The future could be scary for the recycling market, which is why many seem to prefer to concentrate on the here and now at the moment.
With the global economy looking like it will be challenging, many are wondering how it will affect them and their business.
Prices are historically high, and in some cases such as plastics, keep rising higher. But volumes collected also appear to be lower, and this is leading to higher PRN/PERN prices and helping to support some of these price rises for now. Indeed, the higher PRN/PERN prices could be an indication that the market suspects collection volumes will remain low all year as the economic situation tightens further.
Many in the market also expect demand to be challenging, although the Plastics Packaging Tax and manufacturing and marketing need for recycled plastic content generally is providing support for this market.
FX markets remain volatile, and the pound suffered against the dollar again this week, dropping to $1.24 from $1.27 last week. However, it was $1.23 the week before that. Sterling was a little more settled against the euro at €1.17 after briefly going above €1.18 mid-week.
Underlying plastic packaging prices remain stable, but the PRN/PERN market keeps rising. At around £200 this week, that represented a £20 increase on the week before, and this was mostly passed on.
For the time being, demand remains good for most grades, but volumes of available material are low and being fought over.
As a result of the Plastic Packaging Tax, and manufacturer commitments to using more recycled content, this demand for recycled material looks set to continue for a while. However, some are also starting to talk about limits to what they are prepared to pay for recycled content and are looking at ways to bring prices down to what they see as more sustainable levels.
It remains the case that the market was focused on delivering existing orders, expecting to trade for June next week.
Prices as a result were largely stable. For OCC, inspection destinations could be paying up to £170 per tonne, but UK, India and Malaysia were somewhere from £155 to £160 with much of the market at this latter level.
Generation of material remains low, and many buyers with retail contracts are saying that there is a definite trend for lower tonnage from this typically high-quality area. While volumes may only be down a percentage point or two, it is enough to start some concern that the economic situation is creating a harder time for retailers. It would therefore be expected that consumer volumes from local authorities are likely to be weaker too.
REB Market Intelligence understands that DS Smith has begun starting up its paper machines after a 10 day maintenance shut down at Kemsley. However, there have been problems getting PM3 back up and running, after the other two machines were reactivated. This is likely to mean buying from the UK’s largest mill may not recover to normal levels until everything is fully operational and pre-maintenance stocks have been reduced.
Copper, brass and aluminium grades all dropped by £50 per tonne this week. Ferrous grades lost £10.
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