BIR World Mirror on Paper January 2012

BIR – The following article is based on the latest Paper World Mirror produced by the BIR world recycling body for the benefit of its members.

In Europe, recovered paper prices suffered a widely-predicted downward correction early in last year’s fourth quarter. However, by year-end, the brown grades in particular were heading north again. 

Having begun October last year at around US$ 240-plus per tonne, OCC export values suffered a precipitous drop to US$ 175-plus by the fourth quarter’s mid-point, while mixed paper prices tumbled over the same period from typically US$ 230 per tonne to nearer US$ 155-160. As 2011 came to an end, however, OCC and mixed paper prices had recovered to, respectively, US$ 185-190 and US$ 165-170 per tonne. 

With supply of OCC said to be falling short of demand in certain markets, there was some expectation at the start of the New Year that its value would continue to edge higher. At the same time, however, linerboard mills in China and other parts of Asia are still experiencing weak order files for their finished products.

As always, prospects for recovered paper exports to Asia will be influenced by economic growth rates: the continent’s largest economies, excluding Japan, recorded average growth of 5.2% last year; slower progress is expected in 2012 although China and India are still thought likely to grow at, respectively, 8% and 6.5%. 

Recovered paper prices in Germany dropped for the fourth consecutive month in December in response to sluggish business for paper mills and ‘hesitant’ orders from consumers in the Far East. Production downtime normally restricted to the Christmas holiday period was extended in some cases. 

According to feedback from the Czech Republic, OCC prices in December were 64% of their January 2011 level, while deinking and printer shavings stood at, respectively, 75% and 85% of their year-opening values. However, price falls in the fourth quarter did not impact on sales for a country which exports almost 70% of all the recovered paper collected domestically.

Demand for the brown/bulk grades is described as ‘robust’ in the UK, perhaps in part because the new Saica mill is scheduled to start up soon in north-west England. Shortages were expected to lead to a steady increase in demand and prices throughout January. However, prices paid by India for the UK’s middle grades are 30-40% lower than those prevailing in the third quarter. Low arisings of printer grades in the UK have failed to prevent an oversupply while the higher grades have seen prices tumble by as much as 50% compared to third-quarter levels.

In the Nordic region, the decline in recovered paper prices during the early part of last year’s fourth quarter was less pronounced than in other parts of the continent. Part of the reason was more stable domestic demand, with most mills reportedly choosing to continue operations throughout the winter despite an order book squeeze. In Finland, recovered paper stocks are described currently as between normal and low depending on the grade, while Sweden reports that demand is exceeding supply for OCC whereas tissue grades are in oversupply.

In Southern Europe, market conditions appear to have been generally somewhat tougher, with reports from Spain indicating that prices for finished packaging products have plummeted around Euro 120 per tonne since last summer. Domestic prices for OCC and the deinking grades have fallen by some Euro 50 per tonne and white grade values have dropped more than Euro 100. Stocks at the paper mills are around normal levels but are low at packers’ depots.