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 7.2980 to the US dollar at the time of writing:

WTI crude oil closed in New York on September 29 at US$ 90.79 per bbl, down slightly owing to macro-economic concerns. However, it surged more than 30% last quarter on the back of OPEC+ production cuts tightening global crude supply. Although ABS, PC and POM have seen declines exceeding US$ 50 per ton, prime resin prices in China have generally remained high, sustained by rising feedstock values.

China’s economic situation is continuing to weaken, marked by high unemployment rates and a decline in export as well as domestic demand, notably as a result of a property market crisis which has been exemplified by the investigation into the activities of the Evergrande Group’s chairman - the world’s most indebted property developer. Making up 26% of the economy, this sector is facing severe challenges in a way that is impacting China both socially and economically.

Market participants are expressing pessimism about China’s economic outlook, with many foreign companies seeking to relocate to countries such as India and to South East Asian nations like Vietnam and Thailand. China’s vacant properties have reached staggering numbers and, with a declining population and falling prices, recovery may take decades.

Some recycled materials have mirrored the movements of prime resin but market sentiment remains negative owing to subdued demand. Most recyclers in South East Asia are developing their domestic markets while exporting to Europe and the USA, particularly washed PET flakes which are fetching nearly US$ 1000 per ton. Recycled natural LDPE is commanding prices of US$ 950-1000 per ton in Vietnam, Thailand and Malaysia, surpassing the prices when shipping to China.

Recycled PP is facing global pressure owing to an oversupply of prime materials. China’s annual capacity exceeds global demand at 75 million tons, with more expected to come online this year and next. However, there is increased demand for recycled PC and POM materials, resulting in slight price increases compared to three months ago, primarily owing to rising prime material prices and markets outside of China.

Low-end plastic scraps - such as MRP, B-grade big bags, post-consumer mixed-colour PE film, 1-7 mixed plastics and agricultural plastic waste with low recovery rates - are needing help in finding buyers; some are selling at prices which barely cover baling, trucking and shipping costs. Many household plastic waste items are ending up in landfill or are incinerated.

Scrap PET bale prices have risen in the USA and demand has picked up as the market anticipates the mandatory use of recycled content for packaging in the EU and the UAE, set to begin in 2025. Effective recycling of plastic waste and scraps hinges on mandates such as extended producer responsibility which require collection and the use of recycled content. Prime materials remain attractive to brand owners owing to their competitiveness and properties, and so a mandate is needed for using recycled content to protect the environment and save the recycling industry.