At the end of February the price for recovered paper in the packaging sector increased across mainland Europe. This is in response to the fact that OCC and mixed paper is in short supply. For the past two months we have seen strong buying from the Far East as the uncertainty around USA tariff policy disrupts supply chains.
The woes of the graphic paper sector continue with producers in most of Europe contending with lower cost imports from North America and Scandinavia who enjoy more competitive energy prices than those in the UK, France, Germany and Benelux regions. This combined with low availability of recovered paper has these mills in a tight price squeeze and this increased pressure will surely lead to further closures – temporary and permanent.
The tissue and pulp substitute market seems to be in balance leading to stable pricing in this sector.
As we approach spring it is anticipated that demand for recovered paper will increase in all sectors in Europe against a backdrop of low availability leading to higher prices. This will be accelerated in the packaging sector as new capacity comes on stream later in the year.
Packaging
Packaging mills in Europe prices have increased, OCC 1.04.00 & 1.05.00, by €10 per tonne. Prices in the Far East pricing for these grades has remained stable but were already €20.00 above European pricing.
The price for mixed papers 1.02.00 has also increased in mainland Europe by €10.00 per tonne.
Fruitbox 4.02.00 & 4.03.00 grades prices have increased sharply as increased demand cannot be met by available supply. Demand from Germany and the Far East is high. In Germany some of this increase in demand is explained by an increase in housebuilding and the board produced is used in this sector. Price increases of €20 plus per tonne have been witnessed at the beginning of March.
Newsprint & Graphic Papers
Demand for Newsprint and Graphic recovered papers has remained stable in Europe. However, as described the European newsprint mills (not including Scandinavia) are under increased pressure as poor sales, increased energy costs & rising employment costs are all contributing to a difficult situation. All main mill groups have had to maintain pricing even though they would like to reduce for recovered paper, but there is an acceptance, that they will lose volumes to other sectors if pricing is not maintained.
Tissues
Demand and pricing for the recovered paper tissue grades (multigrade & SOW) in March appears to be stable, but with low collections in these grades, we expect increases in price in the coming weeks, especially as the packaging industry is also looking to purchase these recovered paper grades for use in the manufacturing of white top board.
Pulp Substitutes
Pulp pricing reads similarly to the Tissue sector. Pricing has remained stable, but we are beginning to see some increased demand for March and expect price increases in April.
Pricing Predictions
Low collections, particularly in packaging grades, alongside the new production demands in the coming weeks, will lead to a shortage in supply and increased pricing for recovered paper. It is also expected that the pressures experienced by the graphic paper mills will also continue to further exacerbate the supply situation and we expect to see more price increases in all the sectors as this supply continues to become short.
As stated last month there are still clearly potential stumbling blocks like the economic and political instabilities across the world, but in our opinion prices for recovered paper will continue to increase in April as mills build stocks ready for the Easter period.