Report for China & South East Asia

Lockdowns in China owing to the COVID pandemic are having a spiral effect on the economic chain, with commodity prices down and market liquidity tight. At the same time, market disruption between Asia and Europe is reflected in the wide gap in recycled pellet prices.

The following table shows recent prime prices taken from China’s major virgin polymer websites, quoted in Renminbi (RMB) which has an exchange rate of 6.6946 to the US dollar at the time of writing:

Despite crude oil prices recently closing in New York at US$ 104.79 per barrel, this still represented a weekly loss as traders were concerned about a potential recession-driven demand downturn despite global supplies remaining tight.

China has been one of the worst markets for prime material resin in recent years. Owing to the aforementioned pandemic-related lockdowns, tight liquidity and disappointing seasonal factors, China is still under heavy pressure in terms of demand for manufactured goods. As a result, prices for most materials have been on a downtrend for the past two months. Notably, polycarbonate has slid to US$ 2200 per ton as a result of the Bisphenol A price decline while Nylon 66 prices have dropped to US$ 3500 per ton owing to the start-up of production of PA 66 in China. 

Recycled material markets are bearish, reflecting the downtrend in prime material prices. With China’s relatively low level of economic activity, demand for all recycled materials is declining daily. Recycled natural LDPE pellets are selling at US$ 1080 per ton, PP at US$ 980, PC at US$ 1800, PMMA at US$ 1600, Nylon at US$ 2230 and black ABS at US$ 1220. Some recycled pellet prices are only half what they are in Europe and the USA, with most market traders not expecting any marked improvement until the fourth quarter. 

Asian recyclers will have to face increasing difficulties. With the widening plastics price gap between China and the Western World (primarily the USA and Europe), scrap materials are becoming more challenging to buy. For example, LDPE natural film grade A is selling for over US$ 700 per ton in mainland Europe and the UK. Most engineering plastic grades do not match purchase prices from Asian buyers; fewer materials are getting exported nowadays. Adding to the challenges, Hong Kong’s environmental protection department has recently stepped up the import requirements applying to plastic waste, and there is an export ban on plastic waste from Australia. These measures have removed quantities of plastic scrap from the market.