Page 44 from: January / February 2015

Paper

44 January/February 2015

M A R K E T A N A L Y S I S

Ports in a storm

The long-standing labour dispute affecting
US West Coast ports has continued to put
a squeeze on recovered paper export
activity. However, lacklustre demand
from Chinese mills and a relatively
strong US dollar have also been major
influences on flows between the two
countries. In general, merchants in
Europe have been reporting only
limited movements in fibre prices.

Closed: January 20 2015

Europe
Relatively stable conditions
Merchant processors are reporting that
good volumes of the lower grades of
recovered paper have been flowing
into their facilities, as would normally
be expected at this time of year.
With demand quite healthy, most Euro-
pean mills kept their prices stable in
December although some did make
attempts to push values lower. For
January too, most prices have remained
static against a backdrop of good
demand. As has been noted for some
time, OCC stocks are not very high in
Europe.
Towards the end of last year, some
European mills had built stock in
expectation of bad weather conditions

or lack of transport options during the
holidays. In January, therefore, they
have ordered less in order to return
their inventories to more normal levels.
For shipments from Europe to the Far
East, meanwhile, prices for the OCC
grades have stabilised too owing to the
impact of shipping freights and the US
dollar exchange rate. Order levels are
widely described as reasonable for
most Far East destinations.
Incoming deinking volumes are also
described as good and demand has
been reasonable within Europe. Orders
from Asia have also been apparent at
slightly lower prices, with some volumes
heading to India for where shipping
rates have increased slightly since our
previous report. Some of the larger

European mills implemented produc-
tion stoppages in December in response
to poor order files for newsprint and
magazine paper. The difficult market
conditions have been reflected in fur-
ther adjustment of production capaci-
ties; this quarter, for example, UPM is
scheduled to be stopping two magazine
paper machines in Finland with an
annual capacity of 460 000 tons.
European demand is strong for most of
the middle grades of recovered paper
and prices have tended to stabilise. In
India and other Asian countries too,
demand has improved – albeit at slight-
ly lower price points. As for the higher
grades, prices are stable and demand is
healthy for the limited supply available.

North America
One-two punch
Labour disputes at a number of US
West Coast ports and the approach of
Chinese New Year have combined to
land a one-two punch on shipments to
Asia, with export tonnage expected to
move slowly until possibly the end of
February. Domestic corrugated mills,
however, are taking advantage of chal-
lenging export markets as they are
placing healthy orders in anticipation
of a potential demand upswing in the

spring. Buying is strong for Interna-
tional Paper’s large OCC-consuming
mill at Valiant in Oklahoma, along with
the OCC-consuming mill operated by
PCA at DeRidder in Louisiana.
To some sellers, the state of play on the
West Coast is simply a reflection of mar-
ket conditions in China. ‘If China were
short of fibre, the labour situation would
be cleared up,’ one export seller has said.
And a broker has added: ‘The dock slow-
down is hurting but the mills do not need
the material anyway. If China were hot,
this thing may have been over with.’
The Chinese New Year begins on Febru-
ary 19 and many mills in China will be
shutting down for a few days prior to
and after that date. High inventories and
a strong US dollar are key drivers for the
shutdowns. And with a four- to six-week
travel time required for container ship-
ments from the US West Coast to China,
buyers are reluctant to ‘put freight on
the water’ when markets are lacklustre.
News and mixed paper are also display-
ing some weakness. With the quality of
news decreasing, and insulators and
moulded pulp mills the only consistent
buyers of this grade, much of the news
remains unsorted in mixed paper. Prices
for mixed ‘are about as low as they can
go’, one consumer has said.

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