During July, demand from Europe for recovered paper, in particular packaging, began to reduce as paper mills’ order books reduced and stocks of OCC remain strong.
Graphic papers, publication papers and tissue paper grades demand remains high in the UK, this is because of low stocks and little availability in these grades. However, in mainland Europe we have seen some price reductions despite low volumes and stocks, as several paper mills are prepared to take downtime because of poor order books.
August has seen price reductions in Europe on most grades except graphic paper and mixed paper. These grades have remained stable as stock levels are critically low throughout Europe
Newsprint & Graphic Papers
The price of News & Pams (N&P), OI Pams and OI News was stable, demand is stable and more importantly availability and stocks are low.
Magazines throughout Europe remains in high demand.
Packaging
Packaging mills across Europe have reduced pricing. Stocks appear to be healthy but order books aren’t as strong as hoped for. OCC 1.04.00 & 1.05.00 prices reduced around €10 per tonne.
Pricing for grades strong in fibre for packaging, like 4.02.00 & 4.03.00 had previously been much stronger than OCC, but this has reduced dramatically by €30 per tonne (minimum) as mills look to reduce these stocks.
In mixed papers, as confirmed, pricing remains stable as mills are concerned about availability and stocks.
Far East buyers demand and pricing remains low, as demand and freight rates continue on a downward trajectory.
However, the folding box board sector has seen stability in pricing and, with confirmed mill shuts in August, it is anticipated that pricing may reduce throughout the month.
Tissues
In the UK, tissue pricing increased in August by £5 per tonne but in mainland Europe, the landscape is very different. With weaker order books, pricing there has reduced by €10 per tonne and we expect that the price in the UK has peaked.
Pulp Substitutes
In pulp there has been no change in demand or price, but we expect to see some movements after the summer period.
Pricing prediction
It is a very interesting situation in the market at the moment. Quieter because of the holiday period, collections and availability are down 5% year-to-date. Interestingly, demand year-to-date has increased in the UK by 4%, and with a similar picture in Europe, we can clearly see why pricing has increased. We are however, still apprehensive about the strength of demand for the paper mill order books across all sectors.
We believe that September and October will bring price increases, this opinion is based on the demand created by Christmas production that will take place in the mills as they build up requirements in packaging and publications for Christmas. Add to this the low availability and stocks of certain grades of recovered fibre, we will surely see the increase in price as stated.
Beyond October however, it will be difficult to predict due to the many events affecting the economy across the world. Certainly the next US presidential election & the overall global instability will certainly influence most economies.
There is also uncertainty as to whether the Far East buyers will re-enter the market as they traditionally do in November, buying in anticipation for the Chinese New Year. If they do, this will bring added stability to the markets as we head towards the new year but as always we expect some bumps in the road!! 😊