BIR Paper World Mirror October 2014

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

Weaker demand from Asia – and most notably China – triggered a steady decline both in imported volumes and prices during the third quarter. OCC prices drifted slightly downwards from their early-quarter levels of US$ 180-plus per tonne whereas mixed papers held at US$ 160-plus, although lower values were tested. Mills in Asia (including China) are generally running with above-average stocks of finished goods, thus narrowing the scope for price increases.

During the fourth quarter, ′some degree of freight increment′ is widely anticipated for long-haul although new vessel capacity scheduled to hit the market during December could temper shipping lines′ price expectations.

The combination of relatively weak Chinese demand and seasonal increases in fibre availability helped ensure export price softness persisted into October, according to feedback from the UK. The country’s export prospects were also dimmed by the strength of the pound following Scotland′s ′′no′′ vote in the independence referendum on September 18. UK mills are ′very well stocked′ with fibre but the scheduled return to production at Smurfit Kappa Snodland in January ′should stimulate the market′. Among the other grades, ′significant price hikes′ have been experienced recently for SOW in response to Chinese demand for white top production.

In Germany, meanwhile, the Palm plant at Wörth suffered an unscheduled shutdown while some other manufacturers have confirmed significant production breaks before the end of the year. The unexpected production stop at Palm resulted in higher inventory levels in the east of France whereas other parts of the country experienced shortages of material and thus slight price pressure. Also in France, sustained demand and increasing prices were witnessed in the third quarter for sorted coloured office papers and multigrade.

And during the third quarter in Turkey, Kartonsan closed a mill for two months for maintenance and to increase capacity, thereby dampening overall demand; by late September, however, fibre orders improved and prices climbed 10%.

Elsewhere, collection volumes have slid 2.5% in the Czech Republic and no stocks are being built as a result. Fibre exports have increased by 2.5% whereas domestic consumption of recovered paper has dropped 9% despite a small increase in overall paper production.

In northern Europe, the third quarter of the year in Finland was described as ′amazingly flat and stable′, with collection tracing its traditional downward seasonal curve at a time of steady demand from paper and board mills, which implemented only short stoppages for maintenance. Good demand for OCC was also reported from Sweden where growth in collection volumes helped to offset the impact of increased exports to Poland and Germany. Domestic mills′ demand for the news grades was ′strong′ during the summer months.

Among the Mediterranean countries, buyers in Spain ′surprised′ the market recently with a Euro 10 per tonne price drop on all brown grades, prompting exporters to trim their prices too. During the summer months, the reduction in domestic recovered paper collections in Italy extended from the graphics sector to packaging materials, and was regarded as a symptom of ′the generally negative economic trend′ in the country. Italy′s fibre exports have been lower than in the same period last year as a result mainly of ′reduced demand coming from China′.

In addition, unusually high rainfall in the summer months increased moisture levels in the material and rendered it less suitable for export to destinations such as China. China is the outlet for more than two-thirds of the recovered fibre shipped from the USA, and yet deliveries of corrugated and pulp substitutes slid, respectively, 5% and 24% in the opening seven months of this year, although there was an increase in Chinese demand for US mixed paper, high-grade deinking and newsprint.

US exports to India increased more than 12% in January-July this year to more than 1 million tons, with higher tonnages noted for mixed paper, high-grade deinking and corrugated.

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