Market Report Plastics - March 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 German plastics packaging industry started the New Year with confidence, cf. the press release published by the German Association for Plastics Packagings and Films (IK) on 5 January 2016, www.kunststoffverpackungen.de. The article says that 70 per cent of member companies assess the general economic situation as favourable; a year ago this was only true for 37 per cent, i.e. just over one third. According to the association, the essential parameter for this development is the stable economic situation in Germany, which is based on a record employment rate that is causing strong in the domestic market. In particular, the fact that the oil price is still low is strengthening the purchasing power of the population in Germany and in major importing nations.

Just under one third of the companies surveyed is expecting purchase prices to rise in the first quarter. The high volatility of raw material prices is the main reason for this development. The majority of IK members is thus expecting prices to rise in the first quarter of 2016. In addition, the electricity costs, which are sill too high by international standards, are forcing many plastics packaging producers to adjust their prices accordingly.

1.1 Standard plastics: Standard plastics prices averaged 1230 €/t in February, which means they fell by 59 €/t compared to the previous month. Demand for standard plastics is considered relatively calm. Some plastics processors are hoping for prices to fall further, while others are filling their warehouses at markedly lower prices. The supply situation is described as largely favourable. Packaging PET is quoted at an average price of 1045 €/t and is thus listed at 45 €/t lower than in the previous month.

For a detailed discussion with information on price indices for virgin materials and used plastics as well as precursors, please refer to EUWID Recycling and Entsorgung (EUWID Recycling and Waste Management), cf. www. Euwid.de, or EUWID Kunststoff (EUWID plastics), cf. www.euwid-kunststoff.de, and to KI- Kunststoffinformation (KI Information on Plastics), cf. www.kiweb.de.

Table 1: EUWID listings for standard plastics over the past five months; prices in €/t.

1.2 Technical plastics: Once again, technical plastics prices have been falling. In Februar 2016 technical plastics dropped by an average 61 €/t. The average technical plastics price only amounted to 2367 €/t in February 2016, cf. Table 2. In February demand for technical plastics was stable. However, the considerable supply quantities are pushing prices down. In this area, too, processors are hoping for prices to fall further. Technical plastics prices are also under considerable pressure as a result of the fall in precursor prices.

Table 2: Technical plastics prices as published by EUWID over the past six months; prices quoted in €/t.

2. The market for secondary plastics

While waste plastics prices are coming under increasing pressure, recyclates are holding their own in the market. The reduced raw material prices are having only a minor impact on the prices of semi-finished and finished products.

Standard plastics: In its February price index plasticker reported that prices had fallen by an average 5 €/t to 10 €/t. The bids and quotes published by plasticker indicate restrained demand for standard plastics. The EUWID Price Watch for used plastics shows that post-consumer and post-industrial plastics have fallen by an average 15 €/t. According to EUWID, demand for used plastics is also restrained. Recyclate sales are stable.

The technical plastics market continues to show hesitance in purchasing. Technical plastics prices continue to fall. Plastics processors can currently purchase technical plastics at very favourable prices.

2.1 Waste plastics:

The times during which high-quality standard plastics were available in limited quantities are over. The mechanisms for shifting high-quality sorted goods that have been in place to date are no longer working. Low-quality sorted materials are selling badly now. Plastics recyclers can finally demand the quality grades they wish for. Low-quality sorted materials are still being produced in abundance. The poor quality grades are still selling at markedly reduced prices. The outflow to the Far East, too, continues to falter. German plastics recyclers are still meeting their needs with used plastics from Europe in order to maintain their independence from national structures.

As a result of the large supply quantities, waste plastics prices have fallen on a large scale. For example, there are sufficient quantities of PP bale goods in the market again. The large supply of used PS plastics is pushing prices down, too.

There are several reasons for the above rise in processing quantities in Germany. The outflow of quantities to the Far East is still faltering. Above and beyond this, only the very best quality grades are still accepted in the Far East. Chinese traders have not seen any market incentives so far. In addition, there are more and more indications that the People’s Republic of China is taking a very critical attitude towards imports of used plastics and will thus further reduce their amounts significantly in the medium term. Moreover, the rise in incineration prices has led to an increased quantity of plastics being separated out and ending up on the markets. Furthermore, it is still the case that low-quality processing goods are neither accepted in the domestic nor in the foreign markets.

2.2 Recyclates:

Plastics recyclates perfectly supplement virgin materials. In addition, they enable the supply market to be largely independent of the volatilities in virgin materials. It is still neither possible to predict the further developments in virgin material prices nor to estimate the availability of supply quantities with certainty. In addition, there may be shortages in the supply of primary goods in future.

Even though recyclate prices are under pressure as a result of the fall in virgin material prices, they have held their own in the volatile market environment. Thus, recyclates provide a very advantageous supplement to the plastics markets in times of considerable virgin material supply, too. The plastics recyclers’ incoming goods warehouses are replete with stocks. There are sufficient processing goods in the market. Recyclers are only purchasing 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 March 2016. These listings thus merely reflect an interim situation that does not become definitive until April 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: In February 2016 the average standard plastics price in plasticker was listed at 573 €/t after elimination of the outliers. If the outliers are not taken into account, the 900 €/t and 230 €/t listed below for LDPE regrind and PET bale goods can be replaced by 570 €/t and 150 €/t respectively. Hence, the average listings of 573 €/t thus calculated have been falling by increments since November 2015.

The individual quality grades changed only slightly in February 2016. HDPE regrind changed by + 50 €/t. Demand for standard plastics rose slightly in February compared to the previous month. PS regrind and PVC_U regrind prices bottomed out at 620 €/t and 410 €/t respectively.

The first preview of the March quotes, which cannot be definitively reported until the beginning of April, shows the prospective average price to be 551 €/t. Thus, the average price listed by the plasticker internet platform on 16 March 2016 was lower than the previous month’s by 22 €/t. Even in March, standard plastics markets were restrained.

Table 3: Prices of standard plastics in plasticker, quoted in €/t

*: Supply figure 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: preview (may be amended by additional quotes)

3.2 Technical plastics: In February 2016, average technical plastics prices were listed at 1218 €/t in plasticker. Thus, the average price had fallen by 26 €/t relative to the previous month. A comparison between the average prices of February 2016 (1218 €/t) and January 2015 (1272 €/t) shows that the current price is 54 €/t lower. There were three marked price changes in February 2016, namely for: ABS regranulates – 120 €/t, PBT regranulates – 190 €/t and POM regranulates + 100 €/t. In February technical plastics were in sufficient demand.

The first preview of the March quotes, which cannot be definitively reported until the beginning of April, shows prices to fall further, reaching only 1195 €/t. Until 16 March 2016 the plasticker internet platform showed satisfactory demand for technical plastics. Technical plastics prices have continued to fall, reaching very low levels.

Table 4: 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.