MARKET ANALYSIS
Rally across key
grades
The European fibre sector is enjoying higher prices for mixed, cardboard,
and deinking paper while US mills are re-building stocks.
96
A U T H O R Robin Latchem
In February, a subtle uptick in prices
unfolded in Europe across three key
grades of recovered paper – mixed,
cardboard, and deinking paper. This
trend gained momentum as the weeks
progressed. Prices rose by approximate-
ly 20% in March and April, marking an
unprecedented surge. Some are dub-
bing it a ‘price rally’. At least five factors
seem to be driving the price hikes:
• The value of the Euro is remarkably
low
• Customers of mills are placing
more orders, possibly due to lower
stocks
• Not all mills have sufficient stocks
of old paper
• Several buyers temporarily absent
from the market are reportedly
coming back
• Uncertainty – perhaps the most sig-
nificant factor
On the final point, adequate old paper
inventory is crucial for keeping pro-
duction running smoothly. Mills prefer
certainty and are purchasing more old
paper, even though it comes with a
higher price tag.
However, some mills view the situation
as somewhat exaggerated, spurred on
by mild panic among a few buyers.
Whether these higher prices will
endure remains an unanswerable
question. As one old paper entrepre-
neur remarked, ‘We’ll cross that
bridge when we come to it. For now,
our motto is to sell as much volume as
possible at good prices.’
GERMAN POLKA
Europe, particularly Germany, is taking
the lead. ‘The German polka has every-
one dancing,’ remarked a seasoned
trader. Currently, export activity pales
in comparison to the strong European
demand. Very little is heading towards
the Far East and what is available for
export is moving sluggishly. Southern
European countries are still exporting,
albeit at lower prices.
Many buyers in the Far East are closely
monitoring price developments in
Europe. Several Asian paper mills are
struggling to purchase at the current
price levels, primarily because the
margins between procurement and
sales are often too narrow. In such
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