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Recycling markets & their impact on the waste management sector

Recycling markets & their impact on the waste management sector. Andrew Burridge – Materials Sales Manager. Recovered fibre market overview. Increasing production in CEPI countries providing demand: - Newsprint up 5% in 2010 compared to 2009.

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Recycling markets & their impact on the waste management sector

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  1. Recycling markets & their impact on the waste management sector Andrew Burridge – Materials Sales Manager

  2. Recovered fibre market overview • Increasing production in CEPI countries providing demand: - Newsprint up 5% in 2010 compared to 2009. - Packaging grades up 9% in 2010 compared to 2009. • New board capacity in Germany and Eastern Europe during 2010 & new board capacity in the UK at the end of 2011 to the start of 2012. • Strong demand from China for cardboard & mixed grades. • Prices for key end products such as newsprint and testliner moving up since beginning of the year.

  3. Recovered fibre prices £/tonne Source: letsrecycle.com

  4. Recovered plastics market overview • Key demand drivers - Packer filler interest in food grade R-PET and R-HDPE. - Large increase in capacity for PET recycling in Europe. - General growth in Chinese domestic market. • Key price drivers 2010 / 2011: - Crude oil. - Virgin plastics. - Cotton.

  5. Recovered plastics overview • Increasingly strong & competitive European markets. • An increased interest in mixed plastics recycling in various European countries. Also agricultural plastics.

  6. Recovered plastics prices £/tonne

  7. Virgin polymer prices €/tonne Source: European Plastics News

  8. Crude oil prices Source: indexmundi.com

  9. Steel market overview • Demand factors: - Manufacturing in Northern European countries (e.g. German automotive industry). - Construction sector still fairly weak. - Not a uniform recovery in west. • World crude steel production up 15% in 2010 from 2009. 7% fall 2008 to 2009. (source: World steel association) • Strongest growth 2009 to 2010 is US (38.5%) followed by Germany (34.1%) and Japan (25.2%). (source: World steel association)

  10. Steel market overview • Steel consumption predicted to increase 4% in 2011 and 2012. (Eurofer) • Pricing factors: - Immediate supply / demand dynamics playing an important role. - Supply issues with coking coal at beginning of the year affected markets.

  11. Ferrous scrap prices (Europe) €/tonne

  12. Aluminium market overview • General trend of increasing prices since beginning of 2009. • Strong increase in price increases entering 2011. • Market currently driven by a strong growth in demand from developing economies (BRIC). Chinese automotive sector particularly important. • Start of recovery in northern Europe also adding to demand. • Market sensitive to supply restraints.

  13. Markets (general) –medium & longer term factors • European market –Speed of recovery in sectors such as manufacturing & construction. –Consumer confidence and consumption. –Technology and innovation in supply chain. –New and existing legislation (WFD, WEEE, Batteries, country specific bans / targets). • Asian markets: –Domestic growth rates. –Waste infrastructure & legislation.

  14. Why is understanding secondary material markets important? • Understanding demand: –Security of demand: volumes now being collected are significant and increasing year on year often driven by legislation. –Consistency of demand, e.g. reliance on one sector. • Financial: –Their value is increasingly significant. –Materials income factored into business decisions. –Long term pricing contracts.

  15. Understanding the supply chain • Understanding the supply chain and its environment helps us: –identify factors that when combined with a downturn in prices may cause a crash. –assess risk. –make informed decisions during a crisis. –understand when the market might start to recover. • The dynamics of a supply chain and the factors affecting it are likely to vary by material type, grade and geographic location.

  16. Secondary raw materials as commodities • Prices are affected by supply and demand dynamics and external factors. • The globalisation of the recycling industry has added an additional layer of complexity: –shipping times. –understanding the market dynamics & drivers in a variety of countries. • Even where material is recycled locally demand & price will be influenced by global factors.

  17. Looking for indicators of future price movements (cardboard)

  18. Comments on indicators • Some factors have a more direct impact than others. • Some factors ‘influence’ and others may have a more direct relationship. • Short term supply & demand play an important role. • Less tangible factors such as market sentiment have an impact (particularly post 2008). • ‘Leading’ indicators have a more immediate impact where shipping times are long.

  19. Material quality • In a low demand market higher quality material will find a home first • Prices for lower quality grades tend to fall further and recover more slowly: –Lower quality plastic grades: 25-35% of 2008 peak in Jan 2009. –Higher quality plastic grades: 40-50% of 2008 peak in Jan 2009. • Material consistency counts. • Higher quality material can be used by all markets.

  20. Summary • Many markets currently seeing relatively high prices in Q1 & 2 2011. • Prices often strongly linked to key commodities as well as demand dynamics in the immediate supply chain. • Everyone in the supply chain is affected by the markets both positively and negatively.

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