Attached is your PO for deliveries of recyclables during October2020.
This month, the overall market for recyclables improved slightly over the previous month. This improvement is due to pricing increases in mix paper and some plastic grades. Metals are down marginally.
There were modest improvements in both domestic and export mix paper. The increase in the mix paper market is due to continued strength of the packaging market. For a while, several U.S. paper mills have been changing their recipes to use more mix paper. Now, we see similar trends in non-domestic mills to do the same. In fact, this increased demand caused export mix paper prices to increase more than domestic prices.
As we predicted last month, export demand for OCC fell off in October. This demand decrease is directly related to China’s move to zero import of all recycled paper by the end of this year. With travel and port inspection processing times taking four to eight weeks, China will not make any new purchases of recycled paper effective this month. As a result, we saw a notable drop in export OCC pricing.
The demand for post consumer plastics remain strong due to consumer use of plastic bottles. The supply of recycled high density polyethylene natural (HDPE-N) has not kept up with the increased demand. So, HDPE-N was responsible for the increase in recyclables. Additionally, several U.S. states are passing legislation requiring an increase in the percentage of post consumer resin (PCR) in bottles. For example, California recently passed laws which sets a phased-in timeline of when companies must meet minimum content standards, ultimately achieving 50 percent recycled content—15% by 2022, 25% by 2025, and 50% by 2030. As other states follow this trend, we expect recycled plastic container demand to provide upward pressure on pricing.
COVID-19 caused an increase demand for PET bottles (water and soft drinks). As a result, you would think that pricing for recycled PET containers would rise. However, these recycled PET containers are not used to make new bottles. Instead, they go into secondary markets like carpets, fabric, and plastic lumber. The result is recycled PET pricing has remained flat for several months.
In the midst of these challenging times, we will be constantly watching these developments and will always strive to obtain the best pricing available. 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.