Prices of used bottles have fallen partly because of a reduction in demand from the Far East which currently imports about a quarter of the UK's used plastic bottles. Demand has fallen because of the ability of the Far East's internal market to generate more virgin material and recycled plastics with more used plastics being collected. Accordingly, countries such as China are now better able to supply their own needs. Low oil prices are also a factor behind the current surplus of virgin material in the market and this has caused the price of prime material to weaken. And poor trading conditions have been accelerated by the aftermath of September 11.
Andrew Simmons, chief executive of plastics recycling organisation Recoup, said: “With virgin plastic prices falling there is pressure on recycled prices. And prices of mixed bottles are in decline because the Far East's demand for export material is reducing as the Far East has increased its capacity to supply virgin and recycled material internally. Oil prices, the economic situation and September 11 have all accelerated the problem and this all ties together with the primary fact that the level of capacity that is being used outstrips demand.”
But there are differences in opinion as to the impact the weakening export market is having. Mr Simmons said that he thought there was, as yet, no real change in the amount of material being exported and put the figure at 2-3,000 tonnes a year for 2001, similar to one year ago. But Stuart Kershaw, plant manager for Reprise, said that he saw the fall in demand from the Far East having a more dramatic impact on the market with export tonnages rapidly falling.
Prices for used bottles have fallen by about 10 over the last month to around 140 – 150 for clear and light blue PET, 55 – 65 for coloured PET, 130 – 155 for HDPE, 45 – 65 for PVC and 30 – 60 for mixed.
Mr Simmons added that it was “unclear” what impact the lower prices would have next year but said that he was optimistic that a probable increase in the PRN value would mean that even if the value of used plastic falls, recyclers could be better off.
One industry source was more pessimistic and said that although he did not expect to see a crash in waste plastic prices he thought that it was very unlikely that the price would increase in the near future.
Price squeeze
The consequences of September 11 and the general fear of recession are also having a negative impact on the market. Alan Davey, general manager at Linpac Plastics Recycling, highlighted the fall in virgin prices. “Prime prices falling is putting pressure on us and has squeezed our margins. Prices have been stable but have dropped in the last couple of weeks as September 11 has created general uncertainty in the market place. People don't want to take on any more stock than they have to and so there is more material in the market place that there needs to be.”
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