Pricing in Packaging and bulk grades to the far east continue to rise, high demand and large orders by several far east buyers have seen OCC and Mixed prices increase and this has also been supported by high PRN values. However, as confirmed previously domestically and in Europe, the paper industry is under considerable pressure as demand for finished goods has seriously weakened, paper mills are well stocked, and the energy crisis continues to cause serious problems. This has resulted in December further price reductions in recovered paper mid to high grades such as Multigrade, SOW, Scanboards, De-ink papers and Pulp substitutes.
We anticipate pricing in the Box board and Tissue making sector to weaken in the New Year. Bulk grades for Packaging and De-ink we anticipate volatility as economic and political situations worldwide continue to cause unrest. Indeed, the spike in pricing for Packaging for the far east we believe had been caused by China opening there covid restrictions. Clearly this has been short lived, and it will be interesting in the coming days if the demand from the far east buyers will remain.
Newsprint & Graphic Papers
Pricing in this sector has remained stable, although volumes are being carefully managed. We believe the paper mills will carefully monitor the collections after the Christmas period this year as traditionally this period is known for high collections but there is an expectation this year that collections over this period will be markedly down, which will affect supply going forward.
As stated in November an assessment of volumes and stocks will be made in the new year before pricing is determined, however, we anticipate for the first quarter price volatility which will be affected by availability/volumes, demand for finished goods, other markets(far east) and the energy situation.
Packaging
Pricing in December has increased for both OCC and Mixed Papers, European and UK mills have followed the far east markets to ensure continuity, however, a large part of the price increase is as a direct result in the value of the PRN. It should be noted however, that order books for finished goods remain weak and as stated going forward pricing will be volatile. Pricing for the New Year will also be affected as explained in Newsprint and Graphic Papers.
The folding box board sector which produces packaging for the food and pharmaceutical industries, has major downtime across Europe and are reporting reduced orders for its finished goods. The box board sector uses high volumes of Mixed Papers, Scanboards, Multigrade & OI Pams. The grade of Scanboards (Pharmaceutical and food packaging) is becoming extremely difficult to move.
Tissues
Prices and demand in this sector have reduced, as paper mills recovered paper stocks are full and the demand for finished goods is weakening. Multigrade, Scanboards, De-ink grades prices have all reduced.
Pulp Substitutes
Pulp sub grades continue to remain stable.
Pricing Prediction
As stated, it is our opinion that in the New Year paper mills will re-assess their stocks, as well as demand for finished goods and ultimately recovered paper.
With the far east still buoyant and currently the buyers are giving no indication that the change in the covid restrictions in China is making any difference to this demand, we anticipate demand to the far east to remain and this will assist with strong pricing. However, price into the domestic market and Europe will be affected by the availability of supply, market conditions for finished goods and the cost base faced at the time (i.e. pay increases, energy costs etc)
As always, we will continue to monitor the markets. Merry Christmas all and a Happy New Year.
If you have any queries about any of this content or would like specific market information, please do not hesitate to contact us.