US Market Update & Focus on Scrap Exports to Asia
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US Market Update & Focus on Scrap Exports
to Asia
Kathy Hall & Xavier CroninPetroChem Wire
June 20, 2014
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About PetroChem Wire• Formed in 2007 in response to growing liquidity in the spot
ethylene monomer market.
• PCW publishes daily spot prices for NGLs, monomers and polymers, connecting the supply chain from energy down to manufacturing.
• In 2010, PCW began publishing the Repro-Regrind Report at the request of companies in those markets.
• PCW prices are used by the NYMEX and ICE as benchmark for monomer & polymer futures contracts.
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Polyethylene Snapshot
The US and Asia continue to be able to ship to South America.
Jan Feb Mar Apr May June$0.60
$0.65
$0.70
$0.75
$0.80
$0.85
N Am (FOB) S Am (CFR) Europe (CFR) Asia (FOB)
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Polypropylene Snapshot
North America is still not a competitive PP market.
Jan Feb Mar Apr May June$0.60
$0.65
$0.70
$0.75
$0.80
$0.85N Am (FOB) S Am (CFR) Europe (CFR) Asia (FOB)
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Asia is still clearly the bargain market.
Polystyrene Snapshot
Jan Feb Mar Apr May June$0.60
$0.70
$0.80
$0.90
$1.00
$1.10
$1.20
N Am Europe Asia
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When PE supply was tight, less repro was available
Prime vs Repro PE
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14$0.40
$0.45
$0.50
$0.55
$0.60
$0.65
$0.70
$0.75
HDPE BM Prime HDPE Frac Melt Black
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Price declines in Prime have not increased Repro supply
Prime vs Repro PP
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14$0.40$0.45$0.50$0.55$0.60$0.65$0.70$0.75$0.80$0.85
HoPP Prime HoPP Repro Black
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Prime vs Repro PS
Prices in Prime have largely led Repro trends
Jan-14 Feb-14 Mar-14 Apr-14 May-14 Jun-14$0.20$0.30$0.40$0.50$0.60$0.70$0.80$0.90$1.00$1.10
GPPS Black GPPS Prime
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Recycled Resins Have Complex Fundamentals
Prime grade markets = simple fundamentals• Supply/Demand• Cost• Global arbitrage
Recycled grade markets also depend on• Post-Consumer supply (and legislation)• Retail demand for increased recycled content• Scrap market supply & pricing trends
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• For decades, US scrap resins sellers have relied upon China as a destination to send excess scrap supply.
• In 2012, China began changing its attitude about receiving the world’s trash.
Recycled Resins and Scrap Exports
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China’s Green Fence Policy
• October 2012: China’s Ministry of Environmental Protection, the National Development & Reform Commission and the Ministry of Commerce charged with “regulation of scrap plastics recycling pollution prevention.”
China’s Response: Reject the World’s Trash
• China’s Department of the Environment, the General Administration of Customs, and the State Quality Inspection Administration started working together to cut down on illegal solid waste --including scrap plastics--coming into the country.
Source: China Scrap Plastics Association, Plastics Recycling Update, February 2013.
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Laborer takes a nap, at a recycling center in Jiaxing, Zhejiang province, China, November 6, 2011. (Reuters)
2011: A Common Sight in China
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PET 30%HDPE 30%HIPS 10%PS 10%LDPE 5%Other 15%
Comingled Bale Common Makeup
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Five Plastic-Scrap Categories for U.S. Export:PE, PS, PVC, PET, ‘Other’ = MRP/Co-Mingled Bales
US exports of ‘other’ scrap plastic to China is #1 volume of the categories:
2012: 526,898 tons2013: 396,385 tons (down 24.8 %)January-April 2014: 110,941 tons (down 18.8% Y-o-Y)
US export of PE scrap to China is a close #2:2012: 400,171 tons2013: 362,210 tons (down 9.5%)January-April 2014: 119,865 tons (down 5.3% Y-o-Y)
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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US Polystyrene Scrap Exports to China 2012-2014
2012: 13,079 tons2013: 13,418 tons
up 2.5%
January-April 2013: 4,489 tonsJanuary-April 2014: 4,358 tons
down 2.9%
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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US PVC Scrap Exports to China 2012-2014
2012: 151,717 tons2013: 157,057 tons
up 3.4%
January-April 2013: 34,118 tonsJanuary-April 2014: 63,557 tons
up 86%
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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2012: 228,437 tons2013: 196,295 tons
down 14%
January-April 2013: 60,001 tonsJanuary-April 2014: 91,767 tons
up 53%
Virgin PET from China is commonly exported to the US West Coast
US PET Scrap Exports to China 2012-2014
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Finding Alternative Markets for US Scrap Bales
THAILANDMALAYSIAVIETNAM
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THAILAND
‘Other’ US Plastic Scrap Exports to Thailand
• 2012: 101 tons• 2013: 743 tons, up 634%
• January-April 2013: 2 kg (0 tons)• January-April 2014: 1,124 tons
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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MALAYSIA
2012: 9,183 tons2013: 15,066 tons, up 64%
January-April 2013: 4,566 tonsJanuary-April 2014: 4,364 tons, down 4.4%
‘Other’ US Plastic Scrap Exports to Malaysia
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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VIETNAM
2012: 7,853 tons2013: 7,561 tons, down 3.7%
January-April 2013: 1,512 tonsJanuary-April 2014: 3,089 tons, up 104%
‘Other’ US Plastic Scrap Plastic to Vietnam
Source: USA Trade Online (Foreign Trade Division of U.S.Census Bureau), US Commerce Department
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The Fence’s Future
• Will days of cash for bales return?• Inspections of bales now a way of life—before
shipment from the US and on arrival in China.• Every bale has its price— are US sellers willing
to take at a few cents per pound for export rather than pay for incineration or landfilling?
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US Plastic Scrap Supply is Rising
• Commingled Bales• Mixed Rigid Plastic (MRP), several grades• E-Scrap—computers, cell phones, etc.• ABS • PP Super Sacks • Scrap PET is now the world’s most widely recycled
plastic
Other Options: Pay to dispose or sell to Waste-to-Energy plants
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CHINA EXPANDS EFFORTS TO AIR, WATER
MARCH 2014:• China declares 'war' on smog and pollution.
• The central government plans to implement a clean water action plan, strengthen the protection of drinking water sources, prevent and control water pollution in key river basins and carry out land restoration.
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What Does This Mean for US Markets?
STAY TUNED!
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Questions?
Thank you!