Export prices for used plastic film and bottles have been rising, or at least holding at a top end price, for the best part of 18 months. This has been driven by strong Chinese demand.
But UK companies, forced to pay high prices to compete with Chinese importers' seemingly endless resources, may be seeing more material come their way and prices dropping over the next few months.
Mark Gilbert of plastic exporters GW Plastics, said: “There seems to be an over supply of material into China and the importers over there are seriously cutting their intakes. Companies over there will have noticed a struggle to offload materials and tightened up on ordering.
“Over the last 10 days or so the price of LDPE plastic film has dropped by about 35 per tonne and is likely to continue dropping further. Other types of plastic are likely to follow in the near future,” he added.
Price drops have also been noticed on HDPE plastic bottles, with one UK reprocessor claiming that the price he is paying has dropped by about 25 in recent weeks. “It could drop by as much as 100 within six to eight weeks,” he said.
Hongwei Sun, general manager of the Yue He International Trade Company, added: “The situation is serious due to too much material being imported and high prices quoted by the overseas suppliers.”
Seasonal
Nancy Lan, director of Chinese importer Demeter Resource Limited, believes that the slow-up in materials may be attributed to seasonal changes, something that failed to slow the market last year.
Ms Lan told letsrecycle.com: “The market price in China is dropping quite dramatically and importers are reducing quantities. Often the Chinese markets fall at this time of year because of the build-up to Chinese New Year. What importers will be doing now is watching the market to see what happens, but I think prices will stay low until at least February.”
And while some companies are yet to be affected by the predicted drop in prices, there is little surprise that the Chinese have stopped buying so much material.
Stocks
Andrew Green, managing director of BPI recycled products believes the price of virgin plastic in the UK and Europe, compared to the Chinese virgin price is proof that Chinese companies have good stocks of material.
In the UK virgin plastic has risen in price by around 100 a tonne for each of the last three months and now sits at well over 900, while the price in China has seen no rise. Mr Green said: “This factor would certainly support the belief that Chinese companies are less interested in plastic, of all kinds, at the moment.”
As the price drop has been caused by exporters buying less material, most of the UK market is likely to see a knock on effect at a later date.
Andy Bagnall of JFC Delleve claims that he has not noticed a drop yet but he will not be surprised if it follows through to his company in the near future.
He said: “The background facts make it very likely because this has been due for a long time, the market needs some kind of correction. With export price drops though, the first time UK reprocessors tend to notice it is when the phone is ringing more regularly and more people are interested in our prices.
“The drop will serve to remind people that China is just another market that can go down as well as up, it is no guaranteed win,” he added.
Many UK companies will now be on the look out for the possibility of larger yields at lower prices. Phil Gepheart of Bestway Recycling said: “We could easily double the amount of plastic that we are taking in at the moment, so if there is more plastic around we would definitely look to chase it.”
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