Plastic sector sees price pressure as export controls tighten

Speaking to letsrecycle.com this week, many in the sector have reported that the market price for plastic film and bottles for recycling is starting to fall in the UK and on the export market. This is being put down largely to more thorough checking by the inspection body CCIC in China which is trying to prevent poor quality material being imported.

As a consequence, more material is becoming available to the expanding UK market and as a consequence domestic prices are weakening. One exporter remarked: “The Chinese are taking quality far more seriously and the inspectors and customs officials at the ports are offended when badly presented material arrives.”

Some in the UK sector have said that the market had grown “too quickly too soon” since prices slumped in October 2008 (see letsrecycle.com story), due to speculative buyers looking to take advantage of the weak pound and Far East demand for material.

One plastics reprocessor said: “There are a lot of people buying on speculation: not just that but [the Chinese] are opening up a lot of the boxes and have been checking all the small ports, which people normally use to move things across from Hong Kong. They have got wise to people manipulating import tax and boxes of PVC are being opened.”

Price

The price being paid for recovered plastic bottles fell from a high of about £130 per tonne for clear and light blue PET and £330 per tonne for HDPE natural in October 2008 to around £90 for PET and £150 for HDPE two months later, as the sector bore the brunt of the global economic slowdown and falling oil prices.

However, the market looked to have recovered in recent months, with some reprocessors claiming they had managed to achieve as much as £240 per tonne for PET and £320 per tonne for HDPE in May of this year.

One purchasing manager claimed that prices had now reached a “plateau” and he was expecting the market to “undergo a self-correction” in light of the slowing demand from Chinese reprocessors.

He said: “As long as there is this compulsion of shipping to a low-cost economy where they use manual labour then this will continue to happen and this is what really gets me going.”

Swine Flu

One member of a plastics recycling firm in the South of England claimed that one of the reasons for the increased inspections on imported material in China was a fear of “Swine Flu coming in through post consumer waste”, which, he claimed, “has led to increases in import taxes”.

However, the China Certification and Inspection Company (CCIC) London, which performs pre-shipment inspections on behalf of the Chinese government for goods exported from the UK to China, said that there were not aware of any increase in inspections in China or new guidance that had been issued since the onset of Swine Flu.

A CCIC spokesperson said: “Since the start of last year we haven't got any further guidance to say that there are any increased controls so I am not sure of that claim. And we haven't got anything on that [Swine Flu] so we are just doing what we have been doing.”

Paper

In the recovered paper market there have been some small price falls on the export front. However, these are not seen as being for the same reason as in the plastics sector and are down to normal market conditions. The paper sector is said to be well-used to the inspections now and is also making great efforts to ensure quality.

Prices for used cardboard are expected to fall by a few pounds over the next few weeks because of slower demand in the UK, even though arisings are said to be low. UK mills are expected to consider reducing their prices but will come under pressure because of the shortage material.

One other factor becoming more evident in the market is the narrowing of the price gap between the export price for good quality mixed paper and cardboard. Good soft mixed is seen as being in keen demand, partly for use in the tissue sector.