Secondary markets commentary – 26 January 2018

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plastic
A bale of plastics for recycling

FROM THE 26TH JANUARY INTELLIGENCE REPORT:

Paper grades tumbled in value this week as a range of factors combined to push prices lower. While plastics and most metal grades were stable, there was a £10 fall for ferrous grades. As mentioned on the previous page, the pound reached $1.43 this week, dropping to $1.42 at the time of writing. The impact of this has been to make UK material much more expensive on the international market (those that purchase in dollars at least – a euro that has only slightly risen has meant not too much change for those buying in euros). With Chinese New Year on the way next month, there are also fears what the implication will be on shipping with blank sailings and ships caught in the wrong place often occuring after this holiday. However, it is possible things will be different this year as shipping lines will be keen to get bookings on the back of the fall in backhaul tonnage to China. We will have to wait and see. Shipping prices remain relatively stable though and still relatively cheap despite recent fuel price increases, with some lines even offering small discounts in the hope of getting business.

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Plastics
Plastics With the PRN price for plastics currently above £50 and staying there, this is helping to keep material moving. Plastic bottles in particular are benefitting from this, and are finding a home with European buyers particularly happy to buy on the back of the £50 plus PRN helping to keep UK material competitive. However, there is a view that if the PRN were to fall much below this level, that advantage would be lost and it would become much more tricky to find end destinations for plastic bottles. Film grades remain tricky to find a home for with alternative Asian destinations to China appearing to be full up at present, while domestic UK and European buyers also taking their pick of the best quality material from favoured buyers. There are also fears that recent press and TV coverage could lead to less use of plastic overall, meaning less material to go around.

Paper
Paper OCC, mixed and news & pam all lost value this week as paper grades suffered from less demand and higher FX. With UK mills subdued when it came to buying, the export market wasn’t taking up any of this slack either. Although Chinese buyers have been given some more quota at the beginning of the week to make them a little more comfortable, it still wasn’t enough to open the flood gates, and the Chinese authorities continue to strictly control quota levels.
It is also believed that no new quotas will be issued until after Chinese New Year next month. With the pound also stronger against the dollar, OCC lost £10 per tonne on last week, and mixed was down by £8 per tonne for the best quality. However, it is also being said that the worst quality mixed is struggling for a market at present. There is also a view that news & pam is set to fall over coming weeks as demand for, what has been a relatively stable grade, begins to fall.

Metals
Ferrous grades, including cans, lost £10 per tonne this week.

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