Market update as of April 2, 2022.
Prime virgin prices are from China’s major virgin polymer websites in Renminbi RMB. The exchange rate is 1 US dollar= Chinese Yen at 6.3678.
The Crude prices settled at a significant drop to $ 99.27 per barrel in New York on the unprecedented release of the US strategic reserves and China’s virus concerns. Due to increasing geopolitical risk, market players commented that oil prices do not reflect Russian supply disruptions.
With the worst Covid outbreak devastating all provinces, tens of millions of people live on lockdown in China. Shanghai lockdown sparks fears of supply chains disruptions and the adverse global economy as the city contribute 3.8 percent of the GDP. Container terminals and logistic companies are not operating, while some industrial operations and most financial and commercial activities still can continue, which mitigates the economic impact of the lockdown. Prime prices, including PET, PE, PP, PS, and ABS in China, have not negatively responded to the downward trends in oil prices. How long prime prices can maintain at this level depends on the curbing of the Omicron virus.
Recyclers with their downstream customers in China are likely to be affected by the lingering effects of the pandemic lockdowns and restrictions. In Shanghai, congestion at ports is building up, and container ships are rerouting to avoid expected delays. Shipping rates ramp up, and delays result in liquidity issues with recyclers selling their materials to China. Most recycled materials sell well with higher prices as demands from brand owners increase. There are relentless demands for post-consumer PET and HDPE recycled materials to blend with packaging products in the US. Prices of post-consumer recycled PET pellets sell at $ 2755 per ton, whereas post consumer HDPE recycled materials sell at $2500 per ton. These prices are higher than virgin prices, and the markets for recycled materials are up-and-coming.
Globally, with the consumption of plastics top 400 million tons per annual, markets for recycled materials are estimated to be close to 100 million tons per annual in 2025 due to the voluntary and mandatory use of recycled content.
Plastic scraps demands and prices flourish in Asia, Europe, and the US as their local collection quantities do not satisfy the increasing needs. In Europe, recycling industries thrive in Eastern parts of Europe and Turkey; fewer materials are exported to non-OECD countries due to documentation complications and high prices in domestic markets. The US exports of PET and PE scraps to Hong Kong, Vietnam, Malaysia, Thailand, and Indonesia have dropped by 15 percent compared with January last year, 2021. Currently, PET-post consumers bottles sell at over $ 1000 per ton, whereas the Far East could afford to pay a fraction of what they sell locally. Less post-consumer PE films are available for export to Malaysia, Thailand, and Vietnam, as local recyclers can spend as much as $600 per ton ex-work. Other scrap materials of ABS, PS, PP, PVC, and PC have the same issues.
Markets might have a turnaround if logistics and shipping improve, which would reduce the cost of exports and create some room to compete with the domestic buyers. 