Market Update for Prime, Recycled, and Scrap Plastics as of September 15, 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 equaling RMB at 7.2760.

WTI crude oil rose to its highest level since November 2022, closing at $90.77 per barrel in New York on September 15, 2023, driven by further production cuts by Russia and Saudi Arabia.

In China, prime virgin prices have been bolstered by advances in feedstock values and reduced production capabilities. All resin materials have seen price increases over the last two weeks. Higher costs stemming from the continued rise in oil prices have made it increasingly evident that petrochemical companies need to pass these costs on to converters. However, with the Chinese economy facing sluggishness and slow recovery in demand for electrical and durable goods, both domestically and in overseas markets, the demand is not strong enough to support these higher prices. Polymer manufacturers are responding by reducing supplies through production cuts, delaying the expansion of existing lines, additional maintenance, and postponing the construction of new production lines. These actions aim to stabilize prices but may hinder a swift recovery. Importantly, this shift could have a profound impact on the Chinese economy, especially as many manufacturing productions are relocating from mainland China to India and other low-production-cost countries.

Recycled materials in China are showing slight improvements due to higher prime material prices. Notably, good-quality natural LDPE recycled pellets are selling for US $870- $900 per ton, while natural HDPE and PP are priced at around $750 -$800 per ton. As for black LDPE, HDPE, and PP, prices are around $550 -$600 per ton. Generally, downstream product manufacturers have not experienced a significant increase in new orders, which has kept price increases in check. Moreover, there is an overcapacity of recycled materials both in China and globally, with many recyclers operating at only half of their production capacity, waiting for markets to pick up before increasing output. Optimistic market players expect further increases in prime prices to stabilize after a correction phase, creating a significant price difference between prime and recycled materials, which could boost demand for recycled pellets. In terms of market sentiment, recyclers are cautious about raising prices due to the subdued global market atmosphere.

Scrap plastics have largely maintained the same prices as two weeks ago, especially for most general plastics. There are more Grade A LDPE inquiries from Vietnam and Malaysia, but prices are varying due to increased demands in the US domestic markets. PET bottles in bales have recovered from 10 cents per lb to 18 cents per lb in just a couple of weeks. Polypropylene scrap prices remain unchanged due to oversupply of prime materials. For engineering plastics, there is increasing demand for POM, with prices exceeding $900 per ton for mixed colors and over $1050 for natural. Polycarbonate, PMMA, and ABS are selling better with very slight price increases. The price mismatch between buyers and sellers remains the biggest challenge in the recycling industry as prime prices compete with recycled material prices. The market needs to create demand for environmental sustainability, such as recycled content for packaging, electrical appliances, the automobile industry, agriculture, and the fisheries industry. These programs should be supported by commitments from brand owners and legally binding agreements.

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