Converter caution as polymer prices fall

Polymer prices have been consistently high for the last year, peaking in August and decreasing through October. Virgin PET prices have dropped approximately 15% since the beginning of the year.

The drop has come as recycled materials markets collapsed in recent weeks. Recycled steel has been valued at zero by Corus, while waste plastic and paper prices have fallen dramatically.

To make matters worse, China has recently stopped accepting mixed plastic bottles for recycling as the global recession has led to a decrease in manufacturing, causing handlers selling them at “nominal values”.

However, plastics converters are taking a cautious attitude to passing on changes in plastics prices. “There’s always a lag in being able to pass price changes on,” said Bruce Margetts, general manager at RPC Market Rasen. “You never quite catch up.”

Some converters are sitting on material stock bought at higher prices and so are hesitant to drop prices straight away, particularly before it is clear that raw material costs won’t rise again.

“I think there’s a recognition that we’ll have to give some of it back if polymer prices stay down,” said Margetts, “but we are yet to see what will happen.”

However, the feeling among the industry is that they will wait until the New Year to review prices.

The drop in polymer prices will also have an impact on the price of recyclate, placing recyclers’ prices under increasing pressure.

“For sure our selling prices are going to be coming under pressure,” said Francis Jackson, national account manager at Closed Loop. “Hopefully, reductions in raw material prices will mirror any reductions we make in our prices.”

Recoup senior project manager Stuart Foster said that there are still markets for separated bottles as these are sold into the UK and mainland Europe.

“We are recommending to collectors and handlers to separate factions,” added Foster.

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