Prices and demand within the paper recycling industry
Pricing for packaging grades to the Far East have fallen back to the January level following the increase in February of £20 per tonne. We understand that this decrease is due to the feeling that the UK price was too high in comparison to other regions such as Europe and the US.
The European paper industry remains under pressure as weak demand, increasing costs and high stocks continue to hamper any chance of recovery, indeed it is reported by one mill group that Europe currently has in excess of 1 million tonnes of finished reels unsold and in stock across Europe. Added to this is the fact that the biggest producer of graphic papers has placed a stop on all deliveries of recovered paper in Germany for 1 month.
Newsprint & Graphic Papers
Pricing and demand in this sector is very weak, as a direct result of that confirmed above. Pricing is anticipated to be down by a minimum of around £10 per tonne across the board. There are high stocks across the mills. We anticipate reduced demand and falling pricing throughout the quarter.
Packaging
As confirmed, pricing in March for OCC has seen a reduction of £20 per tonne to the Far East. European mills have maintained pricing albeit their starting point in comparison was a minimum of €40 per tonne below the price of OCC to the Far East.
Mixed paper pricing remains stable, we believe this is due to the fact that sorting continues to take place across Europe and pricing for News and Pams, as well as OCC is stronger than that of mixed papers, which enables collecting companies with sorting facilities to achieve stronger values.
The PRN / PERN (Packaging recovery note) continues to support effectively low pricing to all paper mills domestic and export, this is currently running at between £30 to £35 per tonne levels which is historically high.
As in February, March order books for finished goods in Europe are poor and, as indicated, there are high stocks of finished goods. The low collection rates throughout Europe will continue to ensure that volatility in pricing will prevail.
The production of white top board, and the hope for increased demand in these grades has diminished and we expect further reductions in the value of these grades throughout spring.
The folding box board sector continues with downtime across Europe. The box board sector uses high volumes of Mixed Papers, Scanboards, Multigrade & OI Pams. The major producer MM Group continues with shuts at some of their paper mills whilst they implement significant investment at these plants. However, it should be noted that there is an increased demand for Scanboards from the Far East and this is supporting the current value.
Tissues
Prices and demand in this sector remain weak as mill stocks remain high across Europe. We have seen a further reduction again in Europe and the UK on pricing in this sector. Prices have fallen by £5 to £10 per tonne across the board for mid grades such as Multigrade and SOW. It should be noted that in the UK there are a number of mill closures and reduced intake for SOW. Added to this the fact that Europe also has high stocks we anticipate increased price reductions throughout the spring in these grades.
Pulp Substitutes
Pulp sub grades pricing and demand is becoming under pressure as pulp prices have also reduced. Again, pricing to come under pressure
Pricing prediction
As stated in previous months, it was our opinion that in quarter one pricing and volumes are and would be challenging, we have seen in effect a fall in price of £25 per tonne in this quarter.
As we move near to quarter 2 and the Spring, the hope is that there will be increased confidence and spending in the market, as fuel, heating costs reduce, although to counter this high inflation is still a factor across Europe.
Supply is low and demand is weak, but we feel that it is hoped that this will ensure the market has some parity and pricing can stabilise, but it is clear the market is volatile.
Q2 prediction for all grades is a further drop in value of approximately 10%.