In Summary
August was a very quiet month, which was not unexpected. After the difficult month of July, we anticipated that August would be quiet in terms of volumes, increased “planned shuts” and of course many taking their annual holidays.
The European recovered paper market continues with downtime and little demand across all sectors. Tissue mills and De-ink mills in particular reducing volumes.
Packaging mills report varying situations regarding recovered paper demand. Pricing of finished goods has fallen in the UK by £20 per tonne and there have been announced closures of 5 packaging plants by (DS Smith /IP). Demand in this sector is weak. However, there are some positives, particularly in Germany where there is reasonable demand for white top to produce plasterboard to support the building sector, but in the packaging paper sector demand and pricing remain soft.
In the Far East, demand remains poor, however pricing has not reduced as much due to currency and shipping cost fluctuations.
Pulp sub pricing has reduced dramatically as in some cases, pulp is actually cheaper than the pulp subs themselves. Pricing is down £15-£25 per tonne.
Box board demand remains weak with pricing reducing by £40+ for finished goods. Recovered paper supply in these grades remains weak, as the main manufacturers reduce pricing and the Tissue sector has several shut downs and weak demand.
Packaging
Packaging mills in Europe and the Far East – prices are stable or we have seen a small decrease in OCC 1.04.00 & 1.05.00 and mixed papers (1.02.00). Movement is zero to – £5 per tonne.
4.01.00, 4.02.00 & 4.03.00 (NKLS, Fruitbox and Kraft) grades pricing fell around -£5 to -€10 per tonne. Volumes reduced in this sector across Europe.
Newsprint & Graphic Papers
We’re seeing poor demand and reduced pricing. Several mills have taken downtime, and we are expecting announcements of further mill closures in Europe over the coming weeks.
Pricing is down £5 per tonne.
Folding Box board
There is low demand in this sector – machine shuts and high stocks have seen prices fall by £5 per tonne.
The tissue sector (which also uses this grade), has also seen reduced demand and we’ve seen pricing fall by £10 per tonne on average.
Tissues
Pricing in this sector has reduced by £10 per tonne. There are continued shuts in the UK, Essity Prudhoe is currently closed, and the Northwood paper mills also have taken down time. This has contributed to the UK having high stocks at the mills and high stocks being held at collectors’ yards.
We have also seen predatory purchasing of distressed volumes which is also placing pressure on downward pricing for SOW.
Pulp Substitutes
We saw a large fall in pricing in Best Whites following reductions in Pulp pricing (around €20.00 per tonne).
Mechanical grades remain stronger in part as a few mills in Europe are still seeking this material.
Pricing prediction
As reported in August, demand is poor, order books in most sectors are low so the price for recovered paper remains weak.
This month, confirmation of the closure of a further 250k tonnes capacity in Europe has been announced with the closure of a machine at Pitten (Hamburger Group) and a paper mill in Croatia (DS Smith / IP). Consolidation is now in full flow within the paper industry, and we expect this to continue throughout the chain i.e. mills, printers, packaging plants and the waste sector.
With the above in mind our belief is that for the remainder of the year pricing and demand will be flat and a possible reduction in the last month of the year.