With all agency published data to hand showing that Plastic supply in reasonable good health it has been concerning to see Plastic evidence note values increasing considerably in the last few months. At this stage of the year the market is currently showing a surplus supply of around 5%. This figure takes into account the carry in tonnage from Q4 2016 and a small surplus from Q1 2017.
Early concerns had been raised by export companies about the viability of exporting material due to substantial increases in shipping costs. Although prices have now settled most exporters are still reporting higher costs on previous years meaning that trading margins are being eroded. In addition to this the Chinese government has started to cast a watchful eye over waste material imports via the introduction of a new initiative called ‘National Sword’. This follows on from previous initiatives namely ‘Green Fence’ which was aimed at targeting poor quality import materials.
It would appear that it is these concerns which are placing considerably upward pressure on evidence note costs and not the current facts to hand. While higher costs are never appreciated in most cases the spike in prices can incentivise supply growth which when occurring in the earlier part of the year should result in prices stabilising as we move forward.
In a couple of weeks we are due to see confirmation of the supply figures, covering the period April – June, and it is hoped that these will confirm that despite market sentiment supply is remaining robust.
- Ian Andrews