Attached is your PO for deliveries of recyclables during March 2020.
The overall outcome of market pricing for recyclables in Marchchanged little over the past month. However, there was some substantial changes in individual grades. There was a modest increase in OCC pricing,a small reduction in MIX pricing, and significant drops in some plastics grades.
This month, most MRFs are experiencing an overall small reduction in recyclables volume. Yet, consuming domestic mills are not substantially reducing the amount of OCC required for their production. Coupled with new customers inquiries for OCC, this domestic demand continues to generate more needs than we have material to supply.
COVID-19 has begun to present significant challenges to transporting our recycled products. COVID-19 has limited the ability of China and other Southeast Asian countries to unload vessels.Additionally, moreofour export countries have announced higher quality demands and meticulous inspection processes which further slow vessel movement. Korea recently announced such an inspection process and other countries are considering similar requirements. The COVID-19 effect and higher quality demands result in a shortage of containers returning to the Pacific Northwest. While demand for recyclables remainssteady, it is challenging to find containers for our current export markets.
The spread of COVID-19 beyond Southeast Asia continues to be a wildcard that may further disrupt the recycling market. It is difficult to determine what the end effect will be. Many people are traveling less. And, consumer online purchases appear to be on the rise. This shopping practice may generate a near-term increase in demand for recycled products. But, will COVID-19 negatively affect supply chain ability to deliver these purchased products and to collect the resulting residential mix? Time will tell.
We remain optimistic that market demand will increase and that recyclables pricing will improve once the impact of COVID-19 is fully understood. In the meantime, it is possible that the market worsens before it gets better. Rest assured that Pioneer will be closely watching these developments and the recycling markets. We will continuously strive to obtain the best pricing available in today’s marketplace.
It is our pleasure to work with you to recycle material and to protect our environment. We appreciate you and thank you for your business.