Page 46 from: December 2013

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46 December 2013

m a r k e t a n a l y s i s

Closed: December 2 2013

Europe’s mills maintain healthy appetite

While much of 2013 has been characterised by concern over
the European economy, the continent has been a source of
strong demand for practically the entire spectrum of
recovered paper grades during the course of recent
months. However, many international traders report more
muted interest from China, partly owing to an early
Chinese New Year. Furthermore, buying interest from
India and Indonesia has remained relatively low in
recent weeks, not least because of currency exchange
considerations.

Europe
Shipping problems
In general, the stuttering flow of
incoming fibre has become a struc-
tural problem for recycling plants, lead-
ing to strong competition on the buy-
ing side and an erosion of margins.
For the lower grades of recovered
paper, the volumes entering merchant
processors’ facilities have been no bet-
ter than satisfactory of late. Most of
Europe’s mills kept their prices stable
in November and the same is expected
to happen in December against a back-
drop of good demand across most of
the continent. There is still not much
OCC available and stocks within
Europe are not high – a fact still widely
attributed to the economic downturn.

As regards shipments of the lower
grades to Asia, prices for OCC have
climbed to a reasonable level following
a period of reluctant demand. How-
ever, problems have been encountered
with shipping owing to a combination
of, among other factors, blank sailings,
the timing of arrival dates in relation to
Chinese New Year, and delays affecting
the renewal of import licences.
There is a wide differential between the
price of good-quality 90/10 OCC and
80/20 OCC, largely said to be the result
of ‘Green Fence’ issues in China; indeed,
a large number of customers in China are
now tending to buy only 90/10 or 100%
OCC. Meanwhile, Indonesia is in the mar-
ket but at lower prices than China; it is
believed stocks in Indonesia must be low

because of the dearth of buying activity
over the past couple of months. The buy-
ing power of customers in both Indonesia
and India has been impaired by the
weakness of their respective currencies
in relation to the US dollar.
Demand for the deinking grades of
recovered fibre has also been healthy
within Europe although most consum-
ers are now understood to be holding
substantial stocks. Some demand for
deinking material has also been evi-
dent from Asia, albeit at prices lower
than those prevailing in Europe.
Europe is also offering strong demand
for the middle grades of recovered
paper, incoming volumes of which have
been reasonable and prices have been
relatively stable. In contrast, orders
from India and from other parts of Asia
have been slow and are pitched gener-
ally at lower price levels.
As for the higher grades of recovered
paper, the combination of a general lack
of material and of good demand has
provided the spur for price increases.

North America
Muted year-end
The year is ending on a somewhat muted
note owing to the combination of mill
downtime, full inventories, an early Chi-

nese New Year and the approaching
festive season in many parts of the
world.
In the US market, corrugated is moving
steadily even though some mills have
implemented stoppages in response to
orders tapering off ahead of the year-
end. Chinese mills are trimming their
orders because of slowing economic
growth and the processing of permit
renewals for the New Year that require
material to arrive before the end of
2013. The early date for the Chinese
New Year will also affect orders
because deliveries are not accepted
during this holiday period.
Higher container rates are also helping
to keep material at the supplier’s door.
Other markets in Asia as well as in
Mexico have built high inventories and
are not seeking additional tonnage at
present.
Markets remain steady for the deinking
grades and for the pulp substitutes.
Downward price pressure on pulp
could yet impact on these markets
although shortages of white ledger are
bolstering demand for this particular
grade.
The first quarter of 2014 could bring a
rebound as generation starts to pick up
and mill inventories begin to contract.

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