Market Report Plastics - February 2016
Information about the market for plastics is being presented by:
bvse - Bundesverband Sekundärrohstoffe und Entsorgung e.V.
1. The market for primary plastics
The business climate in German companies has continued to deteriorate in February, cf. www.cesifo-group.de. The worries regarding China, the falling oil price and the upheavals on the stock exchanges have dampened the mood. According to a report on a survey conducted by the Munich Ifo Institute among 7,000 managers in February, the business climate barometer fell by 1.6 points, reaching 105.7 points. It thus went down for the third time in succession, reaching the lowest level since December 2014. While representatives from the industrial sector fear that the downswing will continue, the business climate also deteriorated in the retail and wholesale industries and in the service sector. Only in the major building and construction sector did the business climate index climb.
On the other hand, there is some cautious optimism in the plastics processing industry, cf. www.gkv.de. The plastics processing industry in Germany showed moderate growth in 2015. This is what the German Association of the Plastics Converters (GKV) announced at the business press conference held in Frankfurt/Main on Wednesday 10 February 2016. The turnover made by plastics recyclers in Germany, which had attained record highs in the previous year, rose by an additional 1.3 per cent, reaching 59.8 billion euros in 2015. Major drivers of this development include, among other things, plastics packagings and products made from technical plastics. In 2015, the amount of plastics processed remained at the previous year’s level, i.e. at 13.6 million tonnes. Despite this relatively moderate development, the mood in the industry’s companies was still marked by restrained optimism at the beginning of 2016.
Standard plastics: Standard plastics prices fell by an average 16 €/t in January. This is exactly the amount by which they had risen in December. Only the listings for PS held their own. Demand for standard plastics stagnated in January 2016 because plastics processors are still hoping for prices to fall further. Supply is said to be sufficient, even though larger purchasing orders are being accepted very hesitantly. Packaging PET is listed at an average 1090 €/t and has thus fallen by 35 €/t compared to the previous month.
For a detailed analysis including information on price indices for virgin materials, used plastics and precursors, please refer to EUWID Recycling und Entsorgung (EUWID Recycling and Waste Management) or EUWID Kunststoff (EUWID Plastics) and KI Kunststoffinformation (KI Information on Plastics).
Table 1: EUWID listings for standard plastics over the past five months; prices in €/t
2. The market for secondary plastics
The parameters in the secondary plastics markets are changing very rapidly. While January listings still showed a cautious attitude towards further market developments, February and March are already marked by very clear tendencies: there is now considerable supply of used plastics. While Germany’s plastics recycling industry has been complaining about a lack of input quantities over the past few years, materials for the processing industry are now finally available in sufficient quantities. However, quality has deteriorated even more over the past three months. The supply quantities now available, which have risen considerably, have not really been able to make up for the lack of quality so far. Hence, plastics recyclers can now reject materials of insufficient quality and resort to input of a different type. The processing input produced in Germany still shows considerable flaws compared to the materials that can be imported from neighbouring countries.
In its January price index, plasticker reports that demand for standard plastics is restrained, while prices have remained stable. EUWID shows price reductions of 10 €/t to 20 €/t for post-consumer waste. Above and beyond this, post-industrial PP prices have fallen by 10 €/t to 20 €/t. Post-industrial PE, PS and PVC prices have almost held their own. According to EUWID reports, there is sufficient demand for secondary plastics despite the winter break and the public holidays.
2.1 Waste plastics:
The times during which high-quality standard plastics were available to a limited extent are over for now. The previous mechanisms in place for shifting high-quality sorted materials are no longer working. Hoping for markets to change, market participants have, in part, transported used plastics to their warehouses; however, these hopes seem to have been a fallacy. Due to the large supply, waste plastics prices have been falling. For example, sufficient quantities of PP bale goods are now available in the market again. Plastics recyclers are no longer prepared to compromise on quality, either. Hence, PS recycling is now running into trouble because plastics recyclers prefer to withdraw from the market rather than accepting separated materials of poor quality. The quality of the sorted PS fractions on offer no longer meet the plastics recyclers’ requirements in any way.
The above rise in the Germany’s quantities of processing materials is also a result of the outflow to the Far East faltering. As a result of the Chinese New Year celebrations, plastics recycling picked up slowly in February. From March, demand for plastics from the People’s Republic of China is likely to increase; however, traders have noticed very few market incentives so far. In addition, there are more and more indications that China is adopting a critical stance on waste plastic imports and is planning to reduce them in the medium term. Or to put it another way: poor-quality processing goods can hold their own neither in the domestic nor in international markets. What now counts is to provide high-quality materials, which will then - and only in that case - be accepted by purchasers.
