Paper sector blighted by low demand

A lack of demand globally, principally because of low consumption of finished products and therefore weakened demand for packaging material, has been the main feature of the recovered paper market, according to BIR.

The international recycling organisation’s latest Mirror reports that ecomonic decline, high inflation rates and the war in Ukraine are all likely to have contributed to this reduced demand for finished products. Fortunately, it notes, freight rates to Asia have dropped significantly so the market, although weak, has retained some life. 

According to Francisco Donoso, president of BIR’s paper division, ‘Prices have been reduced during recent months despite weak supply and low stock levels in collectors’ and paper mills’ yards. In Europe, OCC and white grade prices have dropped around EUR 20 per tonne since May whereas the deinking grades have remained relatively stable, albeit at low levels.

‘In the USA, domestic OCC prices climbed slightly in some regions at the beginning of July, but all other grades continued to fall.’

Different in Asia

Donoso says the trend seems to be changing currently in Asia with hikes of up to US$ 15 per tonne in India and of US$ 5-10 in other countries. ‘The reason for this could be low production levels during recent months and weak local collection volumes while paper mills were trying to reduce stock levels in a downward-trending market. Mills are now trying to replenish their stocks amid a low collection scenario, and so prices are moving slowly upwards.’

The Mirror notes that China has sought low volumes of recycled pulp from other Asian countries owing to lower demand globally for consumer goods and the consequent packaging. ‘Low demand for recycled pulp in China means the same for recovered paper in other Asian countries, as that recovered paper is often used to produce recycled pulp for China.’

Slow US generation

US representative Myles Cohen adds: ‘US recovered paper generation remains slow on virtually all markets across the country. Even though paper mill capacity utilisation is still a little sluggish, prices for recovered fibre are ticking up domestically.

‘Recovered paper sellers are having no problem getting orders from both domestic and export buyers; this is particularly true for the major bulk grades of OCC and mixed paper.’

Cohen suggests that the limited upward movement on price offers optimism for the future. ‘Maybe we can finally say that there is light at the end of the tunnel and that some good times lie ahead,’ he concludes.