17 February 2009

Plastics export demand picks up

The price being paid for recovered plastics such as bottles has started to rise following increasing demand from the Far East and mainland Europe.

However, some members of the plastics recycling industry have warned companies against having a “short memory” and sending too much material abroad, blaming last year's market collapse on an overdependence on export.

Prices have shown recovery following export interest but remain low due to their relation to the oil price, which is currently low

Prices have shown recovery following export interest but remain low due to their relation to the oil price, which is currently low

Speaking to letsrecycle.com yesterday, reprocessors reported that the prices for bottles had increased by up to £60 per tonne, while plastic film prices had remained consistent after stability crept back into the market in January.

The price being paid for clear PET bottles has risen from between £80-160 per tonne in January to an upper limit of around £180 per tonne in February, while the price being paid for natural HDPE has gone from between £130-180 per tonne to £190-240 per tonne. Meanwhile, the price of good quality film has seen an incremental rise from £120-190 per tonne in January to £130-200 per tonne.

However, the prices remain relatively low compared to the heights achieved last summer – when prices stood at £350 a tonne for HDPE natural bottles. This is partly due to the low price of oil, which affects the price of virgin, and in turn recovered, polymers and currently stands at $40 a barrel.

Trade

The price increases – which are most noticeable in the high-density polyethylene (HDPE) bottle grades – have been attributed to increased internal competition between Chinese reprocessors for recovered material to use in plastics manufacturing following the Chinese New Year.

In addition, the current weakness of the pound against the Euro has also helped increase demand from Europe, enabling French and German companies to compete for material alongside the Chinese – sometimes forcing UK buyers out of the picture.

One UK plastics purchasing manager told letsrecycle.com: “European buyers have always been in the frame and I have never been outbid by a European company but now it has got to that point because of the current strength of the Euro against the pound.”

However, others claimed that the current interest from Europe was not necessarily a good thing, as any future strengthening of the pound could lead that interest contracting which could lead to a depressed market once again.

Export

In particular, some urged caution over prices becoming “overinflated” after the steep fall in prices in November 2008 (see letsrecycle.com).

A sales manager at a plastics reprocessing plant told letsrecycle.com: “There is a short memory in this job and we know that and we knew that there was one even before the market fell. There are one or two companies which have learned lessons but as prices go up we still have to plan to make changes. We get a lot of traders who completely disappear when the market is down and just come back at its height.”

Other plastics reprocessors said that they felt aggrieved by traders who had been given a helping hand when the market was flat and had quickly reverted to the export market at the expense of trading domestically.

One sales manager told letsrecycle.com that there had been some unscrupulous activity and commented: “When push comes to shove the market had come back in and a lot of people are trying to recover the losses that they made.”

Infrastructure

Lamenting the “short-sighted” approach to trading, other plastics recycling companies and trade associations warned how dependence on the export market could be detrimental to the development of the UK's own “fragile” infrastructure.

Mark Burstall, chairman of the British Plastics Federation (BPF) Recycling Council, said: “The last year has seen a major increase in investment in the plastics recycling sector. BPF Recycling Council members have secured finance for major investment in recycling and are working towards further increasing levels of recycling in the UK.

“However, for any new investment to succeed it will be vital that they can see an ongoing commitment to supply materials to UK based recyclers. They would need to be assured that supplies would not dry up once export routes open again,” he added.

While one commentator explained that the market should avoid protectionism, he did remark that for developments such as AWS Ecoplastics' £14 million Hemswell facility, J&A Young's plastics sorting facility at Normanton and Closed Loop London to survive there would have to be a step-change in trading policy.

He said: “A lot of the people who needed the UK in November are back exporting. We need a regulatory change or out-right ban or a general ban but there has got to be some change. It may sound like protectionism but what I am saying is we are not going to change this situation.”


TAGS : Plastics


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