Market Report Plastics - November 2008

Information about the market for plastics is being presented by:
bvse - Bundesverband Sekundärrohstoffe und Entsorgung e.V.

1. The market for primary plastics

In October standard plastics prices in the primary market declined drastically and numerous orders were cancelled. Nearly all standard plastics prices had decreased as early as in September. The global economic slump can still be observed at several levels. For instance, buyers are hesitant and continue to speculate on a further decrease in prices. European markets are faced with persistently increasing streams of goods, leading to a further decrease in price levels. Moreover, the oil price, which has sunk considerably, has led to a decline in primary product prices, in turn causing a further reduction in plastics prices. The downward spiral of prices continues to gather speed. Plastics manufacturers have temporarily closed down numerous production plants throughout the world. Alongside these hard facts, the general atmosphere continues to influence markets, thus accelerating the downward trend.

The markets for plastics exactly mirror the economic situation, since the demand for plastics, in particular for non-durable and durable consumer and investment goods, has decreased significantly. According to the EUWID Price Watch the average November quote for the ten types of plastics listed below is 1033 €/to, thus falling short of the September price by 103 €/to: LDPE film grade 1300 - 1360 €/to, LLDPE film grade 1320 - 1380 €/to, HDPE injection moulding 1320 – 1380 €/to, HDPE blow moulding 1320 – 1380 €/to, PS general purpose 1220 – 1280 €/to, PS high impact 1290 – 1350 €/to, PP homopolymer 1200 – 1300 €/to, PP copolymer 1250 – 1350 €/to, PVC tube grade 1010 – 1050 €/to, PVC film/cables 1050 – 1090 €/to. PET: In October packaging PET was quoted at 1150 – 1200 €/to, thus falling short of the September price by 110 €/to on average.

According to the EUWID Price Watch for October the price quotes for technical plastics remain unchanged. The October quotes for two months remain unchanged compared to August; prices are quoted as follows: PMMA crystal clear 2550 – 2700 €/to, ABS natural 1800 – 1900, ABS white/black 1880 – 2000, ABS mixed colours 2480 – 260, PC crystal clear 2750 – 2900 €/to, PC GF 2950 – 3100 €/to, POM natural 2250 – 230 €/to, PA 6 natural 2550 – 2800 €/to, PA 6 black 2550 – 2800 €/to, PA 6 GF reinforced 2800 – 3000 €/to, PA 66 natural 2800 – 2990 €/to and PA 6 GF reinforced 2800 – 3000 €/to, PA 66 natural 2800 – 2990 €/to and PA 66 GF 3050-3240 €/to. Due to the economic decline, in particular in the automobile industry, price decreases are also expected for technical plastics. The demand for technical plastics is lower than in previous months, whereas there is considerable supply. The slumps in the prices of technical plastics are weaker and occur later than the price drops in standard plastics.

Distinct Price corrections on the London Metal Exchange (LME). The prices quoted here are average values based on LME purchasing and sales prices. In week 46 the European quotes for PP were 973 US-$ in November, 973 US-$ in December and 865 US-$ in January. The corresponding quotes for LLDPE were 1055 US-$ in December, 1055 US-$ in December and 990 US-$ in January. Thus November quotes for PP decreased by 407 €/to compared to the previous month, whereas those for LLDPE decreased by 515 €/to! The downward trend on the LME continues and is reflected by stock exchange data, which are updated daily.

2. The market for secondary plastics

Since mid-October the global economic crisis has also reached plastics recycling. Thank goodness that excessive panic on the primary markets has not yet fully reached the secondary markets for standard plastics. Nevertheless, drastic price decreases and even order cancellations can also be observed here. The decline in industrial production has inevitably led to a lower demand for recyclates. Furthermore, recyclates are now outstripped by primary products, which are now being quoted at a more favourable price. In part, plastics processors speculate on a further decline in prices, and thus are currently not purchasing any recyclates or fewer recyclates and are selling off their stocks. The low profit margins processors and recyclers achieve are not outweighed by the falling purchase prices, as they attain lower sales prices. Therefore, recyclers are considering taking a distinctly longer Christmas break than in the past.

Exports to China have nearly ground to a complete halt. Asian markets are undergoing a change. In China production for the toy industry and for household appliances has been partially ceased. Parts of the textile industry are being outsourced from China to other countries. Experts expect the export sales business with China to revive after the Chinese New Year’s festival at the end of January at the earliest.

