The cost wave that rolled through the upstream markets from mid-December to mid-January washed over into standard recyclate in German-speaking Europe, leading suppliers to pursue price increases ranging up to EUR 50/t. The more opaque grades of rLDPE rose by EUR 20/t, while transparent grades added around EUR 30/t. Due to the off-season in the building industry, demand for rHDPE was weak, although producers of blow moulding and injection moulding recyclate pushed through hikes of about EUR 10/t, mostly at the lower end, and rPP producers achieved most of the EUR 40/t increase they had been seeking. PS recyclate took a small step forward, by about EUR 20/t.

Surging demand for primary polymer governed the supply of material for recycling, whereby production scrap was especially scarce. At the same time, speculation limited availability of post-consumer waste. A large number of recyclers shut down over the Christmas and New Year holidays, due not least to a shortage of material that in some cases continued into January.

If the holidays restrained demand temporarily, in the second week of the month the run on secondary material, priced more reasonably than virgin polymer, was again in full swing. At the centre of buyer interest were rLDPE film grade, rPP and rPS. Demand this month will be boosted by preparations for the building season, but producers are concerned that they will have to put customers on allocation due to insufficient starting material. All of this means prices will move higher across the board.

Unusual for the turn of the year, recyclate prices gained momentum in December and surged by more than 5% in the first half of January, fuelled by turbulence upstream. Despite the hefty upswing, recyclers were conciliatory and continued to charge buyers the December price. Speculation in post-consumer waste caused prices in this market segment to surge, however. Transparent grades added as much as EUR 40/t, with the rise for darker material about half that. Recyclate producers themselves were surprised at the EUR 30/t upswing for rLDPE extrusion and injection moulding material sold to the building sector.

Supply was balanced in January, although there were no reserves, as converters of both virgin polymer and ready-to-use recyclate ran down inventories at year-end. Many recyclers performed at least basic maintenance over the holidays, but due to strong demand had their plants up and running again on 3 January. Most reported that by the second week of the month capacities were being run flat out. Even this was not enough to satisfy demand, however, and as there were no reserves, deliveries tended to be delayed. As before, post-consumer film was hard to come by and was priced significantly higher.

Demand was good. Orders for neat rLDPE continued robust in the early days of 2011, with manufacturers of rubbish bags ordering light-coloured material again. Demand was strongest in Germany, followed by The Netherlands. The UK, the only country outside the euro zone, landed surprisingly in third place. Demand from southern Europe remained weak.

Recyclers see a cost avalanche approaching in February, as surging primary material prices push production scrap higher. For neat scrap, at least half the increase in virgin can be expected, one unhappy converter told Plasteurope.com. At the same time, the mostly medium-sized recyclate producers are aware that they will not be able to pass on the astronomical upmarket rises in full. Many have their customer base among smaller converters in speciality niches, where business relationships are long-standing.

“We have reduced our dependence on the large strategic players, but we still have to pass on costs increases within reason,” one supplier remarked. Most with whom Plasteurope.com spoke were looking for hikes of EUR 20-50/t. Producers of recyclate are also facing an avalanche of orders from new customers in addition to their traditional clientele, as virgin prices go ever higher. Some would like to add extra shifts if they could get their hands on sufficient material.

The January contract for ethylene (C2) rose by a triple-digit margin against December, leading virgin HDPE to soar by EUR 100/t. As this report was prepared, recycled polymer had not yet followed suit. Many orders were filled at December prices. The hibernating building sector provided no impetus, although this did not prevent some suppliers from trying for hikes. Producers of blow moulding recyclate, dogged by the persistent rises in post-consumer waste prices, sought an increase of EUR 20/t, and succeeded in pushing the lower end of the range forward by EUR 10/t. Producers of rHDPE pripe grade tried to pass on EUR 20/t of their higher procurement costs through to their customers. For the most part, these hikes were targeted at extremely low price levels and did not have an effect on the market in general.

Supply of rHDPE pipe and injection moulding grades was good in January, the situation for coloured blow-moulding grades balanced. Many pipe grade recyclers shut down over the holidays, but were back at work on 3 January, producing in winter mode for the most part. As demand was slack, there was ample opportunity to pad reserves. Neat pipe grade virgin polymer was scarce and thus commanded high prices. Supplies of material for canisters and barrels were longer, but prices here, too, were nevertheless high. As streams of post-consumer waste were really a trickle, many rHDPE blow moulders used the slack season to perform maintenance. Reserves remained inadequate to meet even the weak demand.

