China & South East Asia

The following table shows recent prime prices taken from China’s major virgin polymer websites, inclusive of VAT and quoted in Renminbi (RMB) which has an exchange rate of 7.2610 to the US dollar at the time of writing:

New York crude oil closed on June 21 at US$ 80.73 per barrel, declining from the Asian market amid concerns that a strong US dollar and escalating conflict in the Middle East could impact global oil demand growth. This slide came despite improving US oil demand and falling fuel inventories, pushing crude prices to a seven-week high.

In China, prime prices have experienced more than six weeks of declines in the wake of oil prices falling below US$ 75 per barrel, low seasonal demand and a sluggish domestic economy. Another factor impacting prices has been rising freight costs, affecting the competitiveness of exports of prime materials such as PET, PVC, PE, PP, ABS, PMMA, POM and nylon. Many plastic end users have relocated to South East Asian countries such as Vietnam, Thailand, Indonesia, the Philippines and Malaysia to save on import duties, with their ultimate markets being the USA and Europe.

The European Commission recently announced plans to impose provisional duties on electric vehicles produced in China ranging from 17.4% to 38.1%; these duties will be on top of the standard 10% tariff for car imports. China’s economy will be adversely affected by this move. And with more Chinese-made products likely to be subject to additional tariffs, prime prices are not expected to rise significantly amid new production capacities coming on stream.

Most recycled materials in China have remained steady both in terms of prices and demand, except for ABS prices which have retreated from recent highs owing to the continued weakening of prime prices, overstocking and seasonal factors. Conversely, recycled PET has seen increased prices and demand, supported by various sustainability programmes initiated by brand owners.

Additionally, China has now allowed the importation of PET flakes, marking the country’s first related policy relaxation. With costs increasing to, for example, US$ 500 per tonne for natural PE 98/2 film and to more than US$ 280 for grade A big bags, most PE and PP recycled pellets are being sold in South East Asia’s domestic markets at over US$ 850 and US$ 700 per tonne, respectively. More recycled materials are being reintroduced into European and US industries, including PC natural regrind from sheet and plate as well as PC regrind from tinted blue bottles. Feedstock for various recyclers is scarce and the situation is not expected to improve, potentially becoming the new normal.

Clean and easily-processed material for Asia is becoming less available owing to strong domestic demand and export restrictions in Japan, the EU and other developed countries. What is still being exported to Asia either matches the prices competing exporting countries pay or consists of material that the West would not handle owing to high labour costs for sorting or small volumes and irregularities that recyclers find complicated to handle. Recyclers in Asia now find the offers received either too costly or too complex. High volumes of profitable items are virtually non-existent nowadays, posing another challenge for our industry alongside regulatory restrictions on cross-border transportation of goods and oversupply of high-quality materials competing with recyclers.