Confirmed in October, the paper industry was under considerable pressure as a direct result of the energy crisis as well as the worldwide economic slowdown. However, whilst pricing in Europe continued to decline in October, pricing to the Far east and in particular packaging grades showed signs of strengthening, this was because of a strong dollar and large reductions in shipping rates. Many Far East buyer started taking large sized orders to ensure delivery before the containers become short with the run up to Christmas. Pricing for November in Europe for most grades appears to have either reduced slightly or stabilised, as Paper mills secure stock for the Christmas period, although a major player in the folding box board industry has reduced pricing dramatically.
Newsprint & Graphic Papers
Pricing in this sector reduced, although Over Issue Pam’s remains in good demand as they are required to add much needed fibre to the Newsprint sheets, so this grade has seen only a slight reduction. News & Pams again reduced but not markedly. It is difficult to assess the market conditions at present as whilst the paper mills are preparing for Christmas. Our expectation is that December will now remain stable, and an assessment of volumes and stocks will be made in the new year before pricing is determined.
Pricing for November for OCC in Europe as stated seems to have stabilised, however, it should be noted that Mixed Papers demand continues to decline, and pricing is very weak. Order books for finished goods remains weak in Europe so paper mills are paying close attention to stock of recovered papers and volumes will continue to reduce over the winter period. As stated with the Newsprint sector it is our believe that the next major review will be in the New Year. Pricing is also being supported by high PeRN values.
The folding box board sector which produces packaging for the food and pharmaceutical industries, the major player in this market has come out with large reductions circa €100 per tonne (reducing the value of the recovered paper of its purchase by half) as the company looks to reduce pricing as well as volumes. This company is reporting much reduced orders for its finished goods, and it should be noted that this industry is a strong barometer for the general economic situation as a major decline in demand for food packaging and pharmaceutical products does mean a weak outlook from consumers.
The box board sector also uses a large amount of Multigrade and OI Pams.
It is reported in this sector that reduced consumer demand for finished goods is weakening the recovered paper market and in particular certain grades like Sorted Office Papers (which are generally of a poorer quality). However, Multigrades and good quality papers are still in demand and prices remain stable for these grades.
Pulp sub grades continue to remain stable.
As stated, it is our opinion that pricing will stable until the New Year, and paper mills will then re-assess their stocks, as well as demand for recovered paper. As always, we will continue to monitor the markets.
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