Recycling market conditions: looking ahead (16 April 2018)

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Recycling market week ahead
Recycling market prices may change this week

This week is a complete return to normal for the recycling market, with all Easter holidays now out of the way, and most people back at work.

This could be a big week for the FX market, with some key economic data released that could have an impact on the price of recyclable materials.

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With the pound having strengthened considerably against the dollar and euro in the last week or so, is there still room for it to get even stronger?

This week should give us a good indication, particularly how the market responds to the air strikes in Syria and any geopolitical instability that brings.

While there is quite a lot of economic data coming out of the US this week, one key thing to look at is the Federal Reserve will publish its economic update on Wednesday, and this could push the dollar one way or the other depending on its results.

In the UK, the key release this week will be on wage data for February. If it meets the forecast of 3% growth, then this is likely to signify that the Bank of England will raise interest rates in May. This will then likely lead to a stronger pound, and more expensive prices for UK materials on the international markets. But if the forecast is missed, then the pound could weaken.

Forecast prices    One week     Four week

OCC                      £85-90           £84-88
ONP                      £91-95           £90-94
Mixed                    £22-26           £20-24

PET                       £234-240       £233-239
HDPE                    £400-406       £400-406
LDPE                     £188-194       £188-194

In terms of material prices this week, it wouldn’t be a surprise if this week was one of consolidation for the paper market, following price rises in recent weeks.

It seems unlikely that there will be a great deal of competition at the top of the market with UK, European and Indian buyers unlikely to influence the Chinese buyers to up their prices. While the Chinese buyers are more likely to try to keep prices where they are, particularly with the pound strengthening. However, it wouldn’t be a surprise if a pound or two went onto the price for the best quality OCC.

Recent good weather should also have pushed more people out to the shops, so there should be some more retail tonnage around for OCC at the moment. This may also determine prices depending on how much material is available to meet still relatively weak demand.

Mixed paper has jumped back up in the last week, but again doesn’t look like it can do the same this week, despite good German demand in particular.

Plastics prices may start to see price rises if the virgin price starts to creep up as a result of stronger oil prices. But for the time being, it appears that this will be a stable week until the market works out what is going on.

Aluminium remains weak on the LME, so there is unlikely to be any uplift in the price of cans this week. This is also the case with steel, where forward prices suggest there might be a lowering in value in the coming weeks.

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