Report for China & South East Asia

The following table shows recent prime prices taken from China’s major virgin polymer platforms, inclusive of VAT and quoted in Renminbi (RMB) which has an exchange rate of 7.1248 to the US dollar at the time of writing:

The global prime virgin materials market remains highly unpredictable, shaped by weak crude oil prices, a fragile economic recovery and on-going geopolitical uncertainty. In China, most prime resins continue to face pressure, with oversupply and cautious downstream demand weighing on sentiment. Fundamentals remain weak despite short-term cost support from crude fluctuations, keeping producers and traders focused on discounting and inventory management.

With large-scale, advanced Chinese facilities continuing to run at high rates, the country’s structural overcapacity is increasingly spilling into global markets, threatening worldwide oversupply and contributing to persistently weak resin prices.

Meanwhile, recycled pellet markets across Asia continue to struggle as prime resin prices fall further and competition intensifies among brand owners, compounders and recyclers. The downward pressure is now being led by brand owners themselves; they argue that, with prime resin available at lower levels, there is little justification in using recycled pellets, which are mechanically and chemically inferior. Despite having corporate sustainability targets to meet, many of these companies are using their purchasing power to push recyclers into accepting steep price cuts to improve their own margins. Recyclers often face ultimatums: reduce prices or risk losing business.

In Asia, recyclers are navigating multiple headwinds beyond pricing pressure. Import restrictions, rising overheads and additional expense on customs inspections, pre-shipment verifications and documentation requirements have all raised the cost base. Many producers are unable to operate normally as weak or negative-margin orders dominate the market. Recyclers across polyethylene (PE), polypropylene (PP), polystyrene (PS), ABS, PC and nylon have chosen to suspend or sharply cut purchases, citing high stock levels. Only top-quality feedstocks are still being sought while lower-quality materials are increasingly unsellable.

The collapse in demand is not limited to low-grade PE mixed film and PP woven big bags; even higher-value materials - such as mixed automotive production lumps, nylon regrinds with glass fibre/flame retardants and TPU - are facing little or no demand, in some cases at negative values. A wide range of recyclates once considered standard trade items - including PE/PA mixed-colour production film, PEX for wax recovery and factory floor sweepings - have now lost their markets. Recyclers are cutting prices aggressively; in many cases, current returns cannot even cover the cost of goods, transportation and shipping.

In Japan, the mismatch between collection costs and selling prices, combined with strict regulatory requirements, has discouraged export flows. Large volumes of scrap plastics are no longer collected, and more recyclable materials are being stranded in developed countries without clear downstream outlets.

Overall, the global recycled pellets market remains under extreme pressure. Weak demand, abundant prime resin and protectionist barriers are collectively reshaping flows. Unless brand owners re-commit to their recycled content pledges with real purchasing support, recyclates risk losing further ground to cheaper virgin substitutes, leaving recyclers in an increasingly precarious position.

China’s recycled plastics market has been stable to weak, reflecting cautious downstream demand and sustained competition from low-cost virgin materials. For recycled ABS, PS and PP, most trades are limited to small lots on a need-to basis, with buyers avoiding large-volume commitments. In the recycled PE market, demand is showing a slight improvement owing to seasonal restocking, but overall sentiment remains restrained. Recycled PET flake demand from the textiles and fibre sectors continues to disappoint, keeping margins thin. For recycled PVC, both rigid and flexible grades have held steady, but converters remain conservative with their purchases.

Market participants note that while operating rates have been adjusted downwards in some regions, supply is still sufficient. Sellers rely heavily on long-term relationships and steady clients, with little appetite for speculative stocking. The market outlook remains cautious, with sentiment unlikely to improve significantly without more substantial support from downstream manufacturing sectors.

The global scrap plastics market remains plagued by collapsing margins, weak economics and mounting regulatory barriers. With prime resin prices now trading below the cost of recycling, product companies see little justification in purchasing recycled feedstock. Sorting, washing and processing costs remain high, especially in the USA, Europe, Japan and Australia, where labour and equipment expenses make recyclers uncompetitive against Asian processors.

Malaysia has now emerged as the epicentre of policy risk. At the recent ASEAN Environment Ministers’ Meeting in Langkawi, Acting Minister of Natural Resources and Environmental Sustainability, Datuk Seri Johari Abdul Ghani, stated that Malaysia must immediately stop importing plastic waste from abroad under the pretext of the circular economy. He highlighted that plastic pollution poses long-term risks to both the environment and public health, and importing foreign plastic for processing while ultimately disposing of residues in local landfills is unacceptable. He confirmed that he had discussed the issue with Prime Minister Datuk Seri Anwar Ibrahim, who had agreed that plastic waste imports could not continue. The minister stressed that foreign countries sending used plastics to Malaysia simply because disposal is cheaper than in their own markets represents an environmental burden Malaysia can no longer accept.

For Malaysia’s recycling industry, this stance represents the single greatest threat yet. Already facing heightened import inspections, stricter purity thresholds and higher compliance costs, recyclers now fear an outright ban on imports. Protests have taken place outside government departments, with recyclers arguing that imported scrap often provides cleaner, higher-quality feedstock than local collections, and that sudden restrictions jeopardise investment, jobs and their ability to meet downstream customer needs.

Elsewhere in South East Asia, conditions remain equally challenging. Vietnam has not shown any improvement in scrap plastic imports, with flows discouraged by restrictions, cost mismatches and permitting hurdles. Across the region, recyclers are running at below capacity, often processing older or lower-grade stockpiles or suspending operations altogether.

In summary, global scrap flows are being reshaped by a mix of weak economies and tightening regulations. Malaysia’s move towards halting plastic waste imports, now supported at the highest political level, has compounded a broader structural mismatch: too much installed recycling capacity chasing too little viable feedstock. Without a viable import framework or more substantial domestic collections, many recyclers face the risk of insolvency. At the same time, exporting countries remain burdened with growing volumes of plastic waste and dwindling outlets.