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External factors cast clouds over trade

Soaring energy costs, climbing inflation, economic slowdown and new duties are headaches for mills and sellers alike.

The prognosis for the US in recent reports has been consistent: its economy is sputtering due to high inflation, high fuel prices, low consumer confidence and other economic issues. That prompted predictions of slower retail sales and a domino effect to manufacturers.

Lower manufacturer orders would result in slower corrugated sales and paper mill slowdowns causing downward pressure on recovered paper prices.

Now it is happening. Bulk grade (mainly OCC and mixed Paper) demand and therefore pricing have fallen sharply – ‘collapsed’ is probably too strong a word while ‘softening’ doesn’t do the change justice.

Mills are full of recovered fibre inventories and are in the driver’s seat, demanding prices 25-50% less than they were paying a few months ago. This is a major blow to the sellers who must move their tonnes of fibre. But it almost doesn’t matter what price the sellers are getting because they simply have no room to store the huge backup of OCC and mixed paper that exists in MRF inventories. 

To exacerbate this situation, there is a similar lack of demand in international export markets. The Indian, Mexican, and southeast Asian markets are slowing significantly which doesn’t bode well for the 35-40% of USA recovered fibre collections that are exported. For many sellers, it’s a double whammy of soft domestic and export markets.

On the bright side, high grades such as sorted office paper and pulp substitutes show decent demand, for now at least, and prices remain high and in some markets are increasing. But high grades don’t ‘move the needle’ by themselves.  


In Europe, many factors are in the mix, not least the crippling increases in energy costs and inflation. Processors have been desperate to get the price of raw materials down to offset increased costs and to a degree have been successful with brown packaging grades down by about a third from their peak.

However, this is not the catastrophe many collectors predicted because there is not enough material to go round. Global demand for recycled fibre is still growing but there is not enough material to satiate all global markets and it may be that the market has bottomed.

We are seeing some small orders for OCC trickling through in the UK at roughly the same price levels we saw in August. It’s a strange market for mixed papers, where the price would appear to be approximately £35 – £40 per tonne less than OCC but with virtually no orders.

Elsewhere, we appear to have reached the peak for the middle grades, with News and PAMs, SOW and multi grade all softening very slightly, although continued competition and robust pricing is anticipated.

Read the full market analysis in our latest issue >>

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