In October, PP new material offers experienced a substantial adjustment in the market, which formed a positive guidance for recycled material offers. After the National Day holiday, the new PP spot market was driven by futures to catch up with enthusiastic quotations, and the center of gravity rose significantly. Among them, the first working day after the T30S holiday rose by 625 yuan/ton to 9,400 yuan/ton. The price difference between new and old materials opened quickly, and the price difference after the holiday widened to 1,800-1950 yuan/ton, a record high in the past five years. Driven by this, the mainstream offers of recycled PP white transparent particles quickly followed up, and the first working day after the holiday was raised by RMB 600/ton to RMB 7,600/ton.

After the mid-term, the new material offer fell back from the high level, and the recycled material slowly followed the decline. After entering the middle of the year, the price of new materials will be lowered, and the offer of recycled materials will continue to be high under the support of tight supply and high cost. However, after entering the second half of the year, the new material has fallen sharply. As of today, the new material offer is down 1,100 yuan/ton from the beginning of the month, and the price difference between the new and old materials has been compressed to less than 1,000 yuan/ton. The high-level offer of recycled materials is unsustainable, and the price is also lowered accordingly. As of today, recycled PP white transparent particles have been reduced to 7,450 yuan/ton, a decrease of 150 yuan/ton from the beginning of the month.

The price difference at the end of the month has narrowed sharply, and there is no market in the recycling market

At the end of the month, the price difference between new and old PP materials has narrowed sharply, and the decline of new materials has not stopped. Recycled polypropylene and new materials are substitutes for each other, and the prices of the two have a strong linkage. Under normal circumstances, the reasonable price difference between new and old PP materials is 1,000-1,500 yuan/ton, but the current inventory is mostly high-priced raw materials produced in the early stage, and the decline of new materials has not stopped, so the intention of recycling companies is temporarily stable and cautiously wait and see. At the end of this month, the price difference narrowed to less than 1,000 yuan/ton. Under this circumstance, the product factory greatly reduced the purchase of recycled materials, resulting in almost sluggish transactions in the recycled PP market.

The price difference between new and old materials is lagging, and short-term renewable PP offers may continue to fall

The price linkage characteristics of PP new and used materials are mainly manifested in four aspects. First, under normal market conditions, the price adjustment of recycled PP will lag behind new materials by 2-3 weeks, which means that after 2-3 weeks of continuous price increases or declines in new materials, recycled PP will start price adjustments. Second, when the new material fluctuates greatly, the performance of the recycled material is more cautious. This is reflected in the fact that the lagging rise or fall is much smaller than that of the new material, which leads to a widening of the price difference. Third, when the new material maintains a stable and small continuous rise or fall, the enthusiasm of the recycled material to follow the rise or fall is higher. Fourth, under normal circumstances, the enthusiasm for following ups is obviously higher than the enthusiasm for following downs, which is reflected in the rapid response speed of rising, and the slower transmission speed under the support of cost when falling.

It can be seen from the linkage characteristics of PP’s price difference between new and old materials that recycled materials have a slower transmission rate during the downward phase of new materials. At present, the price difference between new and old materials is within 1,000 yuan/ton, and recycled PP has almost no low price advantage, so there are still downside expectations in the short term. Or after the new material stops falling and stabilizes, the pressure will be further transmitted upwards, and the pellet offer will be lowered after purchasing upstream raw materials at a lower price. In view of the short-term supply shortage in various links, the price decline will be less than that of new materials. It is expected to be 300-400 yuan/ton, and recycled PP white transparent particles will be lowered to 7050-7150 yuan/ton.