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Market remains calm despite lack of price rises

Excitement has been at a premium in the UK recovered paper sector over the past month. Only a few, marginal price changes have been reported and little has happened to alter established flows of material. None of the mills are panicking but nobody (in the recovered paper sector) is sitting on stock, MRW was assured this week.

Indeed, one leading merchant processor pointed to the continuing strength of export demand and confidently asserted we could sell double our output. Despite further slight increases in shipping freight rates, he reported a steady build-up of enquiries from an ever-widening range of markets. Nations such as Vietnam are entering the fray with significant demand for material, he pointed out.

The domestic price of old KLS has remained at £4550 per tonne, with the top end of the range typically paid by those smaller mills which are more sensitive to market supply conditions or by those producers adding in a loyalty factor. By comparison, the export price is said to be £5257 per tonne, with buyers in the Far East generally paying towards the top end of this band and European customers towards the bottom.

A similar picture emerged in the mixed paper market: the domestic price increased in March to £25 per tonne but achieved no further upward movement in April despite strong demand from both home mills and overseas buyers. Shipments of this grade have been heading mainly for India, China and other countries in the Far East, with export prices of £3540 per tonne claimed to be readily obtainable.

According to UK packaging producer representatives, their own sales remain broadly in line with expectations but market conditions are picking up slowly. The early part of 2004 has seen an upturn in confidence with regard to sustaining the flow of orders, MRW was told. Mill stocks are reported to be in line with current requirements.

De-inking grades of recovered paper have also been subject to price stability and good demand. Orders from the Far East for news and pams were this week described as sufficient to prevent any build-up of material in UK merchant processors yards. At the same time, no movement was reported in the price of overissue news.

UK newsprint producers are continuing to struggle in the face of reduced pagination and advertising levels. Concern continues to be expressed that, with the advent of email and the internet, major consumers are not using paper communication as much as they were and may not return to it. In this light, the UK printings and writings sector is understood to be considering research into how major advertisers now spread their expenditure across the various communications media in order to better gauge long-term prospects.

The prices paid for middle grades have been relatively static despite reports of difficult times for some areas of the tissue-making sector, mainly a result of the continuing pressure applied by major supermarket groups to their buying prices. A prominent recovered paper expert confirmed: We have not seen downward price pressure yet, but we have been warned there will be a cutback in requirements and in purchasing prices. Whether it will be possible to implement price reductions in the face of good export demand remains to be seen.

The volume of middle grades entering UK yards usually diminishes around Easter but the effects of the holiday period were said to be less evident this year, possibly because of muted demand from domestic consumers. However, May tends to bring even greater disruption to the supply of these grades as the printing industry traditionally takes bank holidays and other breaks during the month.

Talk of tougher conditions for the UK tissue sector coincides with confirmation of a 22.5% increase in consumption of its products last year. Sales of toilet tissue and kitchen towels were relatively static, although demand for the latter was underpinned to a large extent by a major advertising push. Purchases of the more discretionary tissue products such as

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