LAWR

NEWS ANALYSIS Cheaper oil: Resource man $48 (£31)! That is the amount that US oil prices had dropped to for a barrel of oil, at the time of writing this article, for the first time since 2009. What impact is this having on the resource management industry? Liz Gyekye finds out. rom 2010 until mid- 2014, world oil prices had been fairly stable, at around $110 a bar- rel. However, since the start of this year, oil prices have fallen by more than half since last summer. There are many reasons for this change including US shale gas produc- tion and weak consumer demand in many countries across the globe. In addi- tion to this, the oil cartel OPEC is deter- mined not to cut production as a way to prop up prices. Hence, supply is bigger than demand. It is obvious how this news is affect- ing the energy sector but what impact is this having on recycling? Is the resource management industry a winner or loser? Supply and demand Paper and metals are less likely to be impacted by falling oil prices than plastics and textiles, which are more reliant upon oil markets. A continued drop in the price of oil is fuelling con- cerns among plastics recyclers over the demand for recyclate and recovered plastic polymers. Cheaper oil prices tend to equal low commodity prices including those for virgin polymer. Subsequently, to remain competitive, some firms who sell recycled polymers lower their prices. CK Group, a provider of plastic regrind (fine particles), is already seeing the impact of volatile oil prices. "Like the oil producers, faced with supply outstripping demand, the CK Group has to be very careful what regrind and scrap plastic we buy and ensure we have mar- kets for onward sale," says commercial director Chris Collier. He adds: "As Europe's leading pro- vider of plastic regrind we do have access to a wider market of buyers, but sellers are lining up with plastic they want us to buy and already supply is not being met by demand and regrind has already started to stockpile in some areas. "This is not to say we have stopped doing business - far from it - but like our end-user customers, we have to be far more alive on price and ensure quality is as expected." He continues to say that the situation is not being helped by the fact that many of the countries that buy recycled plastic are also in recession. "Afraid of having cash tied up in raw material, manufac- turers are no longer willing to buy until they have orders to fulfil. When they do buy they have the pick of what the market has to offer and are able to be specific on quality and still drive down the price." In fact, some firms have reported drops in value of 30% since November last year for their recycled plastics, accord- ing to SITA UK's technical development director Stuart Hayward-Higham. 'No simple correlation' However, he stresses that there is no sim- ple direct correlation between the value of recycled polymer to the oil price. He explains: "Recycled polymers compete in the international market and their value can be influenced by the demand for plastic products; by the relative price of virgin polymer to recycled equivalent; and perceptions or sentiment in the market. 12 Local Authority Waste & Recycling March 2015 F Recycled polymers compete in the international market and their value can be influenced by the demand for plastic products. Cheaper oil: Resource man

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