Secondary Markets Commentary- 19th January 2018



Market remains in doldrums as material struggles to move amid continuing difficult conditions


It remains difficult out there to trade materials at the moment as most outlets are not enthusiastic at buying material. It is being reported, with a few rare exceptions, that on the whole most materials are struggling to find a home with end markets saying they are either unable to buy (in the case of China) or full up. While we haven’t reached the stage of huge stockpiles of material as yet, it has been the case that material has been moving even if it has been slowly. It now looks like we could be close to material movements grinding to a halt, at least for the rest of the month and possibly beyond unless end markets are able to take more material. One other factor that is suddenly making life more difficult is the continuing strengthening of the pound, reaching close to 1.3 this week from 1.3 last week. The impact of this is to make UK material less attractive to those market buying in dollars, which is most of them. January typically is a good month for traders with plenty of material available following Christmas, and plenty of markets willing to take it after their own quiet periods. This year is looking very different.

There are real fears in the plastic markets that end markets such as Malaysia and Vietnam may be getting close to being full up for the time being. With China now completely out of the equation, some have been able to move material to these destinations, but their appetite appears to have been satisfied for the time being at least. European buyers also seem to be less interested in material than they were.
Film in particular is being badly hit by the weakening export markets, and there are reports that 98/2 may be trading as low as £130 per tonne in some circumstances. However, there are still some paying above £200 per tonne for the best quality material, so it really depends on existing relationships and the quality available for trades to happen at the best prices.

Chinese demand for OCC is very weak and looks set to remain that way until at least after Chinese New Year in mid-February.
While some mills in certain regions have been given new interim import quotas over the last couple of weeks, these haven’t been enough to cover more than the material already on the water. With Chinese New Year often leading to disruption in the weeks afterwards, the fear is that the market may remain in a poor state until the end of March.
This has also been compounded by the strengthened pound that has made OCC less competitive from the UK. Mixed paper has also lost a lot of the demand it was getting from Europe and is trading anywhere from £20 upwards, although most are way above this level at present.

Copper and steel grades softened this week as market demand eased.

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