Page 31 from: Edition 4 2017

29June | 2017recyclinginternational.com

Freight rates likely to stabilise
after ‘explosion’

T
here are persistent ‘tensions’ with
the paper manufacturing industry
which sees opportunities in the

EU’s Circular Economy package to ‘restrict
exports of recovered paper outside
Europe’. However, this ‘short-term vision’
must be resisted given that the European
market’s ‘structural oversupply’ rendered
healthy export flows necessary to ‘sup-
port collection, increase recycling rates
and maintain competitive prices’, stated
Thomas Braun of Germany’s BVSE sec-
ondary raw materials association in his
role as vice president of the European
Recycling Industries’ Confederation.

International trading issues dominated
the latest BIR paper division meeting in
Hong Kong. An ‘explosion’ in container
rates ‘had nearly dealt a death blow to the
shipping of recovered paper’ from Europe
to Asia, according to outgoing divisional
president Reinhold Schmidt of Recycling
Karla Schmidt, also of Germany. Levels of
US$ 2000 per container have been ‘a real
concern’, he conceded.

No audience with lines

Freight costs to China soared more than
US$ 1000 per container – or US$ 40 a tonne
– in the opening months of 2017, delegates
were told. However, rates are likely to sta-
bilise around US$ 1200-1400 per container
over the coming months, according to BIR
world president Ranjit Baxi of J&H Sales
International.

Even though Europe’s recovered paper
industry shipped huge volumes to Asia,
‘we never have an audience with the ship-
ping lines’ in order to convey the huge
problems created by violent upswings in
freight rates, he pointed out.

Concerns over the impact of China’s
National Sword import regime were also
aired during a panel discussion in Hong
Kong moderated by Recycling Interna-

tional’s chief editor Martijn Reintjes. Baxi
understood China’s rationale of outlawing
imports that are contaminated and unsuit-
able for use as secondary raw materials;
at the same time, he warned that sorting
systems are unable to achieve 100% purity
and so a ‘zero tolerance’ approach by the
Chinese authorities ‘would affect us all’.

‘A notch higher’

Imports of recovered fibre are of con-
tinuing importance to Chinese mills in
order to make up for the generally lower
quality of the coun-
try’s rising domes-
tic collections – but
Europe must still
aim to ‘move its qual-
ity a notch higher’,
Baxi insisted. Brian
Taylor of US-based
Recycling Today
magazine argued
that any tonnes
deflected from China
by National Sword
‘will go somewhere’
although market
problems might
arise in the short
term. And Reinhold
Schmidt insisted:
‘China will still buy
good-quality mate-
rial.’

Baxi also contend-
ed that exporters
should ‘look at other
markets’, although
he recognised that
Japan holds a signifi-
cant advantage in
Asian markets owing
to its shorter delivery
times.

Given the high levels of investment in
Africa, he suggested this continent could
absorb at least a portion of any lost export
volumes in a few years from now.

Consolidation trend

Guest speaker Nobuyuki Shiose of Dai-
wa-Shiryo Co., Ltd provided an overview
of latest developments affecting Japan’s
recovered paper sector in which he point-
ed to a growing preference among domes-
tic paper mills for dealing with those fibre
suppliers able to offer larger tonnages. ‘It
is possible to get higher prices if you can
offer more volume,’ he said. This trend
could lead to consolidation within the
supply sector and create a competitive
environment in which ‘small companies
will be the losers’.

In his European market report, newly-
elected paper division board member Mar-
tin Soth of Sběrné suroviny UH sro in the
Czech Republic highlighted the sharp
recent decline in OCC and mixed paper
prices, which was followed by a recovery
of almost equal proportions.

Industrias Hidráulicas, s.a.
P. I. Malpica, calle E, nº 54-55 – P.O. Box 662 – 50080 ZARAGOZA – Spain
[email protected] – Tel. +34 976 57 34 10* – Fax +34 976 57 23 54

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