PAPERMARKET ANALYSIS
Growing global demand
challenges recyclers
Packaging trends continue to favour the recovered sector but securing
scrap fibre remains an issue.
86
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
tually every consumer category and
acute labour shortages.
With the media talking about reces-
sion, the domino effect is low consum-
er confidence, even higher fuel prices
and inflation leading to slower retail
sales, higher inventories and a slow-
down in orders. The net result: paper
mills taking more downtime to match
their slowing orders. That would
undoubtedly result in less demand for
OCC and other paper grades.
OCC EXPORTS
Through most of the first half of 2022,
OCC export demand remained strong
– from January to April, OCC exports
hit a record for number of tonnes
shipped. This demand has been consis-
tent amongst numerous countries
importing OCC from the USA. And
then of course there is India, now the
number one country for USA recovered
fibre exports.
But as many exporters know, logistics
and shipping challenges are the big-
gest issues. The factors mentioned
above are making any prognosis for
the future nearly impossible. ‘Hold
onto your seats; it’s about to be a wild
ride’
Covid, the war in Ukraine, the growing
cost-of-living crisis and disrupted sup-
ply chains continue to challenge the
market. It makes the basic rules of sup-
ply and demand more difficult to pre-
dict as sellers of recovered fibre con-
tinue to benefit from unprecedented
sustained high prices across all grades.
Quite simply, global supply chains
remain out of kilter.
Not surprisingly, global mill buyers
have been trying to reduce the price of
recovered fibre since the beginning of
the year. Reports from Asia indicate
end users sitting on high stocks. China
continues to dictate global demand
but traders have concerns over the
effect of the West’s inflation figures on
peak season order books, especially
for Christmas. This seems to be influ-
encing the Indian market which is using
the opportunity to try to force down
prices. Overall, Asian prices for RCP
have fallen but favourable exchange
rates and freight discounts have con-
tributed to stable prices in Europe.
Market sources in France said shortag-
es of deinking and higher recovered
paper grades had resulted in signifi-
cant price increases while demand
from German paper mills was said to
be strong.
What we cannot escape from, though,
is not being able to meet demand. As
we enter the traditional summer slow-
down, the trend would appear to be a
downward pressure on prices and most
forecasters predict reductions for
recovered fibre in Q3.
US PERSPECTIVE
For most of 2022, OCC, the foundation
of the USA recovered paper market,
had been declining in price. At the
beginning of June, though, it appeared
the market was finally in balance with
supply and demand being about equal.
On the one hand, record e-commerce
sales have driven box demand but
there has not been a corresponding
rise in recycling rates. The Recycling
Partnership reports that 60% of resi-
dential corrugated boxes end up in the
landfill, so the majority of these boxes
are not finding their way back to paper
mills. On the other hand, we’ve seen
many challenging economic factors: a
doubling of petrol prices from a year
earlier, spiralling inflation costs for vir-
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