Pressure piles on paper exporters
Falling recovered paper prices in the US during the past month have further ratcheted up the pressure on already embattled UK exporters, senior industry figures have warned.
Exporters told MRW they faced an anxious wait in the next fortnight as mills in China, the world’s biggest market, place orders for September. If US exporters can offer cheaper fibre, UK and European exporters could face substantial costs.
Paul Briggs, managing director at Mark Lyndon Paper Enterprises UK, said: “The effects of US price falls are only just starting to be seen. If Chinese mills cut orders from the UK in September, even if US prices start to rise again, the damage will already be done.”
A smaller UK exporter said the market was already “in freefall” because of weakening demand from China and that this had prompted US exporters to “offer tonnes at dumping prices”.
News of falling US export prices follows a crackdown on mixed paper quality standards by Chinese customs, which began in July.
Nick Watson, marketing manager at recovered paper exporter ACN Europe (UK), said industry confidence was “shattered” following a slow peak period in China. The combination of falling prices and the quality clampdown was “a double whammy”, he added.
Another exporter said the “very tight” market, with Chinese mills slowing production, combined with the quality clampdown, created a difficult and unpredictable situation for the UK industry.
He said: “We just have to wait and see what happens; it’s all out of our hands.”
Exporters fear there is little sign of improvement in demand during the coming months while the global economy continues to struggle. Watson said he expected little improvement for the rest of the year.
“The global economy has not started to recover in the past six to 12 months. The UK in recession, and the US and others could be heading the same way.
“China is the global manufacturing base - with the recession we are not consuming so they are manufacturing less.”
Another exporter said that with Chinese mills full, he could only see further price cuts ahead this year.
“Clearly, we are affected by the global market - the Chinese economy has shrunk down to below 8% growth and we are at 0%,” he added. “We are not buying anything and they are not selling anything.
“Until we get a resurgence in the global economy - and I’ve now idea how or when that’s going to occur - we’re all in it.”