Prime virgin prices have been sourced from major virgin polymer websites in China and are quoted in Renminbi (RMB), including VAT, using an exchange rate of 1 US dollar equaling 7.2845 RMB.
Crude prices closed at $81.25 per barrel in New York on Friday. The recent price movements are primarily influenced by the decline in US rigs, the worsening property and potential financial crisis in China, and the increasing risk of US interest rate hikes.
Prime virgin prices in China have maintained relative stability, supported by high feedstock costs and plant shutdowns for maintenance. General plastic prices have exhibited a narrow range, varying by only US$30 per ton. Meanwhile, engineering plastics such as POM and PMMA have experienced increases of $60 and $200 per ton, respectively. Despite the introduction of various government measures to stimulate the economy, market sentiments remain subdued as the Chinese population remains cautious about spending. The market is also impacted by credit crunches, economic turmoil, and the defaults of property developers, leading to bankruptcies. While some price hikes have been observed, they are not matched by corresponding demand. As the low season nears its end, there are no signs of a market recovery. Certain petrochemical companies have reduced their production capacities, while others are focusing on export markets. Chinese manufacturers do not anticipate a turnaround in the market for the remainder of the year.
Most recycled pellets in China have been selling at lower prices due to competition from the low cost of prime virgin materials and a lack of domestic and overseas orders. Recyclers globally are grappling with the challenge of finding cost-effective feedstocks. The recycling industry faces the issue of negative margins for recycled pellets, as the costs of collection, separation, grinding, washing, and pelletizing cannot be covered by selling prices. Many recyclers in Southeast Asian countries are further decreasing their buying prices, particularly when selling their recycled pellets to China, which has recently seen significant currency depreciation in Renminbi. Certain PE recyclers in Malaysia, Vietnam, and Thailand have temporarily halted purchases until the situation becomes clearer. Infection black HDPE and PP pellets are only selling for $600, black PS pellets for $580, and PP/PE label and cap pellets are priced at $520, reflecting such low prices that recyclers lack the financial incentive to continue their operations.
Scrap plastics are becoming scarce in Asian markets, as US prices have slightly increased for high molecular weight HDPE, PE grade A film, PET clear bottles, and mixed color HDPE bottles. Conversely, for lower grade scraps such as lumber wraps, big bags, grade B and C films, mixed bottles, mixed runners, and clamshell PET, the offering prices from recyclers in Asia are so low that they often fail to cover the costs of logistics, collection, and baling. The situation of less availability from the US and Europe will stay for a while. On the other hand, with the Japanese Yen being weak, there are more offers from Japan. For example, HDPE and PP regrinds are selling at $340 cnf Southeast Asian ports. Several recyclers are finding it unsustainable to wait for recycled content to become a mandatory requirement, which supports the high price of recycled materials, and are facing the prospect of bankruptcy. The survival of recyclers and the future of the industry hinge on addressing overcapacity of prime materials and the mandatory utilization of recycled content.