Market update for the prime, recycled, and scrap plastics as of May 26, 2023.

China’s prime resin prices have been persistently declining, reaching their lowest level in three years. Specifically, ABS prices have dropped to RMB 8650 per ton, translating to less than US $1100 per ton. The market has seen an increased quantity of 420 000 tons of extra production in the first four months, totaling 1.8 million tons. Moreover, over 1 million tons of new capacities are expected to come online before the end of the year. Some petrochemical companies have reported negative profits in the first quarter results, but there is no indication of cutting output to address oversupply. Serval factors contribute to the poor prices, including a gloomy economic recovery from Covid-19 domestically, sluggish global demands, and persistent oversupplies of prime materials. Despite the political, environmental, social, and financial situations, a five percent increase in global demand is forecasted annually. Furthermore, new ventures and new capacities are being constructed in China for 2024 and 2025. Market players do not anticipate any price improvement until supply and demand are balanced.

In China, declining prime prices are impacting the demand for recycled pellets. Downstream plastic manufacturers now have more options to choose off-spec or prime materials in order to be more financially efficient. The use of recycled content by brand owners, who might be willing to pay more than prime prices, is not as popular in China as in the US and other developed countries. In this situation, recycled pellets would primarily be sold as a commodity to reduce production costs, but they may have inferior quality due to degraded chemical and mechanical properties after recycling.

There is an abundance of offers for recycled pellets worldwide, covering various recycled materials, and some of them are even priced lower than their production costs. Here are a few examples: PET natural pellets at CNF China for $700 per ton, PP natural for $780, and EPS Natural for $900. For lower-grade materials like colored PP/PE pellets, the price is $500 per ton, while black PP and PE pellets for injection and extrusion are priced at $600.

Scrap plastics are facing challenges in selling their pellets at prices lower than the cost of production. The only solution is to offer lower prices to their upstream suppliers. However, suppliers in Europe, the US, and other developed or OECD countries are also struggling as the costs of collection and separation exceed the counter offers they receive. Nowadays, more time is spent on price negotiations and finalizing transactions.

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