As reported in December, the last quarter of 2024 the packaging sector in Europe continued to slowdown. Volumes collected for the Far East remained relatively stable.
However, in the last couple of weeks in December we began to see some notable changes in demand and pricing for Cardboard and packaging grades. This is directly attributable to the impending premiership of Donald Trump. Essentially with the Trump inauguration on the 20th January, trade from China and the far east has massively reduced due to the high concern about tariffs being applied to anything shipped and arriving after the 20th January.
Shipping has almost come to a stand still from the east to the US which has had an impact on the cost of shipping from the west to the east with boxes from the US increasing in price fivefold.
In the short term, the Far East paper mills have switched their buying from the US to Europe, for stability. This increase in buying from Europe has seen price increases of around £10 per tonne for Cardboard and more than £20 per tonne for the Fruitbox packaging grade. (As at the end of December). European buyers have subsequently rallied and moved pricing in their markets to match the increased demand in the packaging industry.
The Graphic Paper market continues to look to reduce pricing in the UK and Europe but following the movements in the packaging industry it is expected that this is now the bottom of the market movements. The Tissue sector & Pulp substitutes we believe is also following the graphic paper sector with pricing now bottoming out, so we expect either small reductions or stability for January.
It is anticipated that demand for recovered paper should remain strong for the next couple of months. However, this should be countered with the continued economic and political instability across Europe and the unknowns of the impending Trump administration and the effect of the Tariffs that will be applied. Market pricing and demand could, and probably will, change very quickly.
Packaging
Packaging mills in Germany have generally maintained pricing or moved pricing upwards with small movements for OCC 1.04.00 & 1.05.00. Prices in Germany have been stable or up to €5 per tonne. The reasons as stated is the demand from the Far East and losses in volumes to the European mills. In other parts of Europe (France, Netherlands, Spain & the UK) mills have increased pricing between €10 to €15 per tonne, as these countries are much more affected by the export markets than Germany.
Mixed Papers 1.01.00 & 1.02.00 – the price has remained stable.
4.02.00 & 4.03.00 grades pricing – we have seen large increases as volumes are short, demand from the far east is high, pricing across the board has seen increases of between €20-€30 per tonne.
Newsprint & Graphic Papers
Demand for Newsprint and Graphic papers has remained stable in Europe and in balance as many mills are stocked up on recovered paper for the Christmas period. Pricing for News & Pams (N&P), OI Pams and OI News again reduced by €10 per tonne as these mills have healthy stock levels currently.
However, as stated we believe this market has bottomed out and if the current Far East demand remains high in the packaging sector, we expect to see a quick turn around in pricing of Graphic papers, as volumes start to fall short quite quickly in the coming months.
Tissues
Demand and pricing for the tissue grades (Multigrade & SOW) in January appears to be stable, with Europe and the UK mills beginning to look to start re-stocking mills after the Christmas period.
Pulp Substitutes
Pulp pricing is a little more variable than the Tissue sector, we have seen stability to small reductions mainly from German white top producers. We expect pressure for increases in recovered paper prices in this sector in February.
Pricing prediction
In the next few months we expect volatility. This will continue until the economies and political situations in Europe stabilise & we understand what the Trump administration is truly going to look like. This will shape the demand for the paper industry, and particularly the packaging industry. We anticipate that this quarter we will see pricing in recovered paper start to rise from February until Easter due to demand swings caused by the stated political and economic instability. However, our opinion is that after Easter, the European mills will have a clearer idea of their demand and that will shape the pricing for the remainder of the year.