According to Dr. Steve Wong of Hong Kong-based Fukutomi Co. Ltd. and executive president of the China Scrap Plastics Association, writing in the Bureau of International Recycling (BIR) October 2016 World Mirror: Plastics, the bearish mood that has characterised the plastic scrap market in China since May lifted as of mid-September.
This shift in mood does not mean the Chinese market is without challenges, however. In the World Mirror, Wong comments on the “frequent changes in the government’s environmental policies,” adding that some companies have gone bankrupt “not through a lack of business skills but because of the sudden enforcement of government policies that have forced factories to shut.”
U.S. sources contacted in October are expressing optimism for recycled plastics markets overall, though the outlook for some resins remains sunnier than others.
Jason Stephens of the brokerage company BlackBridge Investments, New York City, says the U.S. market was trending upward as October drew to a close, adding that the market is up overall year over year.
However, he adds, “Much of these advances came over the summer months, and we may see decreased demand as we approach planned maintenance and the holidays at a lot of the plants around the country.”
While U.S. recycled plastic markets overall are showing signs of strength, polyethylene terephthalate (PET) demand has been weak, and the U.S. supply of postconsumer PET has increased over the last three months. “This was mostly due to the summer months as well as [to] the decreased demand for bottles,” Stephens says. “The bigger end users overbought, and it restricted their purchasing power. This left a lot of supply on the market,” which has suppressed pricing.
U.S. exports of postconsumer and postindustrial plastics for reprocessing have been reduced in light of the strong U.S. dollar, Stephens says. “When the U.S. dollar is strong, it makes it very expensive for foreign customers to purchase U.S. scrap material,” he continues. “The lack of foreign demand results in the material sitting on the U.S. market and increasing the available supply.”
Supply of postconsumer high-density polyethylene (HDPE) bottles—mixed colour and natural—and mixed plastic bottles has been steady over the last three months, he says. However, since the closure of plastics recovery facility (PRF) operator Entropex, Sarnia, Ontario, a glut of unused Nos. 3 through 7 material remains on the market. “It will take time to balance,” Stephens says, “but pricing has been very suppressed due to the unused supply on the market.”
HDPE demand and pricing have been strong in the U.S.
Ed Handy, general manager of Plastic Revolutions, Reidsville, North Carolina, says pricing for HDPE bottle bales spiked “drastically” in October, gaining 20% to 25%. “It was unsettling,” he says of the increase, “because we can’t get the price on our end product up.”
In France, HDPE markets are mixed, with Marc-Antoine Belthé of Veolia Propreté France Recycling writing in the World Mirror: “There have been dramatic declines on blow-moulding grade HDPE and recyclers are carrying high stocks of input material. Outgoings are week and stocks of finished goods are high, such that the end of the year is likely to be under grey skies.”
However, Belthé says injection-grade HDPE is faring better, “with customers aggressively looking for HDPE garbage bin flakes and pellets.”
Surendra Patawari Borad of Gemini Corp. NV, Belgium, and chairman of the BIR Plastics Committee writes in the World Mirror that the direction of the European market is hard to discern. “Many customers have been unable to decide whether prices would really go up or would stay the same, and so they have remained on the sidelines and have refrained from buying large quantities,” he says.
Borad writes that material remained in short supply in September, leading to the expectation that prices would increase in the European market. However, he adds, “prices remained the same for almost all polymers owing to weak demand from Asia.”
Reaching a ceiling?
Departments - Paper
Strained supply concerns European recovered fibre traders.
Blue circles represent tonnes traded in thousands, grey circles represent € per tonne; Source: Eurostat, http://ec.europa.eu/eurostat/web/waste; tonnes traded figure includes tonnes imported, exported and traded between EU nations
Packers and shippers of recovered fibre have largely enjoyed conditions in 2016, with containerboard and other packaging grade mills in Europe, North America and Asia all running at sufficient capacity to absorb the scrap paper being generated globally.
Recovered fibre traders in Europe are seeing those same conditions continue into the final quarter of 2016, though they also express some concern that the ongoing strain on supply is likely to cause some papermakers to shift to sourcing more virgin material in the near future.
