Secondary markets commentary – 2 February 2018

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FROM THE 2ND FEBRUARY INTELLIGENCE REPORT: 

Paper grades fell even further this week with mixed paper in particular hit hard. Plastic bottles and film also fell back, but brass grades were the only movers in metals. The overall movement of the market is downwards this week, but it remains to be seen how much further it might go, especially as the market seems to be running counter to the global economy, which overall, appears to be in a strong growth phase. Clearly, we are still dealing with the impacts of the Chinese ban in the case of plastics, as well as quota restrictions and upcoming 0.5% contamination levels. Other destinations appear to be filling up, or at least holding back for lower prices, and it suggests that markets could remain volatile throughout the rest of the year as buyers and sellers react to circumstances. After jumping up above $1.43 last week, the pound has settled back a little this week, but is also helping to place more pressure on export prices.

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Plastics
Bottle and film grades lost value this week as finding a home for them looked increasingly difficult. PET bottles came off by £10 per tonne, HDPE bottles by £20 per tonne, while the same £20 came off LDPE 98/2 also. Demand from Europe that has helped to sustain these grades is easing off, although the high PRN price is still helping to give the UK a competitive advantage into these markets. It is also being reported that some exporters are finding it increasingly difficult to get hold of containers.
This is generally the case for smaller exporters, while the larger ones are not having the same issue. The reason for this is that shipping lines are increasingly nervous of sending plastics to anywhere, but particularly Asian destinations. In particular, the shipping lines fear that other Asian nations will get frustrated with being an alternative to China and will impose sudden and strict bans or restrictions as Malaysia did a few years ago.
They therefore do not wish to be left handling containers on the water or at dockside. Those exporters who handle a lot of volume are still being accomodated on the basis that the lines are balancing out the commercial benefits with the risk.

Paper
OCC and mixed paper grades both slumped this week as orders became increasingly difficult to get. Major buyers, both domestically and export, were out of the market and were offering lower prices across the board. Mixed paper in particular has been hit hard recently. While some, who are being looked after by regular buyers are able to get up to £30 a tonne, some are having to give the material away for free. Most are somewhere between £10 to £15 per tonne.
Is a gate fee for mixed paper not so far away? It could well be as mixed now appears to be actively sorted to take out OCC and news & pam leaving behind what has less value. OCC also lost almost £20 per tonne with Chinese mill groups hit by quotas and domestic buyers picking and choosing if they want the material. Other destinations also appear to be full up.

Metals
Brass eased back, as did aluminium cans.

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