Market Update for the prime, recycled, and scrap plastics as of June 23, 2023.

Prime virgin prices are sourced from major virgin polymer websites in China and quoted in Renminbi (RMB) including VAT, with an exchange rate of 1 US dollar equalling Chinese Yen at 7.1795.

Crude oil prices have been fluctuating around $70 per barrel and closed at $ 69.16 in New York on Friday afternoon. These fluctuations are driven by fears of a sharp economic slowdown.

In China, prime virgin ABS, PP, and PE have increased up to US $ 20 per ton following the government’s announcement of stimulus measures aimed at stimulating economic recovery. However, PC and POM continue to decline due to slow demand, low feedstock costs and excess capacities. Market players are concerned that the US prices of prime/off grade LDPE at 32 cent per pound and PP at 34 cents would further impact the already weakened market in China and the global polymer market. Despite announcements of price increases by petrochemical companies for different resins in different markets, they have not been able to achieve their ambitious targets. The global markets are facing challenges due to a poor economy and sluggish demand. Convertors are running at reduced capacities as a result of decreased consumption, which is caused by reduced disposable income after interest hikes and summer vacation season. The market situation is expected to be clearer after the vacation is over.

Recycled materials are being negatively affected by the record or recent low prices of prime materials. Recycled natural PP and LDPE are quoted at the US $ 800 level, while recycled black pellets are quoted at the $ 600 level. Prices of PS, ABS, PC, PA, and POM have all declined by hundreds of dollars per ton recently, primarily due to slow demand. Most plastic manufacturers and brand owners are using higher proportion of prime materials to reduce their cost. In the US, PCR recycled HDPE and PET prices have dropped over 300 dollars per ton in the past few weeks. PCR natural HDPE is quoted at 1.2 per pound, PCR natural PET FDA at 75 cents per pound, and non-FDA natural at 50 cents per pound. However, for materials that are not post -consumer recycled PCR, prices are so low that they might not cover costs of processing. Recyclers are offering to sell their stocks, even at loss to maintain cash flow before summer outages of downstream converters. Some market players are choosing to stay on the sidelines to wait until the market settles by the end of the August.

Scrap plastics in Asia are experiencing slow with sluggish demand and downward market trends. Most plastic waste derived from the most consumed commonly used packaging materials such as PE, PET, and PP is no longer financially viable to recycle, as prime prices are so low that manufacturers would shift to the use of more prime virgin materials, unless there is a mandate or commitment to use recycled content for sustainability programs. PET, which used to be in high demand, is now almost unwanted as recyclers have over stocks. Many collected PET bottles are ending up in landfills due to either a lack of demand or financially inviability for recycling. A prominent PET collector in Hong Kong has announced the suspension of collection due to economic reason. Similar situations of reduced purchases of sorted waste materials are occurring in the US, Europe and Turkey. Natural used PE film prices have dropped up to US $ 50 per ton in the US and Europe and currently sell at US $ 400 /ton level.

The low prices of recycled materials and scrap plastics can be attributed to oversupply and excess capacity. The decrease in prime prices directly impacts the recycling value chain. As the oversupply of prime virgin continues, there is no specific timeline for when it will end. This is due to the ongoing stream of new petrochemical plants coming online throughout 2023, 2024 and 2025. The future of the plastic recycling industry remains uncertain until these challenges are resolved.

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