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Downbeat assessment of paper markets from BIR

Demand for paper is flat and the reel market has failed to mirror its levels of 2018, the Bureau of International Recycling reports in its latest update. Reel stocks are rising, especially for newsprint, and recovered paper inventories are also high.

The downbeat outlook comes from division chairman Jean-Luc Petithuguenin in the latest BIR Mirror. ‘Purchase prices are under pressure; paper makers are loaded down with stock and are receiving many offers,’ he writes. ‘The market is looking forward to the arrival in Europe of the new machines that have been announced. However, some projects are waiting for better days in the packaging sector.’

Petithuguenin notes that Chinese manufacturers are buying very little volume in Europe, reserving their quotas for other markets such as the USA. And he adds China’s domestic collections are reported to be rising sharply.
‘Overall, the Asian market is slow and demand for finished products is weak. Furthermore, the Chinese economy has been affected by the trade dispute with the USA,’ Petithuguenin concludes.

Demand weak across all grades

He adds there is insufficient demand for the lowest grades and they are difficult to place. The medium grade market has been experiencing disruption with newsprint sales declining sharply and facing greater competition from lower-priced newsprint reels from Russia. The deinking market is subject to regular price declines so that it is almost impossible to sell everything. The high grade market is also said to be experiencing low demand.    

‘This a pivotal year in which we are still suffering the consequences of the Chinese government’s decisions. Europe is a market of surplus; demand from the continent’s paper mills is insufficient to absorb available supply and waste management companies must export their material.’

Decline of leading economies

Meanwhile, Ranjit Baxi of J&H Sales International believes uncertainties and the trade war between the US and China are dominating global economies. ‘More than 35 of the major advanced economies are showing early signs of recession with many of them registering a visible downturn in their manufacturing output to levels last seen seven years ago,’ he says.

He points out the Eurozone PMI index was 45.7 in September, a low level also last seen in 2012. Levels of 50 and less reflect economic contraction whilst over 50 represents expansion or growth.

‘Weakening export volumes to China are also reflected in the rapidly decreasing container volumes being shipped to China. Coming from levels of 2.6 million TEU pre-2016, we are today projecting around one million TEU for 2019, decreasing to about 400 000 TEU for 2020 and less than 80 000 TEU in 2021’.

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