Plastics – Issue July 2024: Summer lull likely to exacerbate squeeze on prices and margins

rices for most recyclates are under pressure while demand for raw materials is also decreasing owing to the onset of the summer holiday season in the northern hemisphere, it is reported in the latest World Mirror publication compiled by the BIR global recycling organization’s Plastics Division. For many plastics recycling companies, margins are being squeezed by rising costs in many areas of their business, notably including container transportation.

In June, the steady recent uptrend seen for recycled materials over previous months came to a halt in Europe. Prices decreased across almost the entire range of recyclates with the exception of rHDPE blow-moulding grades and clear rPET flakes. Further price declines for recyclates are anticipated over the coming weeks as the market heads deeper into the summer lull.

Meanwhile, the outlook for Eastern Europe remains bullish in the short term, strengthened by increased inquiries for bale volumes from food-grade pellet producers. This demand is in anticipation of the January 2025 deadline for the EU’s Single-Use Plastics Directive, which mandates 25% rPET content in Europe’s PET beverage bottles.

The anticipation is that elevated freight costs from South East Asia to Europe and the USA will further negatively impact trade in the coming weeks, with 40-foot containers reaching close to US$ 10,000 on both routes. Freight rates from India remain lower, thus providing it with a competitive edge in the global rPET market at present; the country is also said to be benefitting from consistent feedstock supply.

Prices and demand for most recycled materials have remained steady in China, except ABS for which prices have retreated from recent highs owing to a combination of continued weakening of prime prices, overstocking and seasonal factors. On the flip-side, rPET has seen increased prices and demand, supported by various sustainability programmes initiated by brand owners. Another key development in this market is that China is now to allow the importation of PET flakes, marking the country’s first related policy relaxation.

Recyclers in Asia now find offers received either too costly or too complex, it is claimed. High volumes of profitable items are scarce, thus adding to the challenges for the industry in terms of regulatory restrictions on cross-border transportation of goods and oversupply of competitor materials for recyclers.

In the USA, meanwhile, the higher temperatures of recent weeks have resulted in an increase in volumes and a long-awaited drop in some commodity bale prices. At the same time, the soaring freight rates have slowed cheap imports of virgin, flake and pellet. The US market for natural HDPE has shown steady growth with increasing prices over recent months whereas colour HDPE has experienced a gradual decline in pricing, not least because one of the largest domestic buyers has reduced its purchases owing to high inventory levels.

Also in the USA, LDPE has experienced strong market conditions with stable prices, driven by robust demand from both domestic and export buyers.

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With contributions from its members, BIR publishes periodical commodity reports under the label “BIR World Mirror”. These detailed reports exist for Non-Ferrous Metals, Ferrous, Stainless Steel / Alloys, Paper, Plastics and Latin America and provide BIR members with up-to-date information on the respective commodity or market segment.

The report on Non-Ferrous Metals appears once every two months, whereas Ferrous, Stainless Steel, Paper and Plastics are published quarterly. Latin America is covered twice per year.