BIR World Mirror Paper March 2009

Archiv – The following article is based on the latest Paper World Mirror produced by the BIR world recycling body for the benefit of its members.

Having fallen sharply in October and November 2008, international trading of recovered paper staged a marked recovery around the turn of the year. For example, overseas shipment volumes from Europe’s leading exporter – the UK – achieved their second-highest monthly total on record in December last year. However, the prices obtained for this tonnage were below those prevailing prior to the onset of the global economic crisis.BIR | The following article is based on the latest Paper World Mirror produced by the BIR world recycling body for the benefit of its members.

Having fallen sharply in October and November 2008, international trading of recovered paper staged a marked recovery around the turn of the year. For example, overseas shipment volumes from Europe’s leading exporter – the UK – achieved their second-highest monthly total on record in December last year. However, the prices obtained for this tonnage were below those prevailing prior to the onset of the global economic crisis.
In the first quarter of 2009, leading destinations for exporters of recovered fibre were China, India, Indonesia and Thailand on the back of firm demand and favourable freight rates. Europe’s OCC prices improved from their lows of the fourth quarter of 2008 to around US$ 90-95 per tonne by the end of March. Customers in Asia have also been requesting decent quantities of mixed papers, news & pams and the middle grades.
Despite this improvement over recent months, many challenges lie ahead for the recovered paper industry – not least the impact of weakening consumer demand on new paper sales and thus on volumes of recovered paper coming forward for processing. Mill closures, redundancies and short-time working have become commonplace; furthermore, many of the mills still in operation have accumulated high stocks of finished goods.
There is other concerning news for exporters: banks have upped their Letter of Credit charges to make export pricing even more challenging; and the shipping lines introduced freight increases for March, with further hikes likely to follow. Indeed, shipping space may become a problem as many lines have withdrawn capacity on Europe-Asia services owing to a lack of cargo. This is likely to affect availability of space on ships in the second quarter.
Meanwhile, in response to quality problems associated with imports of co-mingled waste, Indonesia has introduced a regulation requiring pre-shipment inspection of fibre imports arriving in the country on or after June 24 this year. India too is understood to be examining ways of controlling recovered fibre imports to ensure quality specifications are met.
Feedback from various European countries confirms a marked decline in volumes of collected material over the first quarter. In Germany, collection containers are being emptied less frequently and some collection points have either closed or adopted short-time working. Domestic prices have trailed those for exported material by, typically, more than Euro 20 per tonne.
Since the start of the economic downturn, volumes of recovered paper coming from printing houses in the Baltic Countries have dropped 25-30%, while supermarket and household collection tonnages have fallen 10%. With low demand from domestic paper mills, Asia has become the main market for the region’s OCC and mixed papers.
In Finland, collection volumes declined around 20% at the beginning of this year but have since started to stabilise nearer 10% below normal levels. Tonnages from printing houses and industrial sources have been worst affected while news & pams and OCC volumes have been less badly hit. Stocks are said to be low both at the mills and in merchants’ yards.
A number of mills in France are said to be planning production stoppages in the next few weeks in response to weak demand across Europe; furthermore, some producers are said to be encountering major cash-flow problems. There has been a substantial reduction in credit insurance at most mills, with insurers demonstrating very little confidence in the sector.
From Italy too comes concern that many mills may not survive the current year, with the months leading up to the summer shuts expected to be the most difficult. Mills in Spain are implementing longer periods of downtime because of a lack of orders and ever-rising reel inventories. Steep drops have been recorded in finished product prices.
Mills’ sales in Turkey have fallen to such a dramatic extent that some have stopped buying recovered paper. With newspaper/magazine circulation and pagination at low levels, collection volumes have declined despite high demand. Furthermore, a reduction in pulp prices has led to weak demand and falling prices for high-quality recovered paper. In the Czech Republic, meanwhile, trade in the deinking grades has been the most rewarding part of the recovered paper business.
During April, further downtime is anticipated at newsprint mills in Sweden given a shortage of orders. Kraftliner mills are expected to take downtime during April and May but the recovered paper industry does not expect any upturn in its OCC stocks during this period of low collection volumes. Swedish consumption of recovered paper increased 2.7% last year to 2.022m tonnes while collection climbed 2% to 1.603m tonnes, imports 3.2% to 700,000 tonnes, and exports 11.2% to 281,000 tonnes thanks mainly to increased overseas shipments of overissue news & magazines and of OCC.
Ending where we began, with the UK, domestic recovered paper demand fell slightly in the first quarter, with some packaging producers taking ’commercial’ downtime in response to lower demand for their products. In other product sectors, fibre orders held up reasonably well. Recovered paper supply has been sufficiently short to deter mills from further price reductions; indeed, some have introduced small increases.