This week was certainly interesting in the recycled paper market even if prices didn’t change, for reasons outlined below.
Metals also saw a price boost in certain grades, while plastics remained stable.
Rather than economic matters, it continues to be legislation and regulation in end markets that is changing the dynamics of the market.
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For example, the news from Vietnam, Indonesia and Poland is making it extra challenging to find export markets. Even if these measures appear temporary (with the exception of Poland that is planning to introduce long-term regulations), there is a concern that upheaval is now the default state of the recycling market.
But the big news for the recycling market was the new regulation brought in by the Chinese Government last week that has led to 100% inspection of containers at sites. CCIC (or other inspection agencies if they receive certification) will need to inspect each container and seal it, which is already leading to logistical difficulties for those who are still allowed to export material to China.
In other market news, the dollar remained largely unchanged on last week at $1.33. Against the euro, the pound spiked above €1.14 in the week, but ended it largely similar to €1.13 last week. This wasn’t volatile enough to make much difference in either currency.
Plastic
The price of all plastic grades remained the same this week, with changes seen in previous weeks stabilising.
Moving material remains hard, and the closure of the two key Vietnamese ports has made life harder for exporters. Indeed, it is rumoured that the 8,000 containers at Tan Cang – Cat Lai port and the 1,130 containers at Tan Cang – Cai Mep port are enough to service the Vietnamese plastic recycling sector for six months.
Indonesia is also proving challenging to move material to, while Malaysia is also reported to be filling up.
For the best quality packaging grades, UK and European destinations seem most likely at the moment, but they will have their pick. At least demand still remains relatively good from these at present, especially as retailers and manufacturing customers are seeking more recycled content.
Industrial polymer demand also remains good.
The recent easing of the oil price hasn’t yet had an impact on virgin polymer prices, but if it does, we may see recycled plastic prices ease in July.
Paper
The sudden announcement that 100% inspections of containers, and suspension of self-certification, by Chinese Customs has had a panicked effect on the market this week.
Announced in Chinese on 28 May to come into force on 1 June, the new regulations didn’t give exporters to China much time to respond. CCIC, who for the time being remain the only inspection agency, were also taken by surprise especially now that they have to inspect every box and then seal it before it is sent to port.
Sites are reported to be failing the new inspection regime already, and this has put extra pressure on the Chinese exporters who are seeking to feed their hungry mill groups. Those sites that have passed are suddenly very favourable, and this has helped to keep prices high for this quality, with over £150 the norm.
Even though US exports to China are set to resume, this will only begin to happen properly from next week, and they still face 100% inspections at Chinese customs along with the new regulations on inspection at US domestic sites by CCIC (or new potential others).
With Indonesia imposing 100% inspections on paper imports, and tougher rules for sending paper to Vietnam, markets are becoming harder to find. Indian markets seem to have lost their appetite for material with the US having sent a lot of paper there as a result of its recent one month Chinese ban.
European buyers are also taking their pick of material at the moment as there is plenty around.
The market is starting to look quite challenging as a result. Even for Chinese buyers, they expect to continue to pay a premium for the very best material that has passed the 100% inspections, but the logistical challenges for getting CCIC inspectors to visit a site when the containers are there, will hamper their ability to buy.
CCIC has advertised for more inspectors, but finding them and training them, may take some time.
Unsurprisingly, the PRN/PERN price for paper has risen to £9 to £10 this week. When considering the volumes of cardboard and paper on the market, this is set to be a considerable cost to producers, but at least provides a boost for the UK recycling market to support its efforts. Don’t be surprised if the PRN price keeps rising under these market conditions.
Metals
Fears over a strike in Chilean copper mines has helped to push up the price of the metal on the LME to a four-year high. As a result, scrap prices have also received a welcome boost, rising by £250 per tonne this week.
US tariffs on steel and aluminium have also helped to boost the price of the latter, although steel appeared to have already reached its price limit and remained unchanged.
Prices
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