Recovered plastic prices have fallen sharply across the past two months, caused in part by the continued container blockage in China.
MRW/WRAP prices show the biggest drop in the price of mixed polymer bottles, which has fallen sharply since the end of July from a value range of £270-£310 per tonne down to £224-£231 per tonne over the past two months – a drop of between £50 and £80 per tonne.
Clear PET has dropped by £40 per tonne over the same period. Natural HDPE had fallen by £30 per tonne but seems to have recovered some of its value this week with a £20 increase.
MRW reported at the beginning of September that the southern port of Guangzhou, where plastic bottles are predominantly imported, was not accepting material, causing containers to pile up on the dockside at Hong Kong.
According to industry experts this situation has not changed and, due to other contributing market factors, another fall of £20-£30 a tonne could come about before the end of the year.
One trader said: “If anything the situation has become slightly worse because of the Chinese national holiday this week. Importers broke up from work on Friday, so there was reticence to place any new orders before the holiday period. There are reports that significant stocks of material are waiting to get through to China.
“But material has moved where there is a well-established connection between the importer and the end-user.”
The trader said when restrictions were first felt in August, it was believed to be in part a result of the country hosting a sporting event. “Market expectations were that when the event was over import taxes would decrease and exports would go through but it didn’t happen,” he said.
A recycler told MRW: “It’s still incredibly difficult to get material to China. Its block on importing from Hong Kong has caused oversupply in the plastics market and some grades that can only go for export have dropped sharply.”
But he said that the situation in China is only half the cause for prices to drop, with market nervousness stilting purchasing and new orders. “People are holding off buying to see where the market goes,” he said. “There is lower demand for plastics from China because its economy is slowing and it can’t sustain the huge growth it has seen over the past few years.
“Bottle producers are getting nervous and are enquiring about fixed-price contracts.”
Both experts agreed that plastic merchants and recyclers unable to sell to China will be looking to sell into the domestic market but with prices falling as they are, it could damage some businesses.
Another affect on plastic prices has been the fall in demand from the cotton industry. Cotton prices shot up to record levels this year as the floods in Pakistan destroyed crops and caused a shortage of material, driving clothing manufacturers to buy plastic bottles to make polyester as a cotton substitute. But as cotton prices return to normal trading prices, demand for plastic bottles has waned.
This week trade association PlasticsEurope reported a 6% increase in plastics production in 2010.