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Paper: little sign of market slowdown

Demand for recovered paper which drove production and exports in 2021 has continued into the New Year.

The export of recovered paper from the EU to several countries in the Far East has increased sharply in recent weeks. This strong demand has also pushed up processing with some insiders already cautiously talking about record levels. To some extent, this development has taken the European paper industry by surprise. It is reluctantly gearing up to match demand but whether that will be enough remains to be seen. European demand for scrap paper can certainly be called healthy.

The export growth is partly due to the low stocks of recovered paper at several mills in Asia. In addition, there is still a major shortage of containers on the west coast of the US to ship scrap paper to customers in Asia. As a result, large volumes are being stored on the west coast. Container shortage is less acute on the east coast of America and in Europe. ‘The situation for sea transport with containers is significantly better in the Atlantic than in the Pacific,’ reports one trader.

After a small dip in January, European prices for recovered paper sub-types are back at the level of December 2021. Mid-range and better grades are doing well with rising indices. That is certainly exceptional for the medium varieties in February. The supply side is lower than usual, probably caused by less collection due to coronavirus and lockdowns.

US recycling booms

In the US, trade in all recyclable materials traded in the US was up for the 12 months ending January 2022, with paper leading the way, up 60.5%, according to the US Bureau of Labor Statistics. However, In January 2022, recyclable paper decreased by 6.6%, its third consecutive monthly decline. 

The US International Trade Commission reported in February that exports of recyclable paper from the US increased 12.9% to 16.7 million tonnes, reversing two consecutive years of negative growth. The value of these 2021 exports increased 38%, also reversing two consecutive negative years.

The top 10 countries receiving US recyclable paper exports for 2021 accounted for 89.1% of exports. Their share continues to fall from the six-year high of 96.2% in 2016, indicating how exporters have been finding new overseas markets for recyclable paper.

India has replaced China as the top country receiving these paper exports – 3.95 million tonnes, 89% higher than 2020. Mexico was second, receiving 2.26 million tonnes in 2021, up 65.9%. Bleached chemical pulp paper showed the largest percentage increase at 58.4% but OCC/unbleached kraft remains the number one exported commodity with 10.5 million tonnes in 2021, 16.5% higher than 2020.

According to data from the American Forest and Paper Association, OCC had a record year and an all-time high in 2021 domestically as US paper mills consumed over 24 million tonnes in 2021. US containerboard mill production increased 5.6% in 2021, hitting a record 40 million tonnes. 

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