In the meantime, however, demand for scrap paper remains strong. “Overseas buyers are still active in the market,” says a Netherlands-based recycler, who also says European mills are seeking supply. “We have the machine of Parenco going into production [in Renkum, Netherlands] and the Schoellershammer mill [in Düren, Germany] coming into production soon.”
Another Europe-based trader, who concentrates on supplying Asian mills, says data from China Customs show that in the first eight months of 2016 that nation has imported 0.8% more old corrugated containers (OCC) than in the comparable period of 2015.
Reflecting supply reductions in other grades, however, he says the same data show “ONP [old newspapers] off 15.3%, sorted mixed paper off 2.9% and the total down by 3.4%.”
The same trader says China’s Ministry of Industry and Technology shows mill closures in that nation in 2015 have reduced capacity by 1.67 million tonnes annually, meaning imported fibre is close to retaining its market share—and perhaps domestic collection in China is not proceeding as fast as planned.
Both recyclers say generation has been picking up since the slow summer months, when industrial generation in much of continental Europe experiences a seasonal slowdown. (See the chart on this page with the August industrial production figures.)
“Generation has picked up,” says one recycler in mid-October, while the other offers, “We saw a drop off in May, June and July that started to recover in August and September, as you would seasonally expect.”
The continued strain on recovered fibre supplies and the resulting strong pricing has led to concerns that mills with the option of switching to virgin pulp or wood chips are more likely to do so.
Another factor affecting Europe-based recyclers is the strength of the euro against other currencies. “I have heard that Indonesian buyers have found the European pricing levels too strong for the bulk grades and have turned toward more domestic supply and supply from Oceania,” says the recycler who serves export markets.
Whether Europe’s own mills will continue buying at the same pace into 2017 is another source of concern for the recyclers. “There are rumours that order books for liner mills are not that good for the first quarter of 2017, so it might affect pricing by then,” one recycler comments.
Currency volatility, the Brexit process and the aftereffects of the Hanjin shipping line bankruptcy all have given paper recyclers in Europe plenty to worry about despite the steady demand for their material.
“Service and coverage levels have been affected negatively, which has put a challenge to the trade of secondary raw materials,” says the exporter regarding shipping conditions since the Hanjin bankruptcy.
China remains the big volume buyer in Asia, but urbanisation figures and industrial production and gross domestic product (GDP) growth figures on the Indian subcontinent and in the ASEAN (Association of Southeast Asian Nations) region continue to attract the attention of the global market.
Nonferrous
Departments - Nonferrous
Nonferrous scrap expected to continue trading in a narrow range in the fourth quarter.
Nonferrous recyclers assessing the scrap market in mid-October are predicting the fourth quarter of 2016 will follow the same pattern as the earlier parts of the year, with prices neither plummeting nor zooming upward but instead bumping along in a relatively narrow range.
Regarding supply and demand on the red metals side, Stefan-Georg Fuchs, executive director, recycling materials, with Germany-based copper producer Aurubis, says “autumn markets have been fair to us so far, and we shouldn’t see a significant shortage over and above of what we already experienced in 2016 so far.”
Fuchs characterises the copper price swings that have taken place throughout 2016 as “short-term volatility [that is] too short in its swings to have any significant impact on buying activities in the markets.”
He continues, “I suppose most merchants (on the sell side) play the longer outlook and either keep metals in store as long as possible until the next price hike or (on the buy side) try to buy on the low side when some participants have to sell.
The low price of steel and ferrous scrap remains part of the narrative for nonferrous scrap recyclers as well, Fuchs comments. “We have a cautious eye on steel, as the steel markets tell the recycling markets where to go. If steel goes bad, most other metals do the same, and the collection of [all] scrap will dwindle.”
* In thousands of tonnes; Source: International Copper Study Group
Fuchs points to currency volatility as one wild card in what otherwise should be a fourth quarter similar to the previous three. “We think the current situation might prevail for the remainder of 2016 and well into 2017 unless we see major moves in the U.S. dollar to Chinese RMB (renminbi) value or the U.S. dollar to the euro value, which of course affects red metals prices.”
