To many in the UK recovered paper trade, 2005 buckled under the weight of expectation. In recent decades, cyclical peaks had tended to occur during years ending in a five — but those expecting a repeat of this phenomenon in 2005 were to be sadly disappointed.
But industry experts have been far from condemnatory in their assessments of the year just ended. While short on excitement, 2005 had confirmed “the new era of stability” in which the UK recovered paper trade was now operating, according to one leading light. Without the “major distraction” of topsy-turvy pricing, merchant processors were in a far better position to plan effectively, another added.
Globalisation and the emergence of developing markets have had a major impact. On the one hand, UK merchant processors traditionally restricted to supplying domestic consumers now have an alternative outlet so vast that UK exports of recovered paper and board are expected to have exceeded three million tonnes in 2005.
The weeks immediately before Christmas mirrored the general trend for the year in delivering little in the way of surprises. The headline domestic KLS price remained at £45 per tonne while export prices showed slight signs of firming to £61-£63 per tonne. Rumours suggest that export prices may fall slightly in the early weeks of the new year owing to a combination of exchange rates, lower US price levels and the impact of the Chinese New Year. However, experts expect any such downturn to be relatively short-lived.
Meanwhile, mixed paper has been described as having “a life of its own”. Domestic buyers are paying the now-customary £25-£30 per tonne whereas export sales to key consuming nations — including China, Indonesia and India — are fetching £40-£43 per tonne. One contact even suggested that £45 per tonne was achievable for top-quality material, which is in tight supply.
UK packaging producers reported a last-minute upturn in demand during the weeks immediately before Christmas. However, margins remained under pressure, not least because of “disastrous” energy price increases which had become “a major driver” for structural change within the European industry.
Steepling energy prices have piled pressure on to domestic consumers of de-inking material, leading to suggestions that intake by some mills could be restricted into the early part of the new year.
With more tonnage available for export, overseas shipments of news & pams and overissue news were moving reasonably well in the pre-Christmas period, particularly to Indonesia.
UK newsprint consumption is expected to have fallen by more than 1% in 2005, although much of the decline is understood to have been absorbed by imports. The downturn is being attributed in large part to the trend among advertisers to use alternative forms of media, such as the internet.
A European study is aiming to achieve an understanding of the decision-making process that lies behind this trend and to devise a suitable paper industry response.
Among the tissue grades, domestic consumers introduced increases during the autumn to bring their prices more into line with those on offer from the export m