BIR Paper World Mirror September 2015

Global – OCC prices into China continued to weaken during this year’€™s third quarter – from US$ 180-plus per tonne at its outset to nearer US$ 165-plus by its close. Meanwhile, mixed paper values were declining from US$ 140-plus per tonne to US$ 130-plus. Demand from other leading Asian importers India, Indonesia and Vietnam continued at levels similar to those of the second quarter although at slightly lower price points.

With mills in Indonesia facing overcapacity problems similar to those in China, many stopped their imports of recovered paper in the third quarter as some reduced or even halted production owing to the impact of currency movements on their ability to finance their operations.

For those which continued to produce, there has been sufficient recovered fibre available on the local market at more attractive prices. Although a number of foreign paper mill operators have signalled their intention to build new paper production capacity in Vietnam, the quality, cost and availability of recovered paper imports are proving to be an enduring problem for the country’s existing mills.

‘This has even resulted in an intensification of quality controls by customs officials at ports, such that clearing cargoes takes a long time and leads to major congestion,’ it is noted. Currency has also been a market factor in Turkey as the depreciation of its lira and the increasing cost of imports have enabled domestic mills ‘to sell their stocks more easily and to increase finished product prices’.

Local demand for recovered paper has been increased by Modern Karton’s new liner machine and by Kartonsan working at full capacity.

In Western Europe, the market is described as ‘a good vintage’ in France as sales prices have been consistent and higher than last year. The OCC order file ‘has been strong for several months’ while demand for the high grades has been so acute that ‘the market is clearly facing a lack of material’.

In Germany, however, fibre prices have been subject to regional variations, with the east of the country reporting some reductions in response to well-stocked warehouses. During the course of September, it was reported that consumers were intensifying their quality controls.

Quality is still ‘top of the agenda’ in the UK for the brown/bulk grades, with some ‘over-zealous’ regulation – ‘particularly in Scotland‘ – resulting in significant nervousness among exporters. For the fourth quarter, it is predicted that slightly-reduced Chinese demand may be compensated by increased domestic orders ‘as the refitted Smurfit Kappa mill at Snodland ramps up production’.

Quality is also key among the deink graphic grades, with ‘cherry-picking’ in evidence at a domestic level in the UK. Further south in Europe, fibre prices in Italy have been competitive with levels for exports to nearby EU countries while prices for shipments to the Far East have been weakening.

Indeed, according to feedback from Spain, China’s ‘soft’ demand for bulk grades is perhaps to blame for the ‘highly conservative behaviour of international traders who have significantly reduced purchase volumes, their number of suppliers, and market prices’.

In northern Europe, paper and board mill demand for all the main grades was ‘very good’ in Finland over the course of the summer but imports of OCC were quite small as the market has remained generally well-balanced. Under the country’s new Waste Act, board packaging producers will have full responsibility for fibre-based packages collected from consumers from the beginning of 2016. The law has meant changes in collection practices and also increased costs for producers.

In Sweden, meanwhile, Holmen Paper has stopped using recovered fibre in its production at the Braviken mill. Latest market statistics for the Czech Republic have confirmed a 20% year-on-year increase in both collections and consumption of recovered paper.

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