The packaging industry and the paper industry in Germany is under considerable pressure, not only are they under government pressure regarding energy usage certain paper mills are also under immense pressure due to a water shortage meaning production levels for September have reduced dramatically. Many mills are taking downtime to reduce costs of energy and it has been calculated across Europe’s 93 million tonnes of production if September is annualised the reduction in demand would equate to over 7 million which is a 7.5% reduction
This is a huge reduction, and this has translated to price drops across the whole of Europe. As stated, this is focused heavily on Germany who are the main producers and we have seen a further €80 reduction in packaging grades taking OCC to around €90 delivered per tonne on average. Mixed pricing in Europe to has seen a sizable fall in price seeing pricing around €45 delivered in Germany.
Graphic papers and the tissue sector have remained less affected, but we are already seeing falls in certain parts of Europe in these sectors and expect them to follow suit of the packaging industry. Therefore, we are anticipating large falls in price late September early October for these grades, which will affect PCP pricing.
Newsprint & Graphic Papers
Recovered paper supply has increased in this sector as collectors who have been generating mixed paper not News & Pams have now switched generation to make News and Pams as this is more attractive for them. However, Over Issue Pams as well as unsold Newspaper grades are still in high demand and a good price, as these grades are required in the furnish of these mills. However, as stated it is anticipated that this sector will follow the packaging sector, this is as a direct result not of an oversupply of material but of a lack of availability of consumption as paper mills across Europe take large amounts of downtime for the reasons presented. Anticipated reductions of £50 per tonne (estimated)
Packaging
As stated, the paper mills are offering limited orders for recovered paper, there is reduced demand for finished goods and a reduced sales price. Add to these large increases in energy costs, governmental intervention, lack of water availability. This has resulted in falling prices in Europe for recovered paper.
Currently the UK has not quite followed the other European countries as the far east markets have shown demand, but this will be short lived, we are already seeing prices plummet in the US and therefore it is widely agreed that the European price will follow the US price for this market. Therefore, October prices will see a further step change we expect to see similar reductions in value to the estimated in the Graphic paper industry.
The production of white top is also in reduced demand as the production of packaging slows down pricing will continue to fall as there is a lack of demand due to the shutdowns in the paper mills.
Tissues
The continued lack in supply of necessary fibres has continued to drive this market with UK mills and Europe in short supply. However, as with the other sectors, shutdowns and reduced production is seeing increased availability of recovered paper and therefore it is widely anticipated that pricing will be reduced. We wait to see to the extent as it may be less pronounced than other sectors, but it will happen across Europe and the UK. It is also noticeable that orders and pricing has been stable, we again anticipate that the market has reached its height and prices will reduce in the coming weeks.
Pulp Substitutes
As per the other sectors orders for these grades are becoming difficult and pricing has reduced already with certain customers. Pockets remain available but like all sectors it is a matter of time before reductions arrive.
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