Pricing for packaging grades fell across the board in the UK at the end of April this was driven in part, by the fall in value of the PeRN, which fell in value by £20 per tonne. We are also aware that there is continued weakness in the market for packaging and we are now seeing demand from India as well as other far east countries falling and further price reductions as a result.
Demand in Europe across all sectors is weak and many mills continue with downtime. Pricing has reduced as a result between £20 to £30 per tonne across all sectors.
The outlook for the Quarter 2 is still weak.
Newsprint & Graphic Papers
Pricing and demand in this sector remains’ very weak, with only contract volumes being consumed by European mills. No demand from the far east uncontracted volumes is looking for sales into other sectors. We expect to see increased volumes of Mixed Papers as collectors start to close sorting lines as the advantage to sort news and Pams will become nullified.
As confirmed pricing has reduced not only in Europe but now across the Far East. Early orders had been protected but it appears now that the demand is further weakening and pricing is reducing as a result. European demand is still very weak and prices low, as many paper mills take shuts so companies can try and reduce supply to increase demand for finished goods.
Mixed paper pricing had remained stable but today we saw pricing fall by £10 per tonne as this market too is beginning to weaken.
The PRN / PERN (Packaging recovery note) as confirmed has further made the situation worse as this has fallen by £20 per tonne to £15 per tonne. There is speculation to why this has happened but this we will need to confirm in more detail later in the month as we need to await further information from the figures used in the creation of the packaging notes.
The production of white top board also sees downtime and order books continue to be weak.
The folding box board sector continues with downtime across Europe. The box board sector uses high volumes of Mixed Papers, Scanboards, Multigrade & OI Pams, pricing for this recovered paper continues to fall in May also.
Prices and demand in this sector remain weak as mill stocks are high across Europe, two of the UK’s highest users are also on unplanned shuts, which is making the current situation even more acute. We have seen a further reduction again in Europe on pricing in this sector and the UK. Prices have fallen by around £20 per tonne across the board for mid grades such as Multigrade and SOW.
Pulp sub grades pricing and demand is becoming under pressure as pulp prices have reduced and are continuing to reduce, we have seen pricing fall over $50. Pricing for BW’s and White mechanical grades have fallen between £30 to £40 per tonne across the board.
Quarter 2 is going to be a tough quarter, we expected this. Whilst it is different that the fall in demand is in what is normally the most productive period for the paper industry, it is true though that we have seen weak demand times like this before. The hope is that demand and production will start increasing again in Q3 and the future can look a little brighter.