Market Update for the prime, recycled, and scrap plastics as of December 24, 2022

Prime virgin prices are from China’s major virgin polymer websites in Renminbi RMB. The exchange rate is 1 US dollar= Chinese Yen at 6.9900.

Oil prices settled in New York at $79.56 per barrel, $2 higher than the Asian section. The recent increases in oil prices are supported by anticipation of Russian oil production output cut by 5% to 7% in early 2023. Some commentators suggested that if global demand continues at the current pace, the cut will result in a price in the $80s range.

Despite oil price rises of almost 7 % for the last two weeks, prime prices have slightly dropped amid fast spreading Covid infections crippling most industrial productions and impacting livelihoods in China. Most factories have sent back their workers home for the Chinese New Year vacations last until the end of January. Cities like Qingdao of Shandong and Dongguan of Guangdong revealed their Covid surging cases of 490,000-530,000 and 250,000-300,000 daily, respectively. The published numbers contradict the National Tally of around 3000 cases per day, with 16 deaths during the last few months for the whole country, which surprised the globe with such conflicting reports. Tesla has just announced that their production has to be partially suspended due to operational challenges stemming from the spike in Covid-19 infections. The medical system can hardly cope with the looming tsunami of COVID-19. Currently, all hospitals are overwhelmed, and bodies are piled up at hospitals and mortuaries. Medical experts expect situations will not improve until after the middle of 2023. Demands for prime materials depend on the recovery from Covid-19 and after the Chinese New Year.

As for recycled pellet markets in China, the global recycled materials supplies outstrip demands resulting from lower prime prices. Seasonal holidays reduced the operations of manufacturing industries. Pessimistic economic outlooks are impacting domestic and export markets. Surging Covid infections are paralyzing the regular production of factories. Above are factors that slow down the demand for recycled pellets. Nowadays, recycled materials maintain a stable price because of demands for recycled content from brand owners. The concept of sustainability and circular economy support the operations of plastic industry recycling, especially shipping freight costs, logistic costs, processing, and other costs that are more than selling prices. Market players hope that global prime prices will stabilize, especially since the recent winter storm in the US shut down 36 % of the Texas petrochemical output would create a market shortage to support a price hike.

Scrap plastics are lower in price on poor demands in the US and Europe. Despite reduced and lucrative low-cost feedstocks, recyclers are not keen to purchase them due to uncertain market situations in China and global economic conditions. Most prices have dropped by $20-$50 per ton since two weeks ago amid poor market sentiments. Prices are too low; Some suppliers would wait until after the New Year, hoping for a market turnaround. Some chose to sell for liquidity and space. Others sell materials to avoid further dropping in prices.

2022 is a challenging year for our industry; let us hope that 2023 will be a better year for all of us. I wish everyone a merry Christmas and a happy new year.

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