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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 7.1931 to the US dollar at the time of writing:

Plastics Table Steve Wong

Trading in crude oil has remained within a narrow range of US$ 70 to US$ 75 per barrel for over a month owing to subdued demand and ample supply, with geopolitical concerns influencing market dynamics.

In China, prime prices have not adjusted to rising feedstock costs, reflecting weak demand amid challenging economic conditions. Both general plastic resins and engineering plastic materials face diminished domestic demand, attributed to an increase in the unemployment rate and to a pessimistic economic outlook. Export markets have also been impacted by global economic conditions, compounded by a surge in freight rates resulting from the Red Sea crisis. Current prices are being influenced by supply control through petrochemical production shutdowns and delays in launching new production lines. A few prime virgin material producers are operating at only 25% to 30% capacity, with traders poised to sell surplus inventories when prices rise. This contributes to prices remaining within a constrained range.

The outlook remains uncertain and pessimistic at least until early March, with some experts anticipating a protracted unchanged scenario throughout the first half of 2024.

Recycled materials face challenges, with black PET, PE, PP and PVC recycled pellets priced at US$ 500-600 per ton CNF China main ports - levels that struggle to cover production and freight costs. Meanwhile, natural materials are at US$ 700-800 per ton, depending on quality. Recyclers engaged in sustainability programmes may command slightly higher prices but must contend with slim margins owing to elevated feedstock costs.

The market is witnessing an abundance of recycled material offers from various countries, with some prices so low that they fail to cover pelletizing costs. Slow market conditions are persisting for recycled PS and ABS from the e-scrap sector, influenced by the competitive pricing of prime materials in Asia. The outlook for recycled materials in China remains uncertain until March.

Scrap plastics are mirroring the challenges seen in the recycled pellet markets, with operators facing thin or negative margins. Escalating freight rates stemming from the Red Sea crisis have increased material prices from Europe and the USA. Most Chinese factories in South East Asia are set to close for at least three weeks around the Lunar New Year celebrations. Well-stocked recyclers are opting to stop purchasing, except at substantial discounts. Prices for PE grade A film and PP big bags recycled grade are hovering around, respectively, US$ 400 and US$ 250 per ton while HDPE extrusion regrind is selling below US$ 500 in South East Asia. Engineering plastics remain weak but PMMA is attracting increased interest with stable prices. Liquidity remains a concern for recyclers.

Overall, a turnaround in the markets is not anticipated before the conclusion of the Chinese New Year holidays.