We share our paper recycling market insights each month on our blog. Take a look at our predictions for July and August.Rick Waterson – Managing Director
The outlook for the recovered paper market in July and August remains bleak. Whist pricing for packaging grades stabilized in the UK driven mainly by reasonable demand from the Far East and low shipping rates, reductions continued in Europe and for all other paper sectors. Poor sale prices for finished goods continue in Europe with low demand from end markets for all paper grades, packaging, graphics papers and tissue.
However, there are shoots of recovery it does seem that there are some positive effects of the mill shuts that have taken place over the previous months, as finished good stocks at the paper mills have fallen dramatically. As less has been manufactured therefore less material has entered the waste stream and we expect this to create supply side pressure.
Newsprint & Graphic Papers
Pricing and demand remain low, paper mills continue to consume only contract volumes. There is a high availability of over issue magazines driving down the price, not only in Europe but also it has been confirmed that the Far East is flooded with cheap European stocks of this grade and N&Ps.
However, volumes of N&P are diminishing as the gap in price between mixed and N&P is making it less attractive to separate. As stated above the graphic paper sector in particular we do believe will be a leader in the recovery in price as volumes of recovered fibre become scarce and price could increase quickly in the last quarter.
Pricing remained relatively stable in the UK as the Far East pricing, low shipping rates and a stable PRN value ensured parity for this market. In Europe prices reduced between €5to €10per tonne across the board in this sector. But as described above there is some hope that some demand will re-enter the European market late Q3 early Q4, driven by the low stocks at the mills in this sector.
Whilst the PRN value remained stable at the beginning of the month, this week, latest figures have suggested that over 1 million tonnes has been generated in quarter 2 – the third quarter in a row. Which may suggest further downward pressure on the value of the PRN. The production of white top board continues to see downtime and weak order books.
The folding box board sector continues with downtime across Europe, prices continue to fall this is further exacerbated by the far east market has become flooded. The box board sector uses high volumes of Mixed Papers, Scanboards, Multigrade & OI Pams. Scanboards, Multigrade & OIPams have all reduced by €20 in this sector.
Prices and demand in this sector remain weak as mill stocks are high across Europe & the UK, it has been described to us that this is as a result of a very weak away from home market. We have seen further reductions again in Europe on pricing in this sector of up to €30 per tonne. Whilst the UK had been more stable in pricing in previous months, this market has fallen between £15 to £25 per tonne.
Pulp sub grades pricing and demand continues under pressure as pulp prices reduce again, pricing down €20 to €30 per tonne.
Quarter 3 looks like it will be a tough few month but as stated there is room for optimism at the end of the quarter. July and August we anticipate a rough ride with both demand and price suffering. However, as we exit Q3 with potential low stocks at the mills and increasing demand from consumers, packaging plants, printers, publishers & retailers all gearing up for Christmas we could see some stabilization and price increases for recovered fibre.