MRW Article : 2018 Q1 Reprocessing & Export Supply Figure Analysis.
Now that the first set of PRN supply figures have been released we take a look at how we are performing at the first reporting point of the year.
The stand out figure was in Paper where it was reported for the quarter that we are 140KT behind estimated demand. Although not disastrous, due to the healthy carry in figure, it is certainly concerning to see this market so far behind at this stage given most producers expect this market to fill general recycling obligations this year. General recycling obligations are allocated to producers with the option to purchase any of the material recovery notes in the market. Traditionally this obligation has been filled by the Paper and Wood markets however with the total Wood supply required to meet its material specific demand this year little will be available for this obligation.
Combined, the Glass market has produced close to target with Remelt once again making up the Aggregate shortfall. There is still work to be done with growth of 40KT next quarter required if prices are to remain at current levels. One would expect to see some upward pressure on prices this quarter with the note values aligning due to the Aggregate undersupply position.
In Aluminium, many heads continue to be scratched due to the failure of one seller to release tonnage of 8.5KT in Q4 last year. With the carry in figure falling by 75% on the previous year and a lower than expected Q1 figure buyers may be ruing that sellers decision this year. While prices will remain stable next quarter, continuing the current supply trend will see upward price pressure later in the year.
Steel supply was down on Q1 2017 but was in line with estimated demand. It’s surprising to see market note values trading at the lower end of the scale given the tightness in supply. Based on this recent return I would expect some upward price pressure in the coming months.
Plastic provided a scare for sellers when initial figures reported a supply of 322KT, 55KT above requirement, but this was quickly revised down to leaving the market close to balance. A healthy carry in figure for Plastic should insure settled prices going forward this quarter.
The record breaking target increase for Wood this year has already resulted in prices opening at record levels as buyers looked to secure tonnage early. The latest supply figures showed the market was undersupplied and that increases would be required going forward to alleviate buyers concerns. On current projections this market will provide no excess tonnage for general recycling obligations placing further pressure on other markets to increase supply.
The EFW sector reported another healthy quarterly supply with little concern going forward and prices remaining at the bottom end of the scale.
The next set of quarterly figures are due to be released in July (23rd) and we will need to see significant improvements in Paper and Wood to avert further concerns going forward. All other material evidence note markets require some growth but at this stage look achievable.