China & South East Asia

With the Chinese New Year holidays now over, the recycled plastic market is buoyant again. Factories in China, including those closed temporarily during the Winter Olympics, have resumed production. Nevertheless, most recyclers still face the problem of dwindling raw material supplies.

The following table shows prime prices taken from China’s major virgin polymer websites, quoted in Renminbi (RMB) which has an exchange rate of 6.37 to the US dollar at the time of writing:

New York oil prices hit a seven-year high of US$ 95 per barrel on February 14 on supply disruption fuelled by geopolitical developments impacting on producers.

China and other Asian countries have begun 2022 on a bearish note with regard to demand and prices. Most prime virgin material prices, including those for engineering grades, are edging lower despite the new oil highs. With surging COVID cases in China, the government has imposed stringent rules to contain the spread of the virus, including lockdowns and travel restrictions. Economic activity has slowed since the end of last year, and this situation is likely to last at least until the end of the Winter Olympics.

Price gaps between the Far East and the USA/Europe have widened owing to different attitudes towards COVID. Many Western countries are relaxing their restrictions despite high infection numbers, thus supporting prices and demand for plastic materials in general. In contrast, China and some other Asian countries will probably look to reduce virus numbers to zero before reopening their borders.

Given the current conditions, most recyclers are now seeking alternative markets to China in order to achieve better prices. For example, recycled natural LDPE pellets from film are selling for over US$ 1150 per ton in South East Asia and India whereas China can pay only US$ 950 delivered main ports. For PET and PP, Vietnam, India, Indonesia and Malaysia are continuing to offer better prices.

Plastic scrap supply is tight as the tonnages collected since year-end have been much lower than expected. PE film scrap is selling at over US$ 550 per ton ex-works in the UK and mainland Europe.

Recyclers who rely on imports for their feedstocks will have to face a new challenge as CMA has announced that its group will no longer carry plastic waste on its ships from June 1 2022. This decision will have a significant impact on the shipping of wastes from country to country. As a result, we can foresee that recycling will become a localized industry.