Prime virgin prices are from China’s major virgin polymer websites in Renminbi RMB. The exchange rate is 1 US dollar= Chinese Yen at 7.2524.
New York oil prices closed at $ 87.90 Friday, October 28, dropping about 1 %from the intraday high on China’s widening of its Covid-19 curbs.
The 20th National Congress of the Chinese Communist Party held on 16-20 October did not give any concrete solution to the weakening economy. As President Xi focuses on national security, including the continuation of zero Covid policy, industries are considering diverting their bases to Southeast Asian countries. General plastics PE, PE, and Styrenics are dropping up to US $ 60 per ton. Engineering plastics are under pressure due to softening demands and downstream production shutdowns resulting from poor export and domestic sales. PVC and PET continue their downward trend on increasing fears of a global recession. Situations in China remain gloomy and seem to look into a dark tunnel with no indication of how long the route is.
As China is still the most consumed country for recycled plastic materials, the market for all recycled pellets is hard hit by the weakening Renminbi. Yuan has fallen to its lowest level since 2008; market traders expect further drops in the Chinese currency. There are plenty of PET, PE, PP, ABS, and PS pellet offers in the markets as European has energy problems, and factories can only maintain part of their productions. With the US and European prime prices continuing to nosedive, recycled materials are following the footsteps of the downward movements. Recycled natural PE sells at less than $900 per ton, natural PP pellets at $ 800, and natural PET pellets at $700. These are examples of the market in China; some recyclers manage to sell to the US, Europe, and Asian brand owners as recycled content can achieve a lot better prices as the concept of using recycled materials are for environmental sustainability purposes.
There are disconnects between buying and selling prices. European and the US scrap plastics sell at lower prices, and recyclers in India and Asian countries are reluctant to purchase them as markets are worsening and the global economic outlook is uncertain. Chinese recyclers in Southeast Asian countries have started to plan their production and sales disruptions for the upcoming Chinese New Year; Indian customers want to see if prices have hit bottom. Fewer deals are closed during this period.
As we advance, it is very challenging for the recycling industry. Most people believed there would be pent-up demand after the pandemic, from prime virgin materials to scrap materials; they were either overbought or oversold. Today, what we see are geopolitical situations, inflation, and energy crises impacting our industry.