Prime virgin prices are sourced from major virgin polymer websites in China and quoted in Renminbi (RMB), including VAT, with an exchange rate of 1 US dollar equaling Chinese Yen at 7.1936.
The crude advanced to $79.19 on Friday in New York as Middle East tension escalates, despite economic data suggesting that the prospect of cutting interest rates might dampen.
Prime prices have not been updated since February 6, 2024, and most websites would resume posting prices on February 19. In fact, most factories shut down before January 31 and would not operate until February 15.
2023 has been one of the worst years since China’s economic reform. Majority of people do not expect 2024 to be better than 2023 in terms of economic development as the government’s priority is focusing on national security. Foreign investments in China are shrinking, and a lot of factories are moving out of China to avoid high import duties imposed on made-in-China products. Most popular spots are Malaysia, Thailand, Vietnam, and India, where multinational corporations also move their headquarters from Shanghai, Shenzhen, Beijing, and Hong Kong to Singapore. Nevertheless, some anticipate 2024 could not be much worse, as life still goes on. After a few decades of rapid development and economic reform, China has built up systems and infrastructures for the countries. The markets are more likely to be impacted by overcapacity and the global economy rather than China’s latest political ideology.
Recycled materials are less influenced by overcapacity due to increasing demands resulting from the voluntary use of recycled content and upcoming mandatory EPR and use of recycled materials. As suggested, more than 75 percent of recyclers have gone out of business since China’s Green Fence initiative imposed in 2013. The remaining 25 percent of recyclers are more capable and competitive. Some have increased their capacities by 100 percent to cope with the demands. Recycled material prices have increased by $30 to $70 per ton as the Red Sea and Suez issues lead to high freight costs. European prime price increases also boost demands for prime, recycled materials, and scraps. However, most market participants commented that the increase lacks fundamental demand amid poor economic conditions.
Scrap materials in south East Asian regions are selling better despite most factories still being on vacation. Demands are supported by increasing use of PCR, and suppliers manage to pass on the increased freight cost to their customers. PET bottles and PE film have both seen their prices rise by $40 to $60 per ton recently. Engineering plastics such as POM, PMMA, and PC are stable with better demands. As Europe has started to buy scraps, Southeast Asian recyclers also have to follow suit. Scrap plastics movement lies in the demands and use of recycled materials.
Steve Wong
CEO