Market Snapshot March 2017

Transcription

1 Market Snapshot March 2017 Metal can prices continued to show strong gains during the first quarter of 2017, with steel and mixed can prices up 29% and 15% respectively. An increase in iron ore prices back to mid-2013 levels has supported the rise in demand and hence prices of steel cans. Aluminium can prices have also increased, albeit to a lesser extent (up just 4%). However, the potential for cutbacks to aluminium capacity in China could mean can prices move higher later in Recovered board prices increased sharply in Q with OCC up 22% to 120 per tonne. Cardboard prices typically rise during the early part of the year as mills restock following the holidays. The recent weakness in sterling and higher pulp prices may also have supported cardboard prices. Over the same period, news & PAM prices rose by 7% to 105 per tonne. Recovered plastic prices are broadly unchanged during Q The exception being mixed polymer bottle prices which rose 12% to 115 per tonne, the highest level since March Recovered textile prices increased by 15%-20% during Q with textiles sourced from banks valued at around 265 per tonne while charity shop textiles valued at almost 370 per tonne. Recovered glass container prices are broadly unchanged during the first quarter of This quarters Market Snapshot also includes a look at the introduction of China s National Sword Policy and what the implications could be for UK exports of recovered plastic. It also includes a review of the latest trends in container freight rates and their impact on recovered paper and board prices.

2 Table 1: Key recovered material and commodity prices % change per tonne Mar-16 Dec-16 Mar-17 Dec-16-Mar- 17 One year Recovered paper OCC % 60% News & PAMs % 31% Mixed % 86% Recovered plastic Clear PET % 46% Coloured PET % 8% Mixed HDPE % 75% Mixed polymer % 69% Natural HDPE % 20% LDPE 98: % 44% Recovered cans Aluminium % 61% Steel % 109% Mixed % 30% Glass Clear % -43% Amber % -47% Green % 0% Mixed % n/a Textiles Banks % 46% Charity Shops % 51% Virgin commodities (a) Pulp (NBSK) % 21% PET % 37% HDPE % 12% LDPE % 19% Cotton % 53% Aluminium (LME) % 43% Iron ore (Dalian futures) % 95% Oil (Brent, per barrel) % 67% Sources: WRAP Materials Pricing Report, Thomson Reuters Datastream, Quandl Note: Percentage changes are based on the mid-points of the ranges where applicable. a) Prices w/b 6th March

3 RECOVERED MATERIAL MARKETS Plasticss Recovered plastic bottle and film prices increased slightly during Q but this masks sharp increases from some recovered plastics over the past twelve months. Over this period the largest increase in price has come e from mixed polymer bottles, up 69% to around 115 per tonne. Despite the sharp increase, mixed polymer prices are still around 60% lower than in mid Meanwhile, Chinese demand for recovered plastic appears to have plateaued following recent falls. Chinese imports of recovered plastic (from all a countries) ) peaked in 2012 at 8..9 Mt, declining to 7.3 Mtt in 2015, and then remained unchanged at those levels in In the previous Market Snapshot, we discussed whether higher oil prices (up by around 6% in the first quarter in sterling terms) would result in higher recovered plastic prices. Over the past 5 years, by far the strongestt correlation with oil has been with clear PET bottle pricess (89%), while other recovered plastic prices show much lower positive correlation with oill prices. Clear PET bottle prices increased by 7% during Q Virgin plastic prices increased sharply during Q with PET up 22% to around 910 per tonne, LDPE up 11% to just under 1100 perr tonne and HDPE up 5% to 1045 per tonne. are broadly unchanged during Q Overr the past 12 months, virgin PET prices have seen the largest gains, rising by over 37%. The UK exported 805kt of recovered plastic (both packaging and non-packaging) during 2016, up 2% compared with The second half of the year saw seasonally strong levels of exports, supported by the weakening in sterling. Box 1: Chinese National Sword Policy A plan to crackdown on the import of smuggled waste was announced by the Chinese General Administration of Customs. The plan, known as National Sword or Bordergate Sword 2017 iss thought to involve assessing China s recovered plastic processing methods, the country of origin of the ecovered plastic importedd into China and the end products that t it is manufactured into. Reports in March suggested that some Chinese buyers are holding containers at dockside in China and Hong Kong, claiming they are undergoing inspection. Some buyers are reportedly then either rejecting containers or using the opportunity to renegotiate the price of the material. Although China is still important as an export destination forr the UK s recovered plastics, it just isn t as important as itt once was. In 2011 and 2012 overr 80% of thee UK s exported ecovered plastic was exported to China/HK. This dropped to 63% in 2013 when Operation Green Fence (OGF)( was introduced, but since then it has continued to decline with China accounting forr 55% of UK exports in Other East Asian countriess like Malaysia, Indonesia andd Vietnam now account for 17%

