Page 46 from: December 2014
Paper
46 December 2014
M A R K E T A N A L Y S I S
Five operations impacted by SKG rationalisation
Closed: December 2 2014
Pre-Christmas market lacking
some ‘ho-ho-ho’
‘This year, it seems that business has stopped
earlier than in previous years,’ a leading recovered
paper specialist has lamented to Recycling
International. Few consumers appear anxious
to secure significant tonnage as 2014 draws
to a close, including some of those who had
been active virtually all year round.
Europe
Fuel surcharges
Healthy volumes of recovered paper
are entering merchant processors’
facilities, as is often the case at this
time of year. That said, OCC stocks are
not very high in Europe while incoming
quantities of the middle grades have
been on the low side.
Most European mills kept their prices
stable in November although some oth-
ers pushed for small decreases. Demand
is now slowing slightly but prices are
expected to remain relatively unaltered
for December. For the Far East, demand
has been good from most destinations
but OCC prices have edged lower in
response to an increase in shipping
rates on the back of fuel surcharges.
Orders have also been healthy in
Europe for the deinking grades of
recovered paper. There is also some
demand for Asia, albeit at slightly lower
prices. Some volumes are going into
India, for where shipping rates have
increased slightly too. As for the middle
grades, demand in Europe is very good
across most of the range and prices
have been stable; in India and other
Asian destinations too, there has been
an improvement in demand for such
qualities – but at slightly lower price
levels. And regarding the higher grades,
there is not much material available
but prices have tended to be stable
despite the backdrop of good demand.
North America
Purchasers relatively inactive
Paper markets are sighing ‘ho-hum’
instead of saying ‘ho-ho-ho’ as the year
comes to a close for generators and
consumers. Internal and external factors
are contributing to generally flat condi-
tions, although there are a few positives
that may create the odd bright spot.
Chinese buyers are waiting on 2015
import licences before making any
major new buys. Any material bought
and shipped now will take around four
weeks to arrive, so that’s another reason
for purchasers to be relatively inactive.
Adding to the mix is the on-going long-
shoreman labour dispute along the US
West Coast; steamship lines have
closed some docks, and ships with
goods destined for unloading have
been idling a few miles offshore. At the
time of writing, the situation has not
yet forced material to the East Coast
‘but it is costing people a lot of money’,
says one paper trader. ‘There are not a
lot of other options for people on the
West Coast.’
Domestic mills are full, but stable mar-
kets mean the slow movements have
not yet caused any major disruption.
And although the quality is not as good
as US fibre, Asian mills have the option
of buying from Europe and taking
advantage of the Euro’s weakness in
relation to the US dollar.
Domestically, lower petrol prices may
spur consumer buying throughout the
holidays, which could increase corru-
gated generation and also demand for
boxes. Additionally, with Christmas Day
and New Year’s Day both falling on a
Thursday and thereby creating back-to-
back short production weeks, mills may
Smurfit Kappa Group (SKG), a leading
producer of paper-based packaging,
confirmed a rationalisation/closure
programme in early November ‘as
part of its ongoing focus on control-
ling operating costs and improving
operational efficiency’.
SKG’s ceo Gary McGann noted in its
third quarter financial package: ‘The
group has commenced a process of
engagement with its works councils
and trade unions regarding the ratio-
nalisation or closure of four corrugated
facilities and a recycled containerboard
mill in Europe.’ The operations involved
are the 80 000-tonne Viersen recycled
containerboard mill in Germany and
four converting plants: Ponts et Mara-
is in France; Nybro in Sweden; and
Osnabrück and Hamburg in Germany.
The closure of a converting plant in
Italy had already taken place recently,
he added. These moves will incur an
estimated total charge of Euro 50
million in 2014, Euro 15 million of
which has been included in the third
quarter results with the balance
expected in the fourth quarter.
McGann also made clear that, follow-
ing a period of debt pay-down, the
group is ‘substantially better posi-
tioned today than at any other point
in its recent history’.
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