Although weak, demand was still better than could be expected in the building industry’s off-season, especially for cable sheathing. Orders for blow moulding and injection moulding material were slack, in line with the season. One producer of rHDPE recyclate for pipe sheathing pointed to good prospects for orders from eastern Europe and Scandinavia in January.

Looking ahead to February, many HDPE recyclers see a gloomy picture. Many are wondering how to pass on the higher cost of virgin material. Most have already informed customers of price hikes ranging from EUR 30-50/t. As soon as supply eases somewhat, they plan to jump into action. Mild days in January led to hopes that, as winter set in earlier than usual, spring will lend wings to the building sector early, too. In any case, the short month of February with its longer days will herald spring’s arrival, and recyclate prices can be expected to rise.

Driven by price surges upstream, the propylene (C3) contract for January rose by EUR 110/t, pushing primary PP polymer upward by a triple-digit margin in the first third of the month. Most recyclers had been left sitting on their higher procurement costs, which provided the backdrop for announcements of a EUR 50/t increase in prices for secondary material at the beginning of 2011. Depending on how much of the hike is accepted by the market, the producers stand to restore some of their strongly eroded margin.

Supply in January was balanced to tight. For one thing, supply of postconsumer waste had slowed to a trickle, and for another, converters were reusing their own expensive production scrap. As postconsumer material is hard to come by through any source, recyclers have been unable to turn out enough material to meet the steadily increasing demand. For months, the market has had no reserves to fall back on. In mid-month, only regular customers were being supplied.

Demand continued good as converters abandoned expensive virgin polymer in favour of recyclate. The order surge was too big for recyclers to handle. Either they did not have adequate volumes of starting material or their capacities already were being run flat out.

Moving into February, producers of rPP are caught between the devil and the deep blue sea. On the one hand, they are having to fight for every gram of waste polymer they can find. On the other, soaring procurement prices are causing headaches. Those who do have sufficient material and are operating at full run are still not able to supply the increasing demand from their regular customers, let alone fill orders from occasional buyers. In the background, the agricultural and gardening season is looming. Given the market’s current dynamics, it seems likely that the only way prices will move next month is up.

With a forward leap of EUR 126/t, the January styrene monomer (SM) contract price returned to its lofty heights of a year ago, leading primary PS producers to announce price increases of EUR 140/t. In the month’s third week, it was already evident that at least the monomer price increase would be passed through to buyers of virgin polymer. The turbulence upstream squeezed recyclers’ margins until they bled and led some of them to seek hikes of 8% or around EUR 40/t. This had the greatest influence on prices below the level of the Plasteurope.com table, but the normal range did not remain unaffected, and rPS gained EUR 20/t on average.

Supply was balanced. Driven by exorbitant increases in the primary sector, recyclate demand exploded, and producers were unable to keep pace – this especially as virgin material was literally at a premium. The picture was somewhat brighter for rHIPS obtained from used refrigeration equipment.

Demand was good to excellent. As primary polymer soared to ever higher levels, converters turned increasingly to the secondary sector. However, only regular buyers could be assured of delivery. Most others were left holding the bag.

In February, recyclers will be looking for at least the same price hike achieved in January, in other words about half the increase in virgin polymer. The sharp rises in primary market prices continue apace, sweeping production scrap and, ultimately, post-consumer waste higher. Despite production capacities being run flat out, supply cannot be expected to lengthen substantially. Reserves of finished PS recyclate remain tight, and supply farther up the chain continues restricted. With the textile industry rolling out its spring collection, demand for rPS to produce clothes hangers and spools or for blending with other materials will move into high gear. Recyclate will be on allocation, and only those buyers who accept higher prices will be supplied. This undoubtedly will create more upward pressure on recyclate.

Prices standard recyclate (EUR/t)
Polymer types	January 2011				December 2010
rLDPE
Film natural	950	-	1.000		910	-	980
Film translucent	820	-	900		810	-	860
Film lightly coloured	720	-	780		700	-	760
Film dark	680	-	710		660	-	690
Extrusion black	640	-	700		620	-	660
Injection black	530	-	580		500	-	550
rHDPE
Pipe 930 black	700	-	820		700	-	820
Blow coloured	710	-	770		700	-	770
Injection black	750	-	880		740	-	880
rPP
Homo black	790	-	890		740	-	870
Copo black	800	-	900		760	-	860
rPS
HI black	790	-	900		770	-	880
Prices listed above are reference values for major types and refer to sales volumes in Germany, Austria and Switzerland of between 1-25 t. There are other grades and special types whose price might vary. Data without guarantee. Compiled 14 January 2011.

More on PIEWeb.com: Recyclate: Data and Charts