Recycling market conditions: looking ahead (23 April 2018)

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Recycling market week ahead
Recycling market prices may change this week

Exporters look likely to benefit from a lower pound this week, as the value of it against the dollar fell back this morning, and it appears unlikely it will rise until at least later in the week, if indeed it does.

On the back of poor growth, inflation and wages data, the pound has fallen back since the end of last week to reach $1.39 against the dollar at the time of writing compared to $1.43 just a week ago. Indeed, there was a view that the pound might start to hit $1.45 but this didn’t transpire.

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The euro was at $1.14 at the time of writing after being close to $1.16 this time last week.

For exporters, this means there might be a bit of extra leeway to push up prices a little this week, with deep sea exporters having the best price advantage compared to those selling into Europe.

There aren’t too many economic data releases this week, so all eyes will be on Friday when GDP data is released for both UK and US. This could have the biggest impact on where the pound is headed next week. Otherwise, this week will all be about sentiment, and the FX markets may move on any hints of whether UK interest rates will rise or not.

This week will also be when shipping rates are finalised for May, but at present it looks like those will be unchanged from April.

One other index to watch is the S&P GSCI, which covers the broader primary commodity complex. Last Friday, it exceeded 2,700 for the first time in two years, mainly driven by oil. As an indicator of how commodities are performing, this could suggest some price rises are on the way eventually for recycled materials too.

Forecast prices    One week     Four week

OCC                      £86-90           £85-89
ONP                      £91-95           £90-94
Mixed                    £24-28           £24-28

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

In terms of materials, the week should look positive for OCC with Chinese buyers set to maintain the pattern of buying the best quality material for the best prices. With UK, European and Indian buyers reticent to follow in recent weeks, it will be interesting to see if they respond to the large gap that has appeared and try to get closer to it.

For mixed paper, the question will be whether German buyers continue to maintain the appetite that has seen them raise the price in recent weeks. It still remains cheap for them, but a lot will depend on whether they are filling up their yards, and there are some indications that they are.

For plastics, the market looks set to be stable for this week at least, but eyes will be on next week to see if monthly virgin prices rise.

With buyers out of the market recently, aluminium can prices may fall back as there is a lot of people trying to sell them at the moment. For steel cans, there could also be £5 to £10 off if demand continues to fall.

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