European paper recyclers have had a rollercoaster six months with high stocks and low prices being reversed and then switching back again as markets adjusted to the challenging Covid-19 crisis.
That view has been set out by Jean-Luc Petithuguenin, who chairs the paper division of the Bureau of International Recycling, in its latest update on the fibre sector.
Writing in the BIR Mirror, Petithuguenin says 2020 will be remembered as an extraordinary year – from a health as well as from a market point of view.
‘Early in the year, demand improved slightly and stocks fell a little. At that point, we could have reasonably hoped for prices to increase from the spring and/or summer.’
But that optimism disappeared with the coronavirus. In France, for example, the domestic collection rate fell by 50%. Recycling facilities remained open to meet demand but they did so at a slower pace of activity. Petithuguenin notes that demand from mills remained high but it soon became almost impossible to satisfy it.
‘Within two months, prices surged and our stocks returned to reasonable levels, but conditions changed quickly once again with the mid-May lockdown easing measures. Between March and May, our paper mill customers had generated a lot of product and, eventually, a significant proportion failed to find sales outlets and ended up in stock.
Markets under pressure
‘There is still intense pressure on the market for reels: prices have been falling and mills have started to announce a demand drop of 10-30% for the summer. With the easing of restrictions, collection has returned to normal but we now face a lack of demand.’
He notes reduced demand for lower and middle grades in Europe in June and July with a shortage of demand for newspapers and magazines as well as for tissue products. The office papers market is satisfactory but volumes have decreased owing to more home-working. Good levels have been maintained among the high grades.
Hope for the best
‘So this year so far has brought a roller-coaster market: we started with high stocks and low prices, the reverse applied in April/May, and now the markets have been turned upside down once again. What can we expect in the second half of the year? All will depend on how the Covid-19 crisis develops.’
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