China “open for business” for UK paper and plastic exports

In its 'China Market Sentiment Study', the Defra-funded body surveyed 104 Chinese paper reprocessors and 104 Chinese plastics reprocessors in December 2008 and January 2009, in a bid to “refine and augment” knowledge of Chinese markets and to gauge past, present and future market sentiment.

WRAP said that the results of the survey showed that, in the short term, both sectors planned for their capacity to remain at the same level, while only 8% of paper and 13% of plastics reprocessors questioned were not buying recovered materials.

However, the report also revealed that 76% of paper reprocessors and 45% in the plastics sector were unwilling to speculate on prospects to expand their capacity over the next three years, which, it said, “likely reflected the uncertainty created by the current wider economic conditions”.

And, there was also an unwillingness to speculate on future changes to profit margins, with 68% in the paper sector responding 'I don't know' when asked whether they would change in the short-term, and 84% saying the same in the medium-term, and 76% saying they would not speculate on future increases in demand for their products.

Plastics reprocessors told a similar story, with 35% of respondents replying 'I don't know' when asked whether they thought their margins would increase, and 30% unwilling to speculate on demand prospects in the medium term.

UK paper experts have already warned that, while demand picked up from Chinese markets in early 2009, the longer term picture is less certain, as the impact of the global recession truly impacts on production levels in China (see letsrecycle.com story).

The survey did, however, find that where reprocessors were willing to speculate on future prospects, their sentiments tended to be positive about an increase in margins and demand.

Demand

The second report published by the body today, a 'Market Situation Report', also claims that there is potential further growth for demand for recovered paper and plastics from China.

However, it too acknowledged that the market remained “vulnerable”, relying on a wider economic recovery for short-term improvements.

And, it added: “In the longer term, there may be risks, partly as the sustainability of Chinese demand for recovered materials is linked to its ability to continue on a path of relatively rapid growth over the next two decades.”

Commenting on the findings of the two reports, WRAP's director, Marcus Gover, said: “It is good news that China is still open for business as far as UK recovered materials are concerned. However, whilst the export market is a valuable one, it is just one part of the jigsaw. Both domestic and export markets play a key part in recycling.”

The Market Sentiment report discovered that the key obstacles influencing reprocessors decisions over where they sourced materials from were price and quality.

And, in light of this, Mr Gover said: “What is clear in both markets is that quality of materials plays an important role – with both the domestic and export markets looking for as high a quality as possible. Quality material is still attracting a premium price.”