There is a lot of worry about in the recycling market at the moment, with genuine fears around where to send material, how to send it legally, reform of the PRN system and much more.
To be fair, there are some who are seeing opportunities coming out of the chaos, but with legislative and regulatory uncertainty, it can be difficult to pin down those opportunities.
As we head into the last part of 2018, those sending materials that are still allowed to be exported to China are wondering what the import quotas for 2019 will be. They are also wondering if 2019 or 2020 will be the year that China stops importing recycled materials altogether.
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There is also confusion over the inspection regime and whether that is acceptable to the Chinese authorities.
For those such as the plastics sector, that of course can no longer send material to China, the difficulty remains finding end markets now that much of Asia is closed. Again, there are opportunities here as it looks increasingly likely we will export flake or pellet that has been processed here or maybe in Europe. Of course, Brexit might make Europe more challenging, but nobody quite knows.
There there is the Resources & Waste strategy that is due to be published by the Government before the end of the year. Rumours are swirling that there will be significant PRN/PERN reform with local authorities issuing the certification rather than the recycler. This is, unsurprisingly, seen as a potential disaster. Local authorities would effectively be incentivised to recycle materials that have no end market potentially, while also diverting essential revenue from the recycling market.
For the time being, PRN prices are high and seem to be doing the job they are intended to do of ensuring material is recycled by providing a competitive price advantage or a subsidy.
Shipping seems to have improved a bit this week, but some are still finding it a challenge to get hold of containers.
While at $1.31, the pound ended this week in the same place as last week. The euro too was pretty stable at €1.12.
Prices remained unchanged this week, but finding markets for material continues to be challenging.
The PRN at around £71 to £72 is helping to keep material moving though once a buyer has been found.
Any hope that Vietnam may reopen as a market appears to have been dashed by a Prime Ministerial Directive that will ban material exports to the country unless it is being imported directly by a manufacturer. With most plastic recycling facilities in the county a stage before that, it now looks as if Vietnam is closed unless plastic manufacturers decide to import materials.
Increasingly, it appears the main way to export will be to send a pellet or a flake from UK or Europe, but the processing infrastructure still needs more development.
Most grades were stable, except for OCC which saw a small increase of about £2 per tonne. This was across the market at both the top end for Chinese specification as well as at the bottom of the market.
It appears that buyers, both domestically and export, are stocking up as this is historically one of the busiest times of the year up until December. Chinese buyers also need to get material on the water ahead of the 2019 import quota period coming into play – especially as they don’t know what those quotas will be. A 30% drop is still being talked about.
While material demand from China remains good, there is an expectation that the ongoing tariff trade war between it and United States will lead to a fall off in board demand and falling prices for Chinese mills throughout 2019.
Interestingly, US mills are expecting domestic prices to fall for OCC due to less Chinese competition, and have already seen some small price drops. There is even talk of some mills that currently operate using virgin material will invest in converting to use more OCC.
It is even being speculated that if the price of OCC were to fall here, and the PRN rise enough as recyclers struggle to find markets, that US mills could become a destination for UK material. We’ll have to wait and see on that one!
Copper prices increased by £50 per tonne this week as LME traders expect that trade wars may have less impact than expected on the material.
Otherwise, prices were pretty stable.
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