February review
There was a small increase in the packaging sector pricing for recovered paper in all markets mainly driven by increased demand from the buyers. In Europe, packaging groups had looked to increase the price for the finished goods. However, throughout February it became clear that these prices would not be achieved with continued expectation of overcapacity and weak economic positions in Europe.
De-ink pricing remains under pressure which is driven by the continued structural decline of the market.
The demand from the tissue sector also remained stable to weak.
March
World events
At the beginning of the month the Iran conflict started which was clearly unexpected. The fall out from this is still yet to be fully understood. However, we are already seeing implications both in the short, medium and potentially long term.
Short term, we expect the cost of freight will increase. If the shipping routes in the middle east remain difficult, this will undoubtedly affect worldwide shipments of recovered paper and therefore affect demand.
The price of energy will also be affected, which, as high users of energy, will have major implications on the paper industry. The net effect of that could have serious implications, and we will only fully understand this as the next weeks unfold.
Packaging
At the beginning of March, the Far East, Europe and the UK saw stability across the board for both OCC and Mixed pricing. Due to the situation in Iran, we could see this fluctuate greatly across March.
4.01.00, 4.02.00 & 4.03.00 (NKLS, Fruitbox and kraft board) all these grades demand remained stable.
With an early Easter we expect to see a clearer picture in this market by mid April.
Newsprint & Graphic Papers
Significant movements in price started in March with one European mill group – with a major presence in the UK – attempting to force the market price down. The mill group in question has tried to push the price down unilaterally by £15 per tonne, but no other mill group followed suit.
We have negated this by marketing the material elsewhere, so in real terms, we have only seen a price reduction of £1 per tonne.
Domestic News & Pam grade prices have been reduced by £15 per tonne, all other European outlets either saw a small increase or stability. However, since the start of March we have seen significant increases in cost for freight.
Folding Box Board
Stable pricing, again we expect increased demand in the spring.
Tissues
Supply in this sector remains high, demand remains weak due to high stocks and downtime across Europe. The Essity Prudhoe paper mill production is still yet to start as reported last month and whilst Northwood announced the acquisition of the old Kimberly Clark mill in North Wales, this is not set to re-open until the end of the year, so we don’t envisage major changes in demand.
Pricing has seen stability in some grades like Multigrade, SOW. However, grades such as Tear White Shavings and White heavy letter we have seen reduce by around £10 per tonne.
Pulp Substitutes
This sector remains weak with little-to-no demand from the paper mills and high inventories reported all around Europe for Woodfree grades. Price is stable.
Pricing prediction
Unfortunately, the optimism we expected for April is evaporating quickly because of the middle east situation, aligned with a continued lack of demand in all sectors for finished goods. We hope for a speedy resolution in the middle east so that trade, logistics and business can return to normal as quickly as possible, which in turn will hopefully boost consumer confidence.
The coming weeks we will be watching with interest.