2.2 Recyclates:
It is still neither possible to predict the further development in virgin material prices nor to estimate the future supply quantities available with certainty. Plant failures and shortages are still imminent. Recyclate prices have come under pressure from the falling virgin material prices. However, the past few years have brought about structures that stabilise recyclate markets. Thus, recyclates provide a very good addition to the plastics markets – even in times of considerable virgin material supply. The plastics recyclers’ warehouses are replete with stocks. There are sufficient processing materials in the market. Recyclers only purchase input so long as it is offered at sufficient quality and at reduced prices.
3 The Plasticker Price Index
The plasticker internet platform publishes quotes on an hourly basis. The present market report indicates the final monthly prices. It is only possible to represent the preliminary prices for February 2016. These listings thus merely reflect an interim situation that does not become definitive until March 2016. Plasticker offers the quality grades regrind and regranulates both as virgin materials and as secondary materials. The term 'bale goods' refers to waste plastics only.
3.1 Standard plastics: The average standard plastics price listed by plasticker in January 2016 seems to have risen compared to the previous month. Yet the calculation of the average price, which amounts to 594 €/t, took LDPE regrind into account. The latter, however, is not based on a sufficient number of samples. Or to put it another way, after elimination of the outlier, the average January price equals the one attained in the previous month if LDPE regrind is calculated at 579 €/t, as was the case in December.
A comparison between the average prices attained in January 2016 and January 2015 does not show any change in the two listings, either: both prices were quoted at 579 €/t. However, the individual quality grades showed marked changes in: LDPE bale goods + 60 €/t, LDPE regranulates + 60 €/t, PP bale goods – 70 €/t and PP regranulates – 100 €/t. As a result of the holidays, demand for standard plastics was restrained in January: PP bale goods almost reached the long-term low of September 2014 (€ 180). PP regranulate prices fell to their lowest level in five years at 860 €/t.
The first preview of the February quotes, which cannot be definitively reported until the beginning of March, shows the prospective average price to be 564 €/t if the outlier is not taken into account. Thus, the average price listed by the plasticker internet platform on 16 February 2016 was lower than the previous month’s by 15 €/t. In February, too, there was restrained demand in the standard plastics markets.
Table 2: Prices of standard plastics in plasticker, quoted in €/t
*: Supply figures too low to attain statistical significance; 1: equivalent to the grade "post-industrial, mixed colours"; 2: equivalent to K49; 3: equivalent to K59; 4: equivalent to "standard, mixed colours"; 5: equivalent to the grade "regranulates, black", 6: forecast (likely to be amended by additional quotes)
3.2 Technical plastics: In January 2016, the average technical plastics prices listed by plasticker almost remained unchanged compared to the previous month: they were quoted at 1244 €/t - as opposed to 1239 in December. A comparison between the average prices of January 2016 (1244 €/t) and January 2015 (1291 €/t) shows that the current price is 46 €/t lower. The listings for the individual quality grades changed markedly in January 2016, with price falls ranging from 10 €/t to 170 €/t and price rises from 10 €/t to 180 €/t. The following prices changed considerably: PC regrind + 100 €/t, PC regranulates - 70 €/t, PBT regranulates + 180 €/t, PA regrind - 90 €/t, PA 6.6 regranulates +80 €/t and POM regranulates - 170 €/t. Despite the Christmas break, demand for technical plastics was satisfactory in January.
The first preview the February listings, which cannot be definitively reported until the beginning of March, shows average prices of only 1214 €/t. The plasticker internet platform showed satisfactory demand for technical plastics until 16 February 2016.
Table 3: Prices of technical plastics in plasticker, quoted in €/t
5: equivalent to the grade "regranulates, black". 6 forecast (likely to be amended by additional quotes)
No guarantee for any of the prices. All EUWID prices are quoted ex works. As a rule, the prices quoted refer to quantities in excess of 20 tons. The monthly quotes for secondary plastics, which are updated on an hourly basis, can be calculated using the price lists that are derived from the quotations published in the raw material exchange plasticker. The prices listed in this index are quoted without reservation - as the majority of the quotes submitted are not necessarily equivalent to the sales prices. Furthermore, plasticker does not distinguish between the following grades: transparent, mixed colours or colour-separated. Therefore, the information provided by plasticker may indicate different market behaviour than the prices quoted by EUWID .
