Many in the market seem to be employing a ‘buy what you need’ strategy rather than attempting to stock up for the summer.
With so much uncertainty in the market, buyers are dipping in and out of the market on the basis that they expect prices to fall.
However, whether it is plastics, paper or metal packaging, arisings are still low. The question is about balance now, and whether this lack of supply will provide support, or if demand is dropping so low that it evens out.
What is clear is that this was another week when price falls were seen. We are not in crash territory yet, but most prices are coming down. Some think the market will crash, others don’t. Rather than a hot market over the summer, it looks like it will be cooling, possibly stormy.
In terms of foreign exchange, the pound was trading at $1.18 from $1.20 a week ago, and was stable at €1.18 against the euro.
The PRN/PERN continues to provide support at around the £250 per tonne level for plastic packaging grades, but there is no doubt that underlying prices continue to fall.
For all packaging grades, it is an easing down from a previously hot market, and there is still good demand for recycled content.
But buyers are getting pickier in what they will buy, and are wary of overpaying if prices come down further. However, while they are trying to push prices down, it is also the case that arisings are still low and they have to pay if they need it, or competitors will snap it up.
Most in the market believe prices will settle over the coming weeks rather than drop dramatically, but August is expected to be quiet with the market now mainly domestic and European.
Demand for OCC is falling with Europe, India and South East Asia all showing little appetite for this grade at the moment.
European demand for mixed continues to be good, and the spread between OCC and mixed now seems to have dropped within the historic £20 spread that used to be seen between the two. But if OCC keeps on dropping, surely that will put pressure on mixed too.
It is being reported that Asian mills have good storage of finished goods, which also means Indian mills are not selling pulp to China.
Interestingly, in a tale of two markets, multi and SOW continue to rise and are getting close to £300 per tonne. Tissue, newsprint and containerboard mills all want this grade and are competing for the low volumes available.
Copper was down by £300 per tonne and brass by £100 per tonne this week. One surprise after stabilising last week was that ferrous grades jumped back up by £35 per tonne.
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For PRN/PERN prices, click here