Read our insights from the paper recycling industry for the month of February. We continue to provide insights on a monthly basis. Please check back periodically for more updates.
Pricing for packaging grades to the far east increased by £15 per tonne at the beginning of February. The price increases, we understand are due to strong order books for Chinese paper mills, slightly improved exchange rates and continued competitive freight rates. In contrast, the European paper industry remains under considerable pressure as demand for finished goods is still weak and the mills are well stocked with recovered paper. This has resulted in further price reductions across the sectors of packaging and De-ink.
It should also be noted that many mills in Germany are also generating power for their national grid, this is also causing weak demand as paper production is reduced.
Newsprint & Graphic Papers
Pricing and demand in this sector is very weak with a further reduction in price of £20 per tonne in the bulk grade. Higher grades, such as OI Pams and trim, have also seen reductions but comparatively less as they are competing with grades in other sectors like packaging and tissue. Mills throughout Europe have high stocks and order books continue to be poor.
As confirmed, pricing in February for both OCC and Mixed Papers to the far east has increased and continues to rise. Whereas European mills have reduced pricing as they face all the same issues as the De-ink paper mills, but in contrast to De-ink mills, their stock levels are reducing as collection rates are falling.
UK supplier’s prices remain high compared to European suppliers because of the value of the PRN / PERN (Packaging recovery note) which is supporting effectively low pricing to all paper mills domestic and export.
Order books for finished goods in Europe remain weak but with the added pressure of increased demand from the far east plus low collection rates throughout Europe, it is anticipated that there will be upward pressure on prices for recovered paper as supply and stocks come under pressure.
Since the demand for graphic papers continues to fall with printers producing less, this has had a knock on effect on the volumes of grades used in the production of white top board. Both volumes continue to dwindle which has increased demand in white top board. We are monitoring this situation as this could positively affect pricing in some grades in the coming weeks.
The folding box board sector continues with 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 major producer, MM Group, continues with their shuts at some of their paper mills whilst they implement significant investment at their plants. However, it should be noted that Scanboards is also in demand from the tissue markets as they search for substitutes for volumes as their core material of office papers is also in decline since the pandemic.
Prices and demand in this sector remain weak as mill stocks remain high across Europe. However, there is a real concern that the generation of the recovered paper used in this sector is low and pricing will soon swing as demand will outstrip supply. Pricing we anticipate moving in March/April.
Pulp sub grades pricing and demand remains stable.
As stated in previous months, it is our opinion that in quarter one pricing and volumes are and will continue to be challenging. As we start to move through the months it is clearer now that volumes and collections remain low, with the added increase in demand from the far east and with demand for certain grades in packaging and tissue. We anticipate that the European mills will defend their supplies and production and follow with increased pricing. It looks like March and April will be an interesting couple of months.