Last week was dominated by OCC and this week looks set to be exactly the same.
In recent weeks, a wide spread has opened between domestic, European and some Asian traders in terms of what they are prepared to pay; and the Chinese exporters who have been paying very high prices for the best quality material.
And there are indications that trading conditions for the export market could be set to get even better.
With the pound trading against the dollar at $1.35 last week, exporting material is a lot cheaper than a month ago when the pound was at $1.42. Now that the Bank of England looks unlikely to raise interest rates anytime soon, there could be potential for the pound to fall further.
Over recent days, the pound has stabilised at around this $1.35 mark, but analysts at Lloyds Bank expect this to result in a further fall. They said in a note: “Prices remain in a consolidation phase, around $1.3550, that has developed over the last week or so. Such price action usually resolves to the downside, with $1.3325 – $1.3275 region the next main support below.”
At this time last year (12 May 2017), OCC was trading at £124 per tonne, and by July had reached £162 per tonne. While our price this week was £110, some were prepared to pay up to £140 per tonne for the material, although others were more around the £80 mark. This week could see some of those who have been reluctant to join in at higher prices, forced to for fear of falling behind and then having to stock up at even higher totals.
It therefore wouldn’t be a surprise if OCC was to start reaching those highs again over the coming weeks, especially while the ban on US exports by the Chinese Government remains in place.
But from the beginning of June, there could be a flood of material leaving US ports, although the Chinese are likely to inspect it closely to continue making a point. Therefore, there could be a significant delay, and attention is likely to remain on good quality material from the UK and Europe.
Apart from OCC, the market looks likely to remain relatively stable.
Forecast prices One week Four week
OCC £112-116 £110-114
ONP £90-94 £90-94
Mixed £23-27 £23-27
PET £217-223 £217-223
HDPE £409-415 £409-415
LDPE £197-203 £197-203