With the last set of monthly supply figures released this week for the 2017 compliance year we now have some supply evidence to review last year’s performance. These figures are unaudited and are likely to change once they are published but provide some indication on last year’s performance.
The material which dominated most discussions throughout the year was Plastic as stories emerged that the largest export market, China, was to close its doors to UK sourced material. This resulted in early price volatility and prices hit a high of £85.00 per tonne at the midpoint of the year. Dissenting voices highlighted that the published supply figures didn’t back up the problems highlighted in the press and although many buyers were happy to defer purchasing prices held firm at the higher end of the price scale until late into quarter 4. Those stakeholders wishing to counter the supply argument stated that the market needed these strong prices in order to facilitate supply which ultimately is what the system is designed for. One would expect the 2018 compliance year will continue to have issues regarding plastic supply but given that a lot of the ground work to identify and open new markets occurred in 2017 one would hope that average prices are more in line with previous years.
The Paper market has also been effected by the Chinese import ban and although some concerns were raised in Q3, supply has remained at a level to meet this year’s demand and provide a good carry in for 2018. All markets saw supply levels maintained and although prices for Aluminium have spiked in the last few weeks all materials are on target to meet demand.
Looking forward to 2018 we would expect to see challenges and higher prices in the Wood market and to a lesser extent the Glass markets. The wood market is due to see obligations increase by around 70% in real terms and this may lead to a tightening of supply and subsequently higher prices. In Glass, the downturn in Aggregate supply continued throughout 2017 with a surplus in Glass Remelt the only reason we continued to see stable prices. It is projected that we will have to use some 2017 carry in to meet last year’s demand leading to a smaller carry in figure in 2018. While this in itself will not directly lead to increased prices if the trend was to continue this year prices may firm up later in the year.