13 April 2017 by Steve Eminton

Global markets impact on recyclable commodities prices

Global market demand, and in particular orders from China, have seen prices for two recovered – waste paper – grades fall sharply this month.

At the same time, ferrous scrap markets continue to show volatility with the plastics recycling sector also subject to market reductions.

Waste paper

Prices for mixed papers and used cardboard have reduced significantly this month on the export market and are also lower in the UK

Prices paid for used cardboard and mixed papers rose towards the £140 mark and £105 respectively in March on the export market. But, with rising shipping costs and Chinese finished stocks increasing, Chinese backers backed off in the last week of March and prices have fallen sharply for April. Quality pressures are also said by some to be a factor in the mixed paper market while others say this is not a big issue.

Consequently, to reflect the current downturn in the market, letsrecycle.com has published mid-month indicators for the two grades on both the export and domestic market. Domestic demand appears steadier than on the export front and prices have been reduced, although not by the same extent.

Export prices for used cardboard are around the £80-85 level with mixed papers circa £40-45 per tonne. On the domestic front, low prices are reported for some poorer quality mixed, but the price is ranging generally from £40-50 or more for mixed. Used cardboard is around the £80-90 level ex works on the domestic market.

Going forward, there is some sentiment that the market is unlikely to fall further and could even edge up slightly with a more stable pricing level.

“In the past a fall on this scale would have taken perhaps six weeks or more.”


Adrian Jackson
President, the Recycling Association

However, observers are reluctant to predict May’s markets, with some noting that the end of March downturn was one of the sharpest ever seen.

Adrian Jackson, president of the Recycling Association which represents many waste paper merchants, waste management companies and paper mills, said: “This sudden collapse in prices is unprecedented in my recent memory. In the past a fall on this scale would have taken perhaps six weeks or more in the 1980s. Today with the speed of communications and the role of the internet, everything happens so much more quickly.”

Ferrous scrap

Ferrous scrap markets have seen sharp swings this year with only four months gone, with many prices down about £10 per tonne in April. And, the metals sector is closely watching the outcome of Sunday’s constitutional referendum in Turkey.

Turkish rally

Supporters wait for the arrival of Turkey’s President Recep Tayyip Erdogan for a referendum rally in Istanbul last weekend (Picture: Thomas Koch, Shutterstock)

The referendum is over whether to give the President more power. The interest from the metals sector lies in whether the country remains stable in economic terms or any backlash from the result causes economic instability. If this were to happen, demand for scrap could be affected and prices reduced.

Plastics

In the plastics recycling market, the effect of the Chinese customs authority’s National Sword inspection initiative, which has identified plastics scrap as an area for action to tackle ‘illegal smuggling activities’ coupled with rising freight costs have continued to put downward pressure on prices.

One trader with links to the Far East has noted that many China-based plastics manufacturers are “sitting on their hands”, whilst the full impact of the National Sword initiative is still to be fully digested.

Comparisons have been drawn with the 2014 Green Fence – which sought to restrict imports of low-grade unsorted plastic waste into China – and resulted in price drops for a number of plastic grades.

In March, reductions in price were seen across low grade and mixed materials, with 80:20 and 90:10 films among those particularly impacted with traders reporting fewer buyers for material. Demand for HDPE bottles has remained strong, although there has been a reported softening demand for PET grades.

Commenting on current market conditions, Mike Baxter, director of external affairs at the plastic film manufacturing and recycling firm BPI, and the plastics industry’s representative on the government’s Advisory Committee on Packaging, said that markets are currently being driven ‘on sentiment’ whilst traders continue to gauge the impact of the National Sword campaign.

He said: “It appears that exporters are nervous about sending material out but the Chinese haven’t actually done anything yet. Plastics prices have moved a bit, but they are still holding up.”


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