Vague Terminal Demand Squeezes German Recycled Plastics Market Sentiments
- 20-Jul-2022 5:05 PM
- Journalist: Kim Chul Son
Hamburg, Germany: The recycled plastics market has been demonstrating a downtrend since the start of this month. The uncertainties in terminal demand and the sufficient availability of upstream raw materials have pushed the price trends of recycled plastics to follow a bearish trend in the regional market.
As per the latest data, Recycled High-density Polyethylene (R-HDPE) prices have declined by 1.5% and showed a decrement of USD 35 per ton on July 20th compared to the prices observed in the first week of July 2022 in the domestic market. In addition, the upstream HDPE prices have followed the declining energy prices and dropped by nearly 2%, prompting negative cost pressure on the market value of R-HDPE. As per the observed market scenario, the manufacturers covered their immediate needs due to subdued demand and low purchasing power from the terminal sector; thus, plunged quotations have been observed in the regional market.
Furthermore, Russian gas shipments through the Nord Stream 1 pipeline have not been restarted yet, resulting in supply bottlenecks for significant manufacturing firms. Europe's major economy, Germany, depends on Russian gas supplies for 40% of its natural gas consumption. The curbed energy supply has seeded the recession fear among the market players. The gyrations in the upstream energy value chain provoked manufacturing cost hikes, offsetting the buying sentiments from the terminal sector. In addition, the quotations for R-PP-Natural Pellets have also declined by nearly 1.5% from last month's prices. The profit margins of the recycling firms have contracted due to stable offtakes from the downstream packaging sector. Similarly, the R-LLDPE-Translucent Pellets prices have also decreased by 33 USD per ton in the third week of July compared to the first week's costs on a FOB basis.
As per ChemAnalyst, the dwindling energy costs and global recession fears will significantly impact the price value of Recycled Plastics in recent terms. The bearish demand from the downstream packaging sector amid weak market fundamentals will pressurize the price discussions of Recycled Plastics in the forthcoming weeks.