As they prepared to gather for the Bureau of International Recycling (BIR) World Recycling Convention (Round-Table Sessions) in Amsterdam in late October, members of the BIR Non-Ferrous Division board pointed to mixed signals affecting scrap prices in their write-ups for the World Mirror: Non-Ferrous Metals.
From his perspective with TAV Holdings in the United States, Andy Wahl points to rising London Metal Exchange (LME) prices for primary aluminium (11.8%), nickel (22.3%), lead (20.5%) and zinc (32.3%) while scrap prices in the U.S. languish.
“The million-dollar question is why these gains bear no relation to the pricing and activity levels for our recycled metals,” writes Wahl. “The secondary aluminium market [in the U.S.] is still looking for the bottom as twitch and ingot prices seem to fall hand in hand. Interestingly, twitch in Europe is now worth a little more than in the U.S.—something I have not seen in years. So maybe supply and demand still do have a function.”
Like Fuchs, Wahl sees a tie-in to low pricing on the ferrous side. “The latest drop in ferrous scrap prices to the levels seen at this time in 2015 will not help encourage more nonferrous metals into yards,” he writes.
Plastics
Departments - Newsworthy
Recent news from the various sectors of the recycling industry
Interseroh opens plastics recycling centre in Slovenia
The recycling and environmental services firm Interseroh, headquartered in Cologne, Germany, has opened a new centre of competence for recycling plastics in Maribor, Slovenia. The company says the centre will highlight how modern plastics recycling works and how the efficient use of plastics is being researched and developed.
Taking part in the opening ceremony were Professor Maja Makovec Brencic, the Slovenian minister for education, science and sport; Eva Štravs Podlogar, the general director of internationalisation of the Slovenian Ministry; and Dr. Axel Schweitzer, chairman of Alba Group’s board of directors.
Interseroh’s new centre of expertise seeks to bring together its research and development activities in the area of plastics recycling for the first time.
“At our new location we can service all of our customers’ requirements surrounding the production of modern recycling plastics ourselves,” says Manica Ulcnik-Krump, Interseroh manager of research and development, Recycled-Resource. “This allows us to achieve a greater degree of flexibility and independence in product manufacturing, while, for customers, the periods of development are significantly reduced.”
In a news release, Interseroh, a subsidiary of the Alba Group, notes that over the course of its long-standing research and development work, it has created an upcycling process for plastic scrap from German dual system collections that it calls Recycled-Resource. Through this process, high-tech sorting of the plastic is followed by recompounding, encompassing the extrusion, restabilising and reconstruction of the molecular structure, as well as the chemical modification with the addition of additives in order to achieve the precise plastic characteristics that are required by the customer.
The end result is customised plastic granulates, including the recyclate Recythen, which is suitable for the production of technical items, films or pipelines, Interseroh says.
The company adds that the recycled plastic Procyclen, also manufactured with the help of Recycled-Resource, is just as impact-resistant, rigid and heat-resistant as primary granulate on a crude oil basis. The material also can be used in blow moulding to produce liquid detergent bottles, among other materials.
GreenFiber International to build plastics recycling plant in Romania
GreenFiber International, part of Green Group, the largest integrated recycling park in Southeastern Europe, has announced plans to invest €31 million ($35 million) to build its third production plant for synthetic fibres made from 100% recycled PET (polyethylene terephthalate). The new plant will be in Urziceni, Romania.
The company says the plant will be able to produce 30,000 short tons of synthetic material per year and should be operational by the first quarter of 2017. Additionally, GreenFiber says it is planning an additional investment, doubling the plant’s capacity by 2018.
The Urziceni plant combined with the company’s other plastics recycling facilities in Buzau and Lasi, Romania, will give GreenFiber approximately 113,000 short tons per year of recycled plastics production capacity.
“While the demand from our clients for regenerated fibres was rising,” says Clement Hung, CEO of Green Group, “such an investment was made possible only following last year’s important boost of the operations in the upstream supply chain. In 2013–2015, we invested €23 million, part of which was to create a functional collection infrastructure in Romania and grow the clean PET collection volumes, while the other was to increase the operational capacities for the lines processing PET bottles prior to reaching our GreenFiber factories.”
To meet the needs of the facility, the company estimates that a total of 162,000 short tons of PET bottles will need to be processed, more than the total amount of PET produced in Romania.