Market Report
January saw pricing for packaging, and in particular OCC, increase. As confirmed last month, this was because of the fear of tariffs and far east buyers repositioning their purchasing from the US to Europe. This has also had an effect in Europe as the mills became concerned about the loss of volumes in this grade and from nations with the potential to export deep sea.
As February has approached there have been mixed feelings from the mill groups across Europe, and pricing for packaging has remained stable. It’s worth noting however, that we’ve been informed about several of the larger mill groups pushing for a sizeable increase in ‘finished goods pricing’ circa €100 per tonne in mainland Europe for this month.
This is to offset a lot of the increased costs they are faced with in things like energy and wages. However, if recovered fibre availability continues to reduce, as we expect it will, then any increases, could be lost in recovered fibre.
The graphic paper market continues to look to reduce pricing in the UK and Europe. This is due to lack of demand and falling pricing for finished goods in Newsprint. This continues to cause high concern for the remaining de-ink producers who, like all paper producers, are facing a rising cost base.
The tissue sector remained stable for February. Volumes of recovered paper remain low with no real increase in demand. Pulp substitutes pricing and demand has fallen, particularly in the wood-free grades but we expect this to change in coming months due to the increase in pulp pricing.
As stated in January, it is anticipated that demand for recovered paper will increase due to the low collections experienced across Europe. Thanks to the increased mill capacities, we do also anticipate that pricing for the next two quarters will come under an upward pressure for recovered fibre. However, it should be noted that with the continued economic and political instability worldwide, and the continued unknowns of the Trump administration, much may change and we expect volatility.
Packaging
Packaging mills in Europe have generally maintained pricing for OCC 1.04.00 & 1.05.00. Far east pricing for these grades has remained stable.
Mixed Papers the price has remained stable.
4.02.00 & 4.03.00 grades pricing we have seen large increases as volumes and collections continue to be down of these grades. Demand from Europe (Germany) and the far east is high. Pricing has seen increases of around €20 per tonne.
Newsprint & Graphic Papers
Demand for Newsprint and Graphic papers has remained stable in Europe. However, the European Newsprint mills 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 reduced pricing between £5 to £10 per tonne across there grades N&P, OI News and OI Pams.
However, we are of the opinion that the tight market will mean that the newsprint mills will have to follow any price improvements in recovered fibre. This will undoubtedly put certain mills and groups under further pressure and could lead to further reductions in capacity in 2025.
We also anticipate with OI Pams, that this grade in the comping months will be highly sort after as this grade is becoming increasingly scarce and also widely used across all sectors (packaging, De-ink and tissue).
Tissues
Demand and pricing for the tissue grades (Multigrade & SOW) in February appears to be stable, but with low collections in these grades we expect increases in price in the coming weeks.
Pulp Substitutes
Pulp pricing is more variable, we have seen low demand at the beginning of February and falls in pricing of around £25 per tonne in wood-free products and falls in price of mechanical grades of around £10 per tonne. However, pulp prices are increasing so we expect that this may change quickly in the coming weeks.
Pricing prediction
As per January we expect volatility, however, our expectation for the market is that there are low collections, particularly in certain grades, coupled with increased productivity as new capacity is coming on stream, this will lead to a shortage in supply and increased pricing for recovered paper.
There are clearly potential stumbling blocks, like the economic and political instabilities across the world, but in our opinion, prices for recovered paper will increase in March and April. The remainder of the year will be shaped by the demand and growth of business in this and the next quarter.