Market Report Plastics - December 2008

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

1. The market for primary plastics

The end of the decline in prices is not yet in sight. The primary market for standard plastics has continued to be on the decline in November and December. There is a low demand, whereas the supply is considerable. Throughout the world, production plants have been closed down, which has led to a decrease in the production of plastics. Additional goods from other markets are on offer in Europe. There are still postponements of orders as well as cancellations. Expecting a further price decrease in December, processors are reducing their plastics stocks.

According to the EUWID Price Watch the average November quote for the ten types of plastics listed below is 1233 €/to, thus falling short of the October price by 227 €/to. The price watch for standard plastics shows the following price quotes: LDPE film grade 950-1100 €/to, LLDPE film grade 950-1100 €/to, HDPE injection moulding 950-1100 €/to, HDPE blow moulding 950-1100 €/to, PS general purpose 1000-1100 €/to, PS high impact 1070-1170 €/to, PP homopolymer 950-1100 €/to, PP copolymer 1000-1150 €/to, PVC tube grade 940-980 €/to, PVC film/cables 980-1020 €/to. PET: In November packaging PET was quoted at 1030-1080 €/to, thus falling short of the previous month by 120 €/t on average. Experts think that the decline in PET prices has almost ground to a halt.

Again, there are distinct price corrections on the London Metal Exchange (LME). The prices quoted here are mean values of the LME purchase and sales prices. In week 50 the purchase prices for December, January and February of PP were at 755 US $ respectively and those of LLDPE at 685 US-$ respectively. Thus the December quotes for PP and LLDPE fall short of the prices quoted for December the previous month by 162 €/to and 370 €/to respectively.

With processors considerably reducing their plastics stocks, there are hopes that the decline in prices will grind to a halt from the beginning of February. As of February the current persistent basic demand for plastics products is ultimately expected to lead to a renewed slight increase in demand, which can then only be met by new order placements. Furthermore, foreign demand is also expected to recover as of February. So far sales of daily consumer goods have remained stable or they have merely shown a slight decrease.

2. The market for secondary plastics

The global economic crisis has meanwhile reached the plastics recycling to its full extent. The situation of the secondary markets for standard plastics in November can only be described to a very limited extent with the aid of price indices. The decline in prices affects both input and output prices. The low demand and the decline in the prices of new goods confuse existing markets. In part, this leads to panic, which makes it impossible to use reasonable pricing criteria. Recyclate prices are at best linked, with large reductions, to the prices of new goods. Processors, recyclers and traders are attempting to reorganise markets, orienting themselves toward the places where waste plastics accrue. However, in doing so, they have to take the existing stock capacities into account, i.e. stock replenishment on the one hand and stock reduction on the other. Processors have brought forward and extended their winter break. Audits and technical maintenance work are being carried out.

With a few exceptions, exports to the Far East have ground to a halt. Some experts predict a slight revival of the export trade with China from as early as mid-January, whereas others do not expect exports to revive until after the Chinese New Year’s festival, i.e. from the beginning of February. Goods which have already been shipped will be negotiated again on their arrival. Purchasers can then set prices almost arbitrarily.

Other markets in the Far East than China are no longer showing any interest in plastics imports, either.

Just as the primary market, the secondary market has certain chances for revival, since there continues to be a basic demand which is likely to lead to new order placements at home and abroad from the beginning of February. Experts predict a slight stabilisation of markets for spring. As price fixing has not been abandoned in the primary market so far, it should be possible to attain a certain degree of consolidation in the secondary market again – namely by means of fixed price quotes.

2.1 EUWID PRICE WATCH

According to EUWID, the situation of the secondary markets for standard plastics can no longer be accurately described by means of a monthly price index. To a minor degree, daily prices are fixed. Therefore, EUWID has not given any prices for plastics in November! In part, EUWID has stated price estimates.

PE, PP, PS und PVC: The markets show a very low demand. Experts say that existing prices have decreased by 50%. There is hardly any demand for PE film at home. A selection of grades of 98/2 mixed tissue and 80/20 mixed tissue have been exported to a lesser extent. The prices of the highest regrind and regranulate grades have been linked, with reductions, to the prices of new goods.

PET post user: There is at present a massive surplus of high-grade PET bottles in the market. The prices of new goods cause a massive decline in the prices of secondary PET. Recyclers are reducing their stocks as much as possible, whereas suppliers are storing high-grade PET bottles. Input prices are said to have been reduced by 50% in this segment as well.

2.2 Plasticker Price Index

Price quotes continue to be calculated on the basis of plasticker. The prices in this index are quoted with reservation - as the majority of the quotes submitted are offers which are not reascertained. Therefore, the information provided by plasticker indicates a distinctly less volatile market behaviour than was described above. A closer look at the December quotes reveals a tendency toward a further decline in prices for many standard plastics.

The following price index for bale goods, regrind and regranulates has been derived from the prices quoted on the plasticker raw material exchange; it indicates average prices for very different grades: HDPE-bale goods 250 €/to, HDPE regrind 590 €/to, HDPE regranulates 810 €/to, LDPE bale goods 270 €/to, LDPE regrind 470 €/to, LDPE regranulates 740 €/to, PP bale goods 230 €/to, PP regrind 550 €/to, PP regranulates 880 €/to, PS regrind 540 €/to, PS regranulates 920 €/to, PVC-U regrind 430 €/to, PVC-P regrind 460 €/to, PET bale goods 230 €/to, PET regrind 470 €/to and PET regranulates (890) €/t. Thus standard plastics show the following price changes greater than/less than 40 €/to for standard plastics compared to October: HDPE bale goods - 80 €/to, HDPE regranulates -140 €/to, LDPE regrind -70 €/to, LDPE regranulates -110 €/to, PS regrind - 50 €/t, PVC-U - 70 €/to, PET bale goods - 50 €/to as well as PET regranulates – 170 €/to.

The October quotes for technical plastics are as follows: PC regrind 1000 €/to, PC regranulates 2200 €/to, PA 6 regrind 800 €/to, PA 6 regranulates 1860 €/to, PA 6.6 regrind 880 €/to as well as PA 6.6 regranulates 2100 €/to. Thus technical plastics show the following changes greater than/less than 70 €/to compared to September. PC regranulates +430 €/to, PA 6 regranulates -200 €/to, PA 6.6- regrind -120 €/to as well as PA 6.6 regranulates +200 €/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).