A slump in the price of recovered paper and plastics has sparked fears of a market crash with companies reiterating calls for an end to UK reliance on selling poor-quality recycled materials to the Far East.
Despite the gloomy outlook, industry leaders have told MRW they do not anticipate a repeat of 2008 when the market for all recycled materials crashed spectacularly, with the price of mixed paper hitting lows of £5-15 per tonne.
From a market high in August, the price of recovered mixed paper has fallen by around £35 per tonne. The price of clear PET plastic fell by around £65 a tonne. Further decreases are widely expected until the end of the year.
Recycling firms and industry experts are blaming lack of consumer demand following recent economic upheaval across the EU and tighter waste standards on exports imposed by the Chinese authorities.
In the current downturn the recovered paper industry has shown to be more fearful of further price falls than plastic recyclers. Ranjit Baxi, president of the paper division at the Bureau of International Recycling, said OCC and mixed paper prices were expected to continue to fall and warned of a “very turbulent” final quarter of 2011 in terms of supply and demand.
He added: ‘New paper prices also started to weaken noticeably in the Asian markets, with above average inventories of both recovered fibre and new paper.’
Simon Ellin, chief executive of the Recycling Association, said there had been a recent and unexpected price hike of between £5 and £10 a tonne for low-grade fibres, but added: “All the market indications are that shouldn’t have happened, it was probably just a short-term demand surge.
“Right at the higher end, the best white grades the prices have dropped over 50%. That’s even if you get an order:very few people are buying in these grades, the country’s awash with it.
“It’s getting to the time of the year when Chinese mills are looking to renew their export licences. And there’s a lot of uncertainty in China with some of the small mills getting reviewed for pollution control regulations. They’re not buying as a result of that.”
But Mr Ellin added he thought the market was not far from bottoming out. “Chinese mills are hungry and the fibre has got to come from somewhere. I certainly don’t think we’re going to get into the scenario we were at the end of 2008.”
Prices during 2008 market crash:
- Mixed paper: £5-15
- OCC: £10-30
- Clear PET: £70-100
- Mixed bottles: £0-20
Stuart Foster, chief executive of Recoup, agreed a full-scale crash was unlikely, but said low grade plastic exporters were likely to be badly hit.
“Market prices will always vary and are particularly driven by the likes of China and policies they implement,” he said. “For good quality plastics we’re in a much stronger position in the UK to handle it because we have more reprocessors. With the lower quality that’s where more of the pain might be felt.
“It’s a fairly brusque price correction. It’s perhaps no bad thing if more material is forced to go into local markets for now, because they are screaming out for, particularly, plastic bottles.”
Bernard Chase, purchasing director at Regain Polymers, said: “As a buyer I’ve been warning for the last three months that I anticipate prices falling. I get the feeling that with December in the wings when activity normally slows up anyway, we are going to see some fairly hefty drops.”
But he added that the higher end the plastics recycling market was still “pretty robust”.
“People will find that whereas they could sell anything as soon as they bailed it and a man would give them a fistful of dollars, those people are now remarkably scarce,” he warned.
“The east will continue to take quality single-grades, but not rubbish all mixed together. It’s the traders who have been shipping containers of indifferent material for slender margins who will suddenly find they’re stuck with it.”
|26 August 2011|
(price per tonne - £)
|4 November 2011|
(price per tonne - £)