Recycling prices and market commentary: 23 November 2018

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Aluminium and plastic PRNs are the main story this week, with prices rising even higher.

As reported last week, the Advisory Committee on Packaging has written to the Competition and Markets Authority about restrictive practices leading to high PRN prices.

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That didn’t stop the aluminium PRN price rising from £90 last week to a very large £120 per tonne this week.

Plastic PRN prices are now above £80 per tonne reaching £84 this week from £75 per tonne a week ago.

As we get towards the end of the 2018 compliance period, buyers are needing to adjust their purchasing patterns to meet their obligation and this is helping to push up prices.

Some in the market think paper may also follow this pattern and will rise before the end of the year, but that remains to be seen.

What it definitely the case is that there is genuine expectation that PRN prices will rise even higher in 2019 if markets continue to be harder to find for plastics and paper in particular.

In terms of the physical market, there was some movement for OCC and some metal grades in an otherwise stable market. The beginning of December might bring some adjustment though, but that remains to be seen.

Shipping for December has risen slightly for deep water destinations, which may hit prices a little, but not enough to be dramatic. UK haulage was also reported to be a bit easier to get hold of.

The pound was stable against the dollar at $1.28, and there was no real movement against the euro at €1.12.

Recycled plastics

The PRN price continues to dominate conversation with it rising this week and an expectation that it may rise further up to Christmas as buyers look to fulfil their obligation.

There was no push up of prices of physical materials as yet, but there could be an adjustment upwards in the coming days, especially if the price rises further.

Indeed, there is expectation that the plastic PRN could hit £100 and more in the New Year as the 2019 targets are looking increasingly difficult to hit. With two thirds of plastics PRN generated by the export market, the fact that China is closed and Malaysia and Vietnam likely to be much tougher in 2019, there will be very few destinations left. Europe and Turkey, seem like the key export destinations for 2019, but it is unlikely they will fill the gap.

Interestingly, demand for bottle grades remains strong as manufacturers look to use more recycled content, but film grades continue to struggle.

One thing to look out for is that oil prices have slumped to their lowest level since October 2017 with Brent Crude now below $60 per barrel. As recently as October, Brent Crude was trading at $84 per barrel. There isn’t always a direct correlation between oil prices and recycled plastics prices, but if this causes virgin polymer prices to fall, then expect recycled plastics to drop too.

Forecast prices

1 week           4 week

PET      300-306         302-308
HDPE   532-538         530-536
LDPE    221-227         220-226

Recycled paper

One major Chinese buyer made a move this week by purchasing for both its 2018 quota and also for early 2019 too.

Other buyers remain cautious, but were still sampling the market.

There remains an expectation that 2019 quotas into China will fall compared to this year, but how far is yet to be determined.

Indeed, it may not become clear until the spring of 2019 if Chinese authorities stagger the quota release as they did this year. It is expected they will.

The Chinese mill groups are anticipating having an idea of their first tranche of quota in the second week of December, even if this doesn’t become ‘official’ until January.

It could be that this leads to a rush, which might be why one of the Chinese buyers has decided to take the risk with the aim of taking advantage of lower prices. The other mill groups appear more risk averse.

Prices to China were anywhere between £100 to £115, with most trades at the lower end of this range. This was enough to push the overall market price up though.

Buying was also good for Vietnam with mid-£80s normal for OCC. More mixed was also bought for Vietnamese mills although at a rather static low-£40s price.

Other destinations, both domestic and export, were much quieter with buyers not entertaining transactions unless contractually obliged to do so. As a result, there wasn’t much of a price for these destinations.

Forecast prices

1 week        4 week

OCC      95-99           94-98
N&P      113-117       112-116
Mixed    41-45          42-46

Recycled metals

Copper saw an increase of £100 per tonne, brass by £50 per tonne and £75 per tonne was added to the price of aluminium this week. Demand was stronger on the LME for industrial metals.

Can prices were stable, but aluminium cans may rise in December if the LME rise continues plus the PRN price(see above) could also have an impact. Steel prices were unchanged.

Recycled 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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