Secondary Markets Commentary- 12th January 2018

0
218
China paper imports

FROM 12TH JANUARY INTELLIGENCE REPORT:

Chinese 0.5% contamination level for paper seems to be confirmed, as markets remain quiet

Advertisement

An official English version of the GB standards on imports into China is being circulated that confirms the 0.5 contamination level for OCC, news pam and those plastics that are still allowed from the end of March. Although new and revised GB standards have been circulated in English previously, these have tended to be translations. With the publication of the standards in English, this does seem to show that the Chinese are now working to this level. However, markets remain very quiet with the Chinese largely not involved even with materials that are still permitted. Anyone with material to trade is looking at domestic, European and other Asian markets but there are a lot out there doing the same. So where these markets are purchasing, they are able to pick what they want. The pound now appears to be strengthening a little against the dollar reaching 1.3 this week on the back of suggestions that a transition period for leaving the EU could be extended beyond two years. This puts the pound back at the sort of level seen shortly after the Brexit referendum in June 201. There is still some way for the pound to reach the 1.2 level seen in the days before the vote, but the pound has got much stronger since this time last year when it was trading at 1.22. If the pound were to continue to get stronger, this could be another factor that will make exports tougher.

Plastics
While the market talks about it being tough to move plastics at the moment, particularly film grades, there doesn’t appear to be yards full of the stuff yet. This could happen if the alternative markets to China in UK, Europe and Asia continue to be picky about the material they buy.
Certainly, there is a view that these markets are not desperate for plastic grades at the moment. The plastic PRN fell a touch this week to £52, but remains high for so early in the compliance year and the majority view appears that the price will still rise further. With the cotton price rising above 80 cents per pound, this could start to have an influence on PET prices at this level.

Paper
It was a quiet market in paper grades this week, with the Chinese mill groups still purchasing under quota levels that were largely filled by the time the quota was issued. There is an expectation that new quotas will be revealed throughout this month, but there is not a clear view on whether the Chinese Government will continue to be extremely tough on import levels, or will loosen the strings a little to ensure its manufacturers receive the finished board they need.
Mixed has started to ease back a bit too, with European interest not what it was, and other sources taking mixed paper on the basis on maintaining trading relationships with good suppliers. With US traders reportedly dumping mixed on other Asian destinations at very low prices, there could be further falls on the way for this grade. News & pam has also softened as demand in the market has eased back following a decent run in recent months.

Metals
Brass was the only real change this week, coming down by around £100 per tonne.

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.