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Plastics outlook: New Year optimism stalled by virus scare

Strong trading in Europe in January was blown away by the coronavirus bringing Chinese industry and transport to a standstill. Below is a teaser from the new market analysis, which will be published in our upcoming issue.

2020 started with a positive vibe across the European plastic scrap markets but prospects were quickly clouded by the spectre of the coronavirus that started life in China but quickly became a global concern. The European market had started a little late due to the New Year holidays but the traded volume was initially very strong in January.

Plastic scrap prices in Europe jumped and this was attributed to good demand from Southeast Asian recyclers. Prices of LDPE natural film surged by almost 15% during the month. At the beginning of January LDPE natural film scrap prices were around EUR 215 per tonne. By the end of the month, they had reached EUR 250 per tonne. Prices for other grades, most of which was destined for European recyclers, remained consistent.

February started with major concerns over coronavirus spreading through China. This had a big negative impact on the business, with factories sitting idle without their workforces. The situation worsened and, with so many businesses directly or indirectly linked to China, started affecting the entire world.

The coronavirus has already had a negative impact on plastics scrap prices with the biggest demand for recycled granules being from China. Recyclers around Southeast Asia are mainly processing material to meet the demand from China so, as that declined, they were forced to reduce the price of their plastic scrap.

On the other hand, sea freights charges rose sharply as shipping lines don’t have empty vessels available. Most of the containers on their way to China were stopped short and could not be unloaded.

At the time of writing, shipping lines have announced a general rate increase of US$ 300-500 per container for most business lanes. Freight from Europe to non-China destinations became the victim of this unbalanced situation.

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