Those buying recyclable materials may have had a quiet time this week, while those selling may have struggled to find suitable outlets.
A combination of factors made the market for buyers quiet. For those exporting to China, Chinese New Year and a general weaker appetite for permitted material made for less demand.
Elsewhere, weaker demand generally and the end of the PRN/PERN 2018 transition period slowed the market down. With haulage difficulties also impacting, plus a strengthening pound, it made for tougher conditions.
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In terms of the PRN/PERN market, it is largely settled at the moment, with people now waiting for February to see what the 2019 market will bring and how that will affect both PRN/PERN and physical prices.
Shipping prices for deep water destinations have strengthened by $100 plus over the last month, while Brexit uncertainty is making it harder to get lorry drivers adding to time delays and additional cost.
The pound has strengthened slightly due to an apparent softening of the DUP’s stance on the Northern Ireland backstop. This meant the pound was trading at around $1.31 this week, compared to $1.29 a week ago and $1.25 prior to Christmas. This has made material trading in dollars more expensive obviously.
It has also got tougher to send material into Europe, with the pound gaining quite a bit. This week it reached €1.15 compared to €1.13 a week ago and €1.11 at the beginning of the month.
With a weakening global economic picture, it is looking like a tougher time for recycling markets, especially with destinations harder to find all the time.
The PRN/PERN price remained stable this week as the market starts to look ahead to February and the 2019 compliance period. Nobody is quite sure what will happen so are hanging fire until the picture settles.
This is meaning physical prices are staying high for packaging grades with PRN/PERN revenues holding them up, even if not much material is being traded.
HDPE bottles remain in good demand though, and prices increased by £10 per tonne.
PP, and PP bags in particular, are starting to struggle to find a market with the Malaysia closure cutting off this destination, and other places starting to cope with all the material being offered to them.
With Chinese buyers out of the market, or buying very little, the market was very quiet.
Indeed, other destinations including UK, Europe and non-China Asia were also not too interested in buying either.
This helped to ease prices downwards across the market for OCC and mixed in particular.
Looking ahead, the picture isn’t looking too much better. Once Chinese New Year is out of the way, Chinese demand isn’t expected to pick up. Linerboard sales appear to be weakening due to a tougher global economy, and this is suppressing demand for material in Chinese mills.
Indeed, this is a pattern seen in UK and European mills too and increasingly in South East Asia.
Conversely, UK material is starting to look competitive against that from Europe and US, and if the pound falls and the relatively dry winter continues, UK material might suddenly be attractive to Chinese buyers.
But much will also depend on whether those who have been buying Chinese specification will decide it is worth sorting if the margin difference falls.
Although mixed has fallen in recent weeks, there are indications European demand for mixed may be increasing again. This could also get a boost if prices stay low and any Brexit disruption to transportation remains low.
There were not too many changes at all this week, with just copper coming down by £50 per tonne.
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