Page 46 from: January / February 2016

44 January/February 2016

M A R K E T A N A L Y S I S

Wisely and slow…
The month of December was characterised by a wait-and-
watch attitude within the plastics scrap market.

What would be the scale and impact of the interest rate hike
by the US Federal Reserve? How low
would the oil price go? Would the Euro/
US dollar exchange rate reach parity? And
what about year-end accounting issues?
All these factors pointed to lacklustre mar-
ket movements and eventually everyone
decided to play safe.
Collectors usually prefer to reduce inven-
tory levels at the end of the year but during
December 2015 they decided to hold on
to their stocks for two main reasons. First,
prices dropped sharply for practically all
kinds of plastics scrap, and it must have

been difficult to book losses at the year-end.
Secondly, there was the hope that prices
might recover at the beginning of 2016 –
although this has not happened in the early
weeks of January as collectors and stockists
have offloaded material at lower prices.
China and elsewhere in the Far East
remain the major destinations for plas-
tics scrap. At present, however, recyclers
in the Far East are in no hurry to buy as
they are already sitting on piles of material
and so prefer to wait before making more
purchases. Furthermore, import licences
expire at year-end and some importers
had yet to receive their new ones; some

of them have obtained new licences, but
for reduced quantities.
Given that prices of primary plastics are
very low, demand for reprocessed materi-
als is rather subdued. Sea freight has been
further reduced in early January and this
will add to the pressure on selling prices.
The Chinese authorities have introduced
regulations stipulating minimum process-
ing capacities for existing and new recy-
cling units of, respectively, 20 000 tonnes
and 30 000 tonnes per annum. This move
will eliminate smaller and uneconomical
units. Stricter enforcement had been men-
tioned for China but did not materialise;

nevertheless, shipments have diminished
both from the USA and from Europe.
Despite record-low oil prices and a decel-
erating Chinese economy, I believe that
the market will stabilise at the current
level and that low freight rates and a low
Euro will prevent further falls in prices. In
the course of the coming weeks, I expect
further buying interest will serve to rebuild
existing stocks.

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Contribution by
Surendra Borad Patawari / Gemini Corpora-
tion N.V. Belgium, chairman of the BIR world
recycling association’s plastics committee

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