4 of the UK s export end markets. These countries have recycling infrastructure in their own right while also transhipping sorted material across to China. Reports indicate thatt exports of low-grade plastic from the UK may have been affected by the measures. Although there has been no noticeable impact on recovered plastics prices observed in WRAP s Materials Pricing Report (MPR), higher plastic PRN prices (up over 100 per tonne during March to around per tonne) may have helped support material prices. Paper Recovered paper and board prices increased sharply during the first quarter of 2017 with cardboard (OCC) and mixed paper and boardd prices up 22% and 17%. Board prices are now at their highest level since the fourth quarter r of 2011 after rising by 60% over the past twelve months. News & PAM prices rose by 7% during Q to 105 per tonne, up just over 30% over the same time period. The drop in sterling following the EU referendum increased competition for UK recovered paper and card from buyers in Asia, as the UK s recovered paper and card were now more competitive when compared with our main competitors. An increase in pulp prices is also a factor behind the rise in recovered paper prices; in sterling terms, pulp prices have risen by 21% over the past twelve months to 670 per tonne (pulp is a substitute in the manufacture of paper products). The UK exported 5 Mt of recovered paper in 2016, broadly stable compared to the same period in Of the UK' 's exported recovered paper and board, 74% was sent to China, up from 72% in China imported 28.5 Mt off recovered paper (from all countries) duringg 2016, down 3% compared withh In line with seasonal trends, recovered paper imports bounced back strongly from the October low of 1.9 Mt (that coincided withh the bankruptcy of the South Korean shipping container r company Hanjin), rebounding too Mt during November and December. The increase in cardboard prices is also in line with seasonal trends. Prices typically rise during the first quarter of the year as mills restock. Box 2: Container availability and cost Reports suggest that shipping lines have increased the cost of shipping a 40ft container to Asia by more than $1,000 in late March to around $2,000-$3,000 perr container (each container carries around 25 tonnes of material).

5 The end of the first quarter often sees container freight rates go up due to a shortage of ships available in the wake of the Chinese New Year. If buyers in China and elsewhere in Asia are unable or unwilling to shoulder the higher freight costs, then they may seek to push for lower material prices. Market anecdotee in late March points towards a sharp fall in OCC and mixed paper and board prices. Glass Recovered glass prices were broadly stable during the first quarter of Over the past year though, clear and amber cullet prices have both declined by around 45%. This has narrowed the spread between cullet prices too its lowest level for two years. Recovered aluminium can prices rose by 4% during Q to aroundd 900 per tonne. The rebound in recovered aluminium can prices has been supported by higher virgin aluminium prices up 13% over the same period. The average price reported in the WRAP Materials Pricing Reportt (MPR) is currently 60% of the LME cash price, an increase from 51% twelve months ago. The T current high side of the t ecovered aluminium can price range is i 1050 per tonne, around 70% off the LME cash price. The potential for state mandated cutbacks to aluminium capacity in northern China (home to around 20% of o global aluminium capacity) could mean prices move higher later in Aluminium & steel Steel can prices continued to seee strong gains in the first quarter of 2017, rising to 90 per tonne. That represents an increase of almostt 110% over the past twelve months and the highest level for almost two years. The increase in steel can prices continues c to be supported by higher iron ore prices - steel mills typically increase demand for steel scrapp when iron ore (their main feedstock) increases in price - and steel cans are relatively inexpensive compared with construction grade steel scrap. Iron ore prices have increased sharply duringg 2016 and into 2017 due to higher costs (partly due to an increase in coking coal prices) and strong Chinese demand growth for f high-quality non-domestic ore. However, continued high prices may encourage more supply to come on-stream which could add downward price pressuree to iron ore prices, and by extension steel can prices. Textiles Recovered textile prices increased by 15%- 20% during Q Q with textiles sourced from banks valued at around 265 perr tonne while charity shop s textiles (the value that a charity receives for charityy shop clothing sold to merchants that collect the garmentss from the shop) valued at almost 370 per tonne. Recovered textile prices have increased by about 50% over the past twelve months. Note that the quality of the textiles collected and transport costs may have a significant impact on the overall price achieved.

6 WRAP Economics Team March 2017

7 Glossary CPI Confederation of Paper Industries EA Environment Agency HDPE High density polyethylene HMRC Her Majesty s Revenue & Customs kt Thousand tonnes LDPE Low density polyethylenee Mt Million tonnes News & PAMs Newspapers & magazines NPWD National Packaging Waste Database OCC Old corrugated cardboardd PET Polyethylenee terephthalate PRN Packaging Recovery Note While steps have been taken to ensure its accuracy, WRAP cannot accept responsibility or be held liable to any person for any loss or damage arising out of or in connectionn with this information being inaccurate, incomplete or misleading. Forr more detail, please refer to our Terms & Conditions on our website: marketinformation Printed on xx% recycled content paper