Speaking at its conference on navigating the economic slowdown yesterday, WRAP's programme manager for market knowledge, Liz Dixon Smith, acknowledged that material prices had fallen “sharply” of late and that there were “turbulent market conditions.”
Ms Dixon Smith also claimed that future risks, such as changes in regulation and the prospect of China processing more of its own recyclables – did not present a significant risk – as WRAP was planning to monitor regulatory change and there was a practical limit on how much recycling rates could grow in the country.
She said: “At present none of these appears to present an appreciable risk to the UK in the medium to the long-term”, and added that “Chinese paper production – and hence recovered paper demand – is expected to continue to grow strongly, and so is Chinese recovered polymer demand.”
Ms Dixon Smith explained that the majority of recovered paper and plastics sent from the UK to China at present ended up in the Eastern Province of Guangdong, which had been particularly hard-hit by the economic slowdown, possibly giving a skewed picture of China as a whole – whereas regions in the North were managing better.
Valpak
Mike Jefferson, commercial director of recycling firm and producer compliance scheme Valpak, explained that, over the past few weeks, there were currently high levels of uncertainty and lack of confidence in exports to countries such as China, with potentially large financial risks in placing orders at the wrong time, bearing in mind factors such as shipping times.
He explained that there had been a reduction in demand from export orientated sectors – particularly Guangdong – with the economic conditions causing the failure of some smaller manufacturing businesses in Asia, and that people were waiting to see where prices for recovered plastics and paper would settle.
However, Mr Jefferson highlighted some factors which could improve the situation – such as measures by the Chinese Government to stimulate domestic demand and support exporters through tax and currency controls, a stronger US dollar, potential reductions in shipping prices and lower levels of waste arisings – leading to a more equal supply and demand balance.
As a result, he predicted that paper prices could ease up over the next couple of weeks, with plastics prices possibly stabilising in the next 2-4 weeks – but stressed that the UK was “unlikely to see a quick return to some of the prices seen over the past 12 months.”
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