Page 53 from: Recycling International January/February issue 2023

PAPER

53recyclinginternational.com | January/February | 2023

CONTRIBUTING TO THE
RECOVERED PAPER
MARKET ANALYSIS:
• Simon Ellin, ceo, IWPP, the

recovered paper trading
division of The Recycling
Association (TRA), UK

• Myles Cohen – Board Member,
VIPA, USA

demand remains robust, European
mills may find themselves short and be
forced into some buying activity.

CHINA AWAKES
Certainly, China has woken after its
long lockdown and there are positive
vibes from the papermaking sector
there. On the one hand, reports of
domestic supplies beginning to take
off again have forced down domestic
prices. On the other hand, China’s
recent announcement of a reduction in
trade tariffs for recycled pulp and fin-
ished goods would appear to be a tacit
acceptance that industry is very short
of fibre to meet increased activity and –
maybe – a strong economy is returning.
Pulling all these signals together, there
are signs that UK, European and global
demand for fibre is slowly coming to
the fore and I expect demand for
brown packaging to be steady and
prices to inch up accordingly.

MONDI TAKES OVER ITALIAN PAPER MILL
UK-based paper and packaging supplier Mondi has completed the acquisi-
tion of the Duino paper mill in Italy from Burgo in a deal worth EUR 40 mil-
lion. The facility, located near Trieste in northeast Italy, operates one paper
machine producing lightweight coated mechanical paper. An investment
of EUR 200 million will convert the machine into a containerboard machine
capable of producing 420 000 tonnes of recycled containerboard per year
from 2025.
The Duino facility is near two ports which Mondi says are ideal for exports
to corrugated solutions plants in central Europe and Turkey and the grow-
ing local Italian market. At the time the deal was proposed in August
2022, Mondi group CEO said: ‘We are excited by this opportunity to
invest in the growth of our packaging business, build on our integrated
platform and broaden our geographic reach.’

the paper. While no MRFs readily
admit it, it would not be unheard of for
MRFs to be sending loose tons directly
to landfill because, as sad as this may
be, disposal is sometimes the most via-
ble economic solution. More of the
same seems likely in the short term but
the tide will turn and demand will
again increase. The only questions are
when and by how much.

EUROPEAN LULL
In Europe, supply and demand enters a
lull after the New Year as mills take
stock and look at looming demand and
the stocks they are holding. All of this
contributed to a very quiet start to the
year. But as the year picks up, small
price movements are being noticed.
Several factors are at play, not least
some stronger demand from India, par-
ticularly in mainland Europe where ship-
ping is cheaper than the UK, as well as a
steady market into South-East Asia.
Several events are looming that will
probably tighten the UK market in Q1
and will push prices upwards moder-
ately. Not least increased demand driv-
en by Valentine’s Day (14 February),
Easter (7-10 April), and Ramadan in
March which should see India looking
to increase stocks in lieu of the shut-
down. The unknown factor though is
how the European and global economy
fares in the first half year. Will Europe
recede into a recession, or will they
ride it? If they ride it, and Asian

lower than in January last year for
OCC, DLK, Mixed Paper and BBC.
So why is this happening? It’s more of
the same of what this column has iden-
tified in the past few months: low con-
sumer confidence resulting in reduced
purchasing at the retail end leading to
high retail inventories. All of this has
meant lower box requirements from
manufacturers as retailers are extreme-
ly nervous about buying more invento-
ry when their current stock levels are
very high owing to a lukewarm (at best)
holiday season. Hence, manufacturers
are not demanding box shipments
from containerboard and boxboard
converting plants.

SITTING STOCK
This slowdown led to paper mills tak-
ing some serious downtime in the
fourth quarter of 2022. Indeed, most if
not all major containerboard and box-
board paper manufacturers took
unprecedented levels of downtime in
December. Since the US paper mills
did not run at full capacity, high levels
of stock are sitting in recovered paper
yards and MRFs waiting to be pulped.
All of these factors have combined to
create something of a perfect storm in
which high supply of recovered fibre
does not align with low demand for
paper-based packaging. As we know
full well, when this happens prices
drop.

LANDFILL TREND
Words that many of sources have been
using to explain the current value of
these bulk grades include ‘collapse’,
‘shatter’, ‘crash’ and ‘catastrophic’. As
usual, when prices fall this low, the cost
to process and bale recovered fibre at
a MRF far exceeds the market value of

A U T H O R Robin Latchem

52-53_mapaper.indd 53 03-02-2023 14:07