Recycling prices and market commentary: 7 December 2018

December 7, 2018

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One of the strange things about the recycling market in 2018 has been the ever increasing importance of the PRN/PERN market to the physical price.

For many years, glass was effectively subsidised by the PRN/PERN price, and there was a strong relationship between the plastic PRN/PERN and the market price for the material.

But this year has seen almost every material affected by the PRN/PERN. The year seems to be ending with this picture dominant, and looking set to have the same impact in 2019.

Aluminium PRNs broke the £150 mark this week for the first time ever for any PRN/PERN, while the transition price for plastic is now just over £100. The current price for December is in the low-£90s. Physical recycled plastic packaging prices continue to rise as a result (see more below).

For paper, the PRN/PERN price has almost halved this week, and this may put downward pressure on prices next week along with other market conditions.

Effectively, this means that many markets that used to see the PRN/PERN market as a potential and occasional bonus, are now having to work out two markets for one physical price. Interesting times.

Otherwise, market conditions are relatively stable with no real change for the pound against the dollar at $1.27 and at €1.12.

One factor as we get closer to Christmas is that material movements may slow down. With Christmas Day on a Tuesday, getting haulage is likely to be tricky with the last day most probably Friday 21 December until at least 27 December. But drivers are also likely to be on holiday between Christmas and New Year.

Recycled plastics

Packaging grades have seen price increases in recent weeks.

Demand is good for HDPE bottles, aided by the PRN/PERN price and this has seen their value increase up to £575 this week. This has also naturally pushed up the HDPE Regrind price.

Film is also on the up for the same reason, with 98/2 now able to attract £250 and possibly upwards as the PRN/PERN value rises.

Only top quality grades are benefiting though with low quality material still struggling to find a home. However, there are reports that some are still able to move low quality materials for use in low quality applications such as bin and carrier bags or agricultural uses, due to the PRN/PERN value helping their material value on the export market.

As mentioned above, the current December PRN/PERN value is £92-£93 pound, but the transition price has breached £100 this week. Many in the market are actively talking of a £150 PRN/PERN at some point in 2019, especially as it is expected that it will be harder to move material as more restrictions come in from destinations such as Malaysia and Vietnam and no new UK or European infrastructure to take up the slack as yet.

Forecast prices

1 week 4 week

PET 300-306 300-306
HDPE 575-581 587-593
LDPE 250-256 253-259

Recycled paper

Chinese buyers of OCC eased off this week after a brief flurry from at least one last week pushed the price up. The result of this was for the price to ease down this week by £5.

Material that met Chinese specification lost £5, but a more negative outlook in the whole market caused the overall market price down a touch too.

The main buyers for China are still waiting to hear what their quotas will be for 2019, but they are expecting up to a 40% cut. The view is that they won’t know the full extent of the cuts until way into 2019, so the mills are now being cautious and appear to have everything they want.

Of course, this could all change once they get their quota figures and it wouldn’t be a surprise if they pick up buying, at least a little, after Christmas.

One problem on the horizon will be that a possible 40% quota cut will lead to material flooding other destinations, and prices would be expected to fall there as a result.

However, the PRN/PERN has made UK material cheaper than European and US material (the latter also has the impact of the Chinese tariff), so good quality UK material may still find a home by having a price advantage.

For the time being though, the PRN/PERN price has fallen this week from around £19 to £12.50 this week. It wouldn’t be a surprise if the physical material price eased a bit as a result.

Other paper grades remained stable this week, but a falling PRN/PERN price could hit them too.

Forecast prices

1 week 4 week

OCC 86-90 85-89
N&P 111-115 110-114
Mixed 41-45 42-46

Recycled metals

Copper grades lost £50 in an otherwise stable market for industrial metals.

For cans, the main buyer of aluminium cans is reported to have stepped out of the market for the time being and this has put the market into hibernation unless they can find other destinations. The PRN/PERN reaching £150 per tonne doesn’t seem to have affected prices as yet, but it might.

Although steel can prices remain stable, a couple of respondents mentioned that their prices had fallen a touch, so that is something to look out for in case it becomes more widespread.