Paper recycling industry market conditions
As with September, the packaging sector in Europe showed a slowdown in both demand and prices. Demand from the Far East in this sector however, remained reasonably stable. The de-ink market has continued to show good demand & stable pricing. Whereas the tissue sector demand fell, and pricing reduced as a result. For pulp substitutes pricing dramatically reduced as a result of virgin pulp prices falling by $200 per tonne in the last few months.
For November the outlook and pricing are not positive, however, the good news was that the US port strikes were averted, and supply from that region has remained stable.
However, the real concern is in Europe in November, the ERPIS report confirms stock levels are at an all-time-high at European paper mills for both finished goods and recovered paper. The report for October confirmed record levels of unsold finished goods in the packaging industry and it is widely reported that the price increases sought by the mills has not been achieved. Conversely for raw materials such as recovered paper, this is a disaster with many groups dropping prices heavily and many mills taking unplanned shuts. It should also be noted that in parts of Germany pricing for Mixed paper is higher than that of OCC. This situation is also affecting other sectors.
Packaging
As confirmed above, packaging mills across Europe have dramatically reduced pricing, particularly in Germany, where OCC 1.04.00 & 1.05.00 prices have reduced by €25 per tonne. This is a result of the low demand and the fact that German industry & manufacturing is facing severe pressure from high energy costs because of the Ukraine war. This is not only affecting their profitability but also has a knock on affect to their customer base. We can also see evidence of a downturn in German economy in the recent announcement from Volkswagen, who declared the potential closure of three of their plants with job losses of over 300k people.
In other parts of Europe (France, Netherlands, Spain & the UK) mills have reduced pricing by around €10.00 per tonne
Mixed Papers 1.01.00 & 1.02.00 the price has also reduced by around €10.00 per tonne, however, as stated above, in some cases the purchase price is higher than that of OCC 1.04.00/1.05.00 in certain parts of Germany. This is as a direct result of the value of De-ink papers that are collected in this grade from domestic collection sources which ensures that the combined value is higher.
4.02.00 & 4.03.00 grades pricing have also come under the same pressure as OCC, price reductions have followed the same pressures as confirmed in OCC.
Sales to Far East demand remained stable, but pricing reduced by between £5 to £10 per tonne mainly because of increased freight rates and currency fluctuations. However, we do not anticipate that this will be for long, as the end market demand of the Far East mills is equally as weak as Europe’s. Our assumption is that the price has been maintained so that the buyers ensure the volumes arrive in time for the Chinese New Year. We anticipate large reductions in pricing in December in line with Europe.
Newsprint & Graphic Papers
Demand for Newsprint and Graphic papers has remained stable in Europe and in balance, as many mills are stocking up on recovered paper for the Christmas period. However, pricing for News & Pams (N&P), OI Pams and OI News did reduce by £10 per tonne, as the mills look to recoup high input costs incurred throughout 2024.
Tissues
Demand and pricing for the tissue grades (Multigrade & SOW) have reduced again this is directly attributable to the dire situation of the packaging groups who use these grades in the production of white top board across Europe. With the fall in production & high stocks in the mills, this has meant that more volume of these grades are now widely available across Europe and therefore price has decreased by £10 to £15 per tonne. However, the main concern in the reduction of consumption, is the lack of orders available and it is expected that stocks in collector’s yards will increase. This will cause further issues across the coming months.
Pulp Substitutes
Pulp pricing continues to fall, as pulp prices fall, and a lack of demand will see stock increases in recovered paper yards during November and December. Prices down over £20 per tonne.
Pricing prediction
We fully expect continued price reductions going forward and many mills to take down time in December for Christmas. We anticipate that this winter we will see low demand and reduced orders.