Recycling prices and market commentary: 11 September 2020

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Yet again it is the PRN/PERN and recycling fraud that has come up in conversations this week.

After publication of the monthly data, the plastic recycling industry again looked bewildered at how we could already, it seems, be at 80% of target. More on this below.

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The paper market felt a little more subdued this week, with demand seeming to wane almost everywhere.

Metal markets however saw a price boost for copper and brass grades.

The big news this week of course was the announcement revealed first on this site of the detail of Turkey’s 50% quota that was implemented immediately.

This means that the country that has been the second biggest importer for OCC and PE-based plastics is now a much diminished market for UK material.

As noted below, for the paper sector also facing the China ban and challenges with Indonesia, there are very strong fears the next few months, maybe years, could be challenging.

All in all, the first full week back at school for most, hasn’t brought about a great deal of joy for those at work in the recycling market.

One boost for exporters was a falling exchange rate, brought about by the currency markets being spooked by the UK Government apparently wanting to break international law on its Brexit Withdrawal Agreement with the EU, and in the process making a trading deal with the EU harder.

As a result, the pound was trading at $1.27 from $1.32 a week ago, and €1.08 from €1.11 last week.

Recycled plastic

For those trading packaging grades, the depressing news again this week seemed to be the continuous recycling fraud that appears to be taking place in the PRN/PERN market.

There appears no doubt among those legitimate businesses that fraud is taking place. Previously it was assumed that containers were going around in circles as this was a logical, if illegal, way to make money from the system.

With the PRN/PERN price having fallen to around £50 over recent weeks, there was some hope that the fraudsters would leave the market as it would no longer be financially viable to send containers back and forth across European borders.

But the latest monthly data published yesterday seemed to show that something is still going on. Now the speculation is that the fraudsters must now be allocating plastic PRN/PERNs to other materials, possibly RDF. Nobody is quite sure for certain though.

The result of all this is that the PRN/PERN price fell to around £30 to £35 per tonne, creating hardship for plastic recyclers that are also suffering from low prices.

A falling PRN/PERN price also led to a falling physical price, with all packaging grades coming down in value. However, with the FX also making UK material cheaper, there was more demand from Europe that helped to mitigate some of the PRN/PERN price fall to an extent.

Forecast prices

1-week4-week
PET218-224220-226
HDPE399-405398-404
LDPE152-158155-161

Recycled paper

As one member of the paper recycling market commented this week, the “main activity in the market was inactivity”.

Many mills appear to be full or anticipating that prices will fall. OCC saw a drop in the mid-market with a number in the £70s more common than £80s, while the inspection destinations were only buying small amounts.

While the price of mixed remained stable, the German mills seem full for the time being, and as these have been driving the market, it wouldn’t be a surprise if this grade starts to come down too.

There is a lot of fear around though, with China due to switch off imports before the end of the year, plus Indonesia singling out the UK for attention.

Legitimate exporters to Indonesia are getting nothing out of the Embassy and do not know what is happening with their new registrations to export there. While efforts are being made by these companies and The Recycling Association to engage with Indonesian officials, the uncertainty means it feels very difficult, if not impossible, to send material there right now. Clarity is needed, but the Indonesians don’t seem to want to give it.

When combined with this week’s shock immediate introduction of a 50% reduction quota by Turkey, three of the current biggest destinations are set to be lost or drastically reduced.

To give some context, out of a total of 387,219 tonnes of OCC sent from the UK abroad in April, May and June according to the most recent HMRC data, China, Indonesia and Turkey were responsible for 171,865 tonnes of it (44%).

With India having dropped off massively in recent months due to Covid, and no imminent sign of it returning as it once did, this leaves UK mills of course, Europe, Vietnam, Malaysia and perhaps Thailand plus reduced Turkish capacity as the outlets for UK material. Where will all that OCC we will generate in the run-up to Christmas go? Surely these restricted markets will also lead to lower prices unless something turns up soon.

Forecast prices

1-week4-week
OCC78-8276-80
ONP64-6864-68
Mixed30-3429-33

Recycled metals

Copper was boosted by £200 per tonne thanks to increased prices on the LME. Brass was up by £50 per tonne, but everything else saw no change.

Recycling prices

For recycled paper prices, click here

For recycled plastic prices, click here

For recycled metal prices, click here

For recycled glass prices, click here

For PRN/PERN prices, click here

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