Recycling prices and market commentary: 3 August 2018

August 3, 2018

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In terms of recycling prices, it was a quiet week with not much movement across most material grades.

Indeed, many market participants are on holiday, while those stuck in the office are gripped by uncertainty.

The news that emerged this week that a proposal to amend the Basel Convention to make it harder to export plastics had been put forward could have devastating consequences for plastics recyclers. This is on top of the news from Vietnam, Malaysia etc.

There will be a lot of crossed fingers that this proposal from the Norwegian Government is not agreed at the Basel Convention meeting in September.

Exporters benefited from a falling pound as the week went on. After starting the week at $1.31, the pound was dipping below $1.30 at the time of writing giving a small boost to exporters. The pound had fallen on Friday after Bank of England governor Mark Carney had said a no-deal Brexit was increasingly possible, which spooked the market.

Those shipping to Europe however saw a relatively stable pound trading within a €1.22 range.

One factor that is becomingly increasingly important is the rising price of PRNs. Overall PRN prices have risen substantially in recent weeks. Indeed, PRNs are now believed to be at their overall highest prices ever.

With one million tonnes of general obligation struggling to be met (these would traditionally have been filled by paper or wood PRNs), the paper PRN is now being seen as the benchmark lowest PRN price.

The consequence is that if paper rises, other PRN prices might rise too in order to fill this general obligation. Interestingly, glass PRNs appear to be traded at the moment in order to meet general PRN obligations.

With the price of physical glass so closely linked to the PRN price – effectively it is a subsidy – it could be that the rising paper PRN price pushes up the price of the glass PRN and potentially the physical price of glass too.

Recycled plastics

The market is quiet at the moment with many participants off on holiday and those still at home struggling to shift material.

There remains some domestic and European demand for high quality packaging grades, plus industrial HDPE and PP. But low grade material is really struggling, as Asia is effectively cut off at the moment.

This is starting to push up the PRN price for packaging grades, and it is close to approaching the mid-£60s. This is because the market distrusts the Q2 data, but more so that it fears the closure of the Asian market will hit the ability to reach targets in the third and fourth quarters of this year.

It wouldn’t be a surprise if the plastic PRN continued rising in the coming weeks.

Recycled paper

The paper market was stable this week on the surface, although there was a bit of movement that overall balanced things out.

In OCC, one Chinese buyer was offering £20 per tonne below its rivals in order to show it wasn’t wanting too much material. However, the other two were competing for tonnes and pushed up the price of Chinese specification material by £2 per tonne.

Other none-China destinations saw demand fall. UK and European demand was affected by the summer holidays, while other destinations such as India were not so interested either. These therefore fell by about £2 per tonne. The impact of all of this is that the overall market price saw no change. Indeed, our price for OCC has remained unchanged for four weeks now at £109 per tonne. That doesn’t happen often in what is normally a more fluid market.

News & pam and mixed paper grades saw no real change in value.

SOW has seen a slight fall though as demand has also fallen.

Recycled metal

Copper grades fell by £100 per tonne with the continuing worry over US tariffs hitting prices. Other metal grades were unchanged.