Yearly average R-PP post-industrial bale prices at record low in 2024 to date

LONDON (ICIS)–Average yearly recycled polypropylene (R-PP) post-industrial black bale values in 2024 to date are at their lowest level on record on the back of the impact of the cost-of-living crisis on key end-use sectors such as construction and horticulture.

May monthly average post-industrial black bale prices in 2024 reached the lowest level seen in May since 2020.

Sentiment beyond Q2 remains weak, with players increasingly concerned in the past few weeks over substitution risk to virgin, macroeconomic weakness (particularly in the construction sector), the end of the peak horticulture season, and the approach of the summer holiday period.

The yearly average price for post-industrial black bales is at its lowest on record to date in 2024.

Year	Average price (€/tonne)
2020	286
2021	518
2022	555
2023	302
2024 (to date)	280

ICIS began pricing R-PP post-industrial bales in November 2019.

Prices in the first half of the year for post-industrial grades are typically higher than in the second half of the year.

Historically, post-industrial bale values are typically highest in the first half of the year (due to the peak horticulture, outdoor furniture and construction seasons) through to July, before typically hitting their lowest point for the year in Q3, before rebounding in Q4 (although remaining below the average for the year). This is clearly shown in the below seasonality chart.

The seasonality index shows which months in the year prices are typically higher than average, and which months they are typically lower than average, and to what extent. It reveals the underlying trading patterns in markets beyond short-term supply-and-demand conditions.

The average price is represented by 1.00. When the index is below 1.00 it means that prices are typically below average in that month, and when above 1.00 it means prices are typically above average in that month, with the distance from 1.00 showing the extent.

It is calculated by first dividing each monthly price by the average price for that year to give an index value. Then, all of those monthly index values are averaged to give a single value for each month. Those averaged monthly values are used to plot the seasonality index. The longer a price series has been running, the more accurate the seasonality index.

The lull in Q3 is typically due to the impact of downstream convertor closures.

During July and August, downstream convertors typically shut for several weeks of routine maintenance. Typically southern Europe shuts earlier than northern Europe, with the majority of northern Europe shutdowns occurring in August.

There has been repeated talk in the past few weeks of German convertors shutting as early as late June this year due to negative macroeconomic conditions in the country.

Convertor summer shutdowns have a significant impact on bale values, because waste volumes continue to enter the chain, lengthening the market. If shutdowns occur earlier than typical in 2024, this could exacerbate the oversupply.

There remains a wide spread between natural bales and black and mixed-coloured post-industrial bales. Post-industrial bale natural prices have been as high as €700/tonne ex-works NWE in recent weeks.

As with post-industrial bales, black pellet prices are typically at their highest in the first half of the year, and at their lowest in the second half of the year (compared to the average price for the year). This is due to the seasonality of the horticulture and construction sectors, where peak seasons typically take place in the first half of the year when temperatures are higher. This is shown in the below seasonality graph.

Natural post-industrial pellets share a similar seasonal trend, although the peak tends to happen at the start of the year (due to restocking following the year-end) with natural post-industrial material not as exposed to the horticulture sector as black and mixed-coloured material.

Focus article by Mark Victory