The end of the slump is not to be expected for the time being. The decreasing prices of primary products are likely to have an impact on all plastics recyclates in the next few months. Prices are currently being updated on a daily basis. There is frequently a lack of criteria for appropriate pricing.

2.1 EUWID Price Watch

EUWID indicates very wide price ranges for some plastics; the upper limit reflects above all pricing at the beginning of the month, whereas the lower limit shows the prices ascertained at the end of the month. The EUWID Price Watch of October centres upon two focal points of declining prices, namely PET and the post-user segment of PE. The quotes for PE production waste, PVC and PS remain unchanged. Only two PP grades show price decreases.

PE: No changes in the EUWID Price Watch for PE post-industrial waste. However, in this case price decreases of 50 €/to are also predicted for the next month. In the PE post-user segment prices decrease almost throughout: LDPE shrink film natural (E40) 460 – 550 €/to, LDPE shrink film mixed colours (E49) 210 – 350 €/to, film transparent natural < 70 µm 150 – 400 €/to, film transparent coloured < 70 µm 40 – 90 €/to, LDPE farm film black or white (B41) 10 – 35 €/to, mixed film (80/20) 80 – 200 €/to, mixed film (90/10) 120 – 130 €/to, mixed film (98/2) 150 – 400 €/to and HDPE hollow bodies mixed colours (C29) 150 – 200 €/to. PE films are no longer in demand; their sales to the Far East have almost ground to a halt.

PP: As far as PP post-industrial wastes are concerned, PP film mixed colours (K59) was quoted at 110 – 240 €/to and PP film natural (K50) at 300 – 460 €/to in October, thus falling considerably short of the quotes for the previous month. With a view to primary plastics, next month’s prices are likely to decrease in this market as well. Experts report that stocks are still abundant. According to market experts the situation is further aggravated by the lack of orders in the PP segment.

The quotes for PS post-industrial waste and PVC remain unchanged. In view of the prices of new goods, the quotes are also expected to decrease in this market in November.

PET post user: The situation on the PET market is inconsistent. The prices of new goods have led to a decrease in the prices of PET recyclates. However, existing contracts were yet to be fulfilled in October. Since exports to China have nearly ceased, the supply situation in Europe has improved. The two October quotes in EUWID are as follows: single-use bottles natural 270 – 300 €/to, single-use bottles mixed colours 0 – 150 €/to. This involves price reductions of 20 – 40 €/to, but they may well range between 40 and 70€/to as well.

2.2 Plasticker Price Index

It is possible to calculate a price index for secondary plastics, in particular for bale goods, regrind and regranulates for all grades on the basis of the quotes given on the raw material exchange, as provided by www. plasticker.de. Prices increased from August till September. From September till October the previous price increases were reversed again. At first sight, the November quotes for many standard plastics show a tendency toward a further decline in prices. However, afterwards the fall in prices slows down in November. The following October quotes apply: HDPE bale goods 330 €/to, HDPE regrind 610 €/to, HDPE regranulates 950 €/to, LDPE bale goods 260 €/to, LDPE regrind 540 €/to, LDPE regranulates 850 €/to, PP bale goods 230 €/to, PP regrind 590 €/to, PP regranulates 860 €/to, PS regrind 590 €/to, PS regranulates 920 €/to, PVC-P regrind 500 €/to, PVC-U regrind 480 €/to, PET bale goods 280 €/to, PET regrind 510 €/to and PET regranulates (1060) €/to. Thus the following price changes greater than/less than 50 €/to are reported compared to September: HDPE regranulates – 90 €/to, PP regranulates – 110 €/to and PS regrind – 70 €/to.

The October quotes for technical plastics are: PC regrind 1020 €/to, PC regranulates 1770 €/to, PA 6 regrind 860 €/to, PA 6 regranulates 1810 €/to, PA 6.6 regrind 1000 €/to as well as PA 6.6 regranulates 1900 €/to. Thus the following changes in the prices of technical plastics greater than/less than 50 €/to are reported compared to September: PC regranulates – 400€/to, PA 6 regranulates – 200 €/to as well as PA 6.6 regranulates – 100 €/to.

The EUWID price quotes refer to bale goods or regrind. The given prices were quoted for business transactions between sorting plants and sales agents or the processing industry, as the case may be. As a rule, prices refer to quantities in excess of 20 to ex works. The prices attainable in trade can differ considerably from the indicated price range in both directions, depending on the grade of the type of plastic material quoted. The abbreviations used for some grades refer to the list of waste plastics published by the German Federal Association for Secondary Raw Materials and Waste Disposal (bvse)/Bureau of International Recycling (BIR).