Following the May’s market report we saw strong demand from Europe for recovered paper mainly driven by a shortage in availability of recovered fibre. June, we are also seeing strong demand in some grades and continued increases in recovered paper pricing. However, the far east market has cooled off and pricing and demand, brown grades in particular, has not followed the high demand shown by some European mills.
demand is high and availability low in Newsprint & Graphic Papers
The price of News & Pams (N&P), OI Pams and OI News all increased, demand is high and availability in these grades low. European mills are very short on volume, and we have seen price increases of around €10 per tonne.
It should be noted, however, that last week, UPM announced the closure of the Hurth paper mill in Germany removing over 300k tonnes of capacity from the European de-ink market
maintaining pricing in Packaging
Packaging mills across Europe & the UK, whilst short of fibre, have looked to try and maintain pricing were possible. Some mills have achieved this whilst some have had to increase pricing by up to £10 per tonne on brown grades.
It is noticeable that the grades strong in fibre like 4.02.00 & 4.03.00, pricing increased between £10 to £20 per tonne as this material is low in generation.
Mixed papers prices also remain stable with some small increases in Europe.
Interest from Far East buyers has also cooled off, with pricing remaining stable in these grades.
This month we have seen a small price increase of around £5 per tonne in the folding box board sector as they look to compete with the tissue market that has had to cross other markets to find supplies of recovered fibre.
Tissue market struggles with recovered fibre supply
As mentioned, the tissue market is struggling with the traditional supply of recovered fibre, with buyers acknowledging that tonnage is low. Pricing has therefore increased by £10 to £20 per tonne and we expect it to continue to increase in this sector throughout the summer period.
small movement in Pulp Substitutes
We are seeing a small movement upwards of £5 per tonne. We expect this sector may start to increase greatly as the tissue sector volumes continue to diminish and they look to offset poorer quality products with higher grades to sweeten their mix.
Pricing prediction for recovered fibre
June has seen a continuation of price increases for recovered fibre, although not as marked as May. It is, however, clear that some markets are not following the far east prices and demand has cooled compared to Europe. It is also noted that the strength of the demand for finished products is unclear and if the recovered fibre price becomes too heated, we could see a reoccurrence of 2022 with paper mills taking downtime to cool the market.
It is our opinion that in packaging we are at the height of the market and that pricing will be stable. The tissue sector and graphic paper sector is more difficult to assess, as they are essentially dealing with a declining market and experiencing real falls in availability of fibre. We therefore expect, in the next few months, there to be instability and high pricing until we are out of the summer period.
However, as always with predictions, other factors may and can influence this. Elections, political instability and the strength of economies will all play a part in the pricing of recovered fibre. There are also strong rumours that China will relax its laws on the importing of recovered fibre to allow OCC back into the country. If this happens, this again could/will have a huge influence on demand.
What we can be sure of however is that, as always, it will be interesting.