Report for China & South East Asia

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 7.2254 to the US dollar at the time of writing:

New York oil prices closed at a nine-week high of 73.86 per barrel on July 14 in response to supply concerns and technical buying. 

In China, prime prices have remained mostly the same over the last two weeks as the Development and Reform Commission in Beijing has announced policies to phase out and eliminate outdated petrochemical production plants, including PE, PP and PVC production lines. According to the notice, the reform has set benchmarking and baseline levels of energy efficiency, resulting in the shutdown of highly-polluting and high-energy-consuming factories. This initiative will undoubtedly help reduce overcapacities in plastic resin supply chains.

Additionally, Saudi Arabia’s recent announcement of a crude oil production cut has boosted prices, sending PE and PC soaring. A short-term improvement in market sentiment is expected to push up spot prices although sustaining this into the longer term will depend on market fundamentals.

Demand has remained slow for recycled pellets in China as downstream product manufacturers need more orders. The low cost of prime materials and the abundance of recycled materials both domestically and imported from South East Asian countries are negatively impacting market sentiment. Some players expect an increase in oil prices to support prime material prices, which would, in turn, help recycled pellet pricing.

Recyclers in South East Asia are selling their pellets in local markets and exporting to India, Australia, the USA and Europe as an alternative to the slow Chinese markets. US-imported post-consumer resin (PCR) PET flake is being bought for US$ 0.45 per lb, which translates to nearly US$ 1000 per ton. US local non-PCR pellet prices for PP and PE are at US$ 25-39 cents, or US$ 550-850 per ton. Prime/off-grade is quoted at 33 to 39 cents per lb, or US$ 750-850 per ton.

Outside of Asia, recycled pellets are being offered everywhere because most recyclers cannot easily sell material in their domestic markets or are not satisfied with existing prices and so are seeking alternative outlets.

The low prices of prime materials are impacting scrap plastics. Sorted mixed kerbside PET bales in the USA are selling at US$ 130 per ton and natural for US$ 250, while mixed-colour HDPE bottles are attracting US$ 220. It is relatively easy to imagine that all unsorted plastics and low-quality recyclables are selling at negative prices or are being sent to landfill. No agricultural films with a recovery rate of less than 60% are being exported to Asia, and low-end mixed supermarket film, grocery bags and mixed runners either end up in landfill or are incinerated.

Most recycling factories in Western and developing countries are putting their purchases on hold and reducing their production or running at a loss to remain in operation; some have suspended their operations indefinitely. Sorted PE film, super sacks and mixed MRP can still be sold at reduced levels to match customers’ target prices, often exceeding their costs. Engineering plastics also face a similar price mismatch between what suppliers are asking and what customers can afford to pay. Some suppliers are choosing to hold on to stock until there is a market turnaround, while others are liquidating inventory even at a loss for cash-flow purposes.

Key market needs include: reduced capacities on prime and supplies for upstream; and policies to use recycled content to support the sustainable development of the recycling industry.