Prime virgin prices are from China’s major virgin polymer websites in Renminbi RMB. The exchange rate is 1 US dollar= Chinese Yen at 6.8867.
In New York, crude oil prices closed at a recent low of $66.74 per barrel on the banking sector crisis, economic recession, and geopolitical instability might trigger slow demands.
Crude prices plunged almost 15 % in the week, and equities slid globally, raising concerns of a possible global economic meltdown. As seen from the above chart, prime virgin prices had a worse week, with no single resin price increasing. Prime materials such as PE, PP, ABS, PVC, and PET are over-capacity, with Polypropylene adding 4 million tons and Polyethylene 1.5 million tons this year. More will come before the end of the year 2023 and next year, 2024. Since a few years ago, China has opened up ownership and operation rights to private sectors, and many companies have invested in refining oil and manufacturing plastics and chemical products.
Meanwhile, renewable energy has been escalating growth, which reduces reliance on fossil fuels and gas. Despite the Chinese government’s estimated 5 percent growth in 2023, market players commented that property markets have suffered from prolonged demand due to a severe oversupply of 600 million units. Orders for vehicles and mobile phones have dropped so much that manufacturers have had to reduce up to 30 percent of the price to encourage customers to buy. The excess petroleum has to convert to plastics; the example of PE and PP over capacities is the tip of the iceberg. Export trades are slow as there are stacks of sea containers in many different ports. Most people do not know when the situation will improve as there is no sign of improvement.
For recycled materials, prices are either stable or continue to edge downtrends. Uncontrollable factors affect demands and prices, such as economic downturns, China’s policies to focus on political ideology, and competition for cheap prime materials. Some recyclers sell to brand owners for the pellets as recycled content manages to survive. Others might have to struggle as processing costs more than selling prices for PET, LDPE, PVC, PE, and PP. Recyclers in South East Asian countries are getting difficult to buy nylon, PC, ABS, PMMA, and POM as exporting countries are using themselves or exporting to other regions but not Asia. Market participants are taking a very cautious approach to commit themselves as oil prices are sliding and news of possible financial market collapses.
Scrap plastics exporting from the US and other developed countries have been slowing down in volume as Asian recyclers cannot match their offering prices because of the low cost of prime virgin resins. There are fewer supplies in the plastic recycling landscape as they are too costly to collect and separate waste from the household. Some waste collectors in California commented that their landfill quantities had increased 100 percent due to low prices. Most household waste is complicated to segregate because of moisture from the rain. European exports have almost been challenging due to regulatory controls. With plastic waste quantities shrinking, recyclers are either closing their factories or cutting down their production capacities. Many of them cannot maintain their overhead as production does not generate enough profit.