The market is waiting to see what September will bring, but that didn’t mean that there was inactivity this week.
There is definitely a sense of foreboding with high energy prices and the impact on the global economy causing worry for many. This means there is an expectation that weaker demand is likely to bring further price falls.
But for now, a lot of the attention is on the PRN/PERN market and the support that is providing for key packaging grades. At current levels for paper and plastics in particular, it is helping to keep prices roughly around where they were last week, but some falls and increases were seen.
There is also the fallout from the current strike at Felixstowe and what that means over the next few weeks for availability of back-of-store materials such as OCC and LDPE film if less deliveries have been made. So far, the impact seems limited, but that could change into next week.
At $1.18 the pound was unchanged against the dollar from last week, and was also at €1.18 from €1.17 last week when compared to the euro.
Weaker demand for LDPE film from Europe, and a slightly weaker PRN/PERN, helped bring the price down by £20 per tonne this week. European buyers are worried about energy prices and are seeing the value of virgin material demand come down too.
There is still interest from Asia for film, but volumes were a little bit lower due to export challenges with the strike at Felixstowe. With the ferry from Felixstowe to Rotterdam also affected, it meant material could not go via The Netherlands. This therefore had an impact on orders from the UK.
Bottle grades came down as a result of the lower PRN/PERN price, but participants in this market are waiting to set prices for September.
After last week’s PRN/PERN price rise, this started to translate into slightly higher trading prices for OCC this week.
Many traders were happy to pass the value, or most of the value, of the PRN/PERN on, but with the price of it up £15 in the past couple of weeks, it also reflects a weaker underlying market.
There was some interest from South East Asia at the right price (they are happy to choose local markets where generation is good or the excellent value of the US), but Europe seems less eager where energy price rises and availability are a huge concern for mills.
On a more positive note, the PM4 machine at Kemsley is slowly restarting operation.
Without the full benefit of the PRN/PERN, mixed didn’t respond as well as OCC but still saw a small price increase.
There is a bit of tension ahead of next week when a benchmark price is likely to be set for September, especially as many orders will be done for the month then. Some see this week’s price rises as setting the tone, but mills believe prices are too high. It will be interesting to see which side wins out.
Copper was up by £150 per tonne, brass by £50 and everything else was stable.
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