack down on poor quality material was also having an impact.
He said: “Our main buyer of film has been soft [on price] this year and always wanted 100 tonnes with a quick turnaround. But now he wants a lower price for 200 tonnes on a longer contract that would take us into September.
“It is hot now in northern China, up to 35°C, and is too hot for the labour and so the labour demand more money for working in the very hot yards sorting the material.
“So the buyers always now book contracts into September and by the time it is delivered it will be October/November time. They know they will get a higher price in their domestic market then in the run-up to Christmas when there will be more need for shrink-wrap as well as for the usual domestic carrier bag market. While the cost of labour will also drop as it gets cooler.
“The price always softens at this time of year because of this, but it has been compounded by the Chinese restrictions and crack down on imports of low quality material. This has driven down the price more than usual.”