Martin Robb’s Plastic Market Report: December 2020

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Martin Robb Nevis Resources
Martin Robb from Nevis Resources

As 2020 draws to an end, it will be remembered as an extremely difficult year for many in the recycling industry and particularly for plastic recyclers and exporters. Covid, PRN fluctuations, low virgin prices and reduced demand have all taken their toll.

Unfortunately, 2021 is expected to be even more challenging with the added complications of Brexit, whether there is a deal or not, and the Basel convention amendments. Shipping material could be one of the biggest obstacles that plastic recyclers face in the coming year.

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Let’s take a look at December to date. An increase in the transitional PRN price (around £50pt more than spot) has been welcomed and has enabled some trading to take place albeit at much smaller tonnages. There is expected to be a large carry into 2021 so PRN prices are expected to remain low, at least initially. There was further positive news with the announcement this week that the Environment Agency could annul illegal PRNs. None of us want to see fraud in the industry and this could potentially end this activity.

As expected, tonnages being exported to Turkey increased and we’ve seen some EU reprocessors respond with stronger pricing, but mainly on the higher grades. However, this was largely short-lived as container and trailer availability have become an issue and exports have almost come to halt. At this time of year suppliers would normally be clearing out their yards in preparation for the glut of Christmas tonnage, but this is unlikely to happen at this stage. It is adding to concerns they already have on what is going to happen with their material in the New Year with a potential no deal Brexit.

As I mentioned in last month’s report, it appears there will be a grace period for non-conformance. This is reasonable due to the continued lack of clarity surrounding the issue of Brexit.

Unfortunately, there will be no such grace period for breaches of the Basel convention amendments. The Environment Agency has stated that they will be taking enforcement action for any non-conformance from day one, which is 1 January 2021. With some materials now notifiable such as PVC, I expect exporters will generally avoid these grades. It will be a big ask for UK processors to deal with the excess tonnage so it will be interesting to see how material like PVC will be dealt with going forward. Prices will definitely take a big hit.

I expect UK processors will see big increases in tonnages offered to them for all grades of plastic. This would see a further softening of prices. The grades that UK processors are unable to handle may end up as fuel or worse landfilled. If this is the case it might not be economically viable for waste companies to continue picking these grades.

Finally, I’d like to take this opportunity to wish you a Merry Christmas and a Happy New Year.

Martin Robb is sales and marketing director at Nevis Resources

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