Recycled market: differences from 2020 to 2022

Crude oil market is quite volatile in 2020-2022, to be in negative territory in 2020, but to spike in 2022 since the Russia-Ukraine conflict. Many industries have experienced the volatility, and recycled market also faces some unique and different situations.

Before: worry about the impact of imported recycled chemical fiber

After the solid waste ban, Chinese recycled chemical fiber prices continued to rise, and some capacities were transferred to Southeast Asia and Africa. Chinese plants worried about the imports of recycle chemical fiber to squeeze the Chinese market shares. In 2019, imported HC re-PSF prices were once lower about 1,000yuan/mt than Chinese HC re-PSF.

Now: overseas recycled chemical fiber is sold to Europe and U.S. directly

In 2020, China recycled chemical fiber prices were very low, and overseas recycled chemical fiber was directly sold to Europe and U.S. In 2021-2022, with surging sea freight, selling prices of products in Southeast Asia and Africa were higher to Europe and U.S., especially Africa, by virtue of low sea freight, the selling prices to Europe were more competitive. In May, 2022, prices of HC re-PSF in Africa were $1,500-1,600/mt ex-works, $1,020-1,150/mt in Southeast Asia, while in China, FOB prices were around $1,050/mt.

Before: recycled chemical fiber plants had low feedstock and PET fiber chip in 2020

In Mar 2020, PET fiber chip prices were lower than recycled PET flakes, and recycled chemical fiber plants purchased large quantity of PET fiber chip.

Now: Recycled PET flakes supply is tight, and demand is also flown to sheet plants

PET fiber chip prices have risen to 8,500-8,600yuan/mt. PET flakes with better quality are flown to high value-added use, like 3A-grade white flakes and sheet. Demand of PET flakes for recycled chemical fiber reduces, and supply is tight. Though Shanghai eases the COVID curbs gradually in Jun, the liquidity is still limited overall. PET flakes supply, especially in East China, may remain tight in Jun and Jul.

Before: plants turn to produce from solid re-PSF to HC re-PSF

HC re-PSF profits could reach 1,000yuan/mt at its best, while solid re-PSF profits were around the cost line. In 2020, HC re-PSF profits once reduced to below 500yuan/mt, but solid re-PSF was worse, and quality HTLS close virgin PSF was replaced by virgin PSF. Some plants in Hebei and Jiangsu changed the flexible production line to produce from solid re-PSF to HC re-PSF, or some plants chose to invest new HC re-PSF production lines.

Now: plants turn to produce from HC re-PSF to solid re-PSF

In 2021, solid re-PSF market performed well. Since May, 2022, the outbreak of epidemic in Jiangsu made the virgin PSF hard to sell, and in Jun, driven by higher PX market, the price spread between virgin PSF and solid re-PSF enlarged to 1,500-2,000yuan/mt, or even above 2,000yuan/mt. Plants in Hebei, Jiangsu and Zhejiang have turned to purchase from virgin PSF to solid re-PSF. Despite of large price spread, with the oversupplied situation, both HC virgin PSF and HC re-PSF stepped into losses, and some flexible lines were changed to produce solid re-PSF again.