In terms of recovered paper prices, the summer period has ended with a minimum of drama.
In the second full week of September, OCC export values were still around the £100 a tonne level on the back of steady demand and sketchier-than-normal supply. “Incoming volumes are very, very low,” an industry expert said of conditions in the UK. “We don’t seem to have got over the summer lull.”
In just two days in early September, buyers representing one of China’s major mill groups reckon to have secured more than 70,000 tonnes of OCC from the UK market at prices around £101-£102 per tonne. But according to a senior spokesman, this record-breaking purchasing performance by his company had effectively drained available supplies in the UK. He added that, in general, Chinese mills were “not that desperate” to source UK material at the present time, not least because OCC from mainland Europe was around £5 per tonne cheaper.
Chinese mills’ appetite for recovered fibre has also been curbed by continuing “poor sales” of their finished products. Their buyers have duly created a measure of stability in UK recovered paper export values by backing away from the market as soon as “a level they can’t afford” has been reached, the same spokesman observed. Stability has also been witnessed in freight rates to Asia, with a couple of contacts even maintaining that improved deals had been offered in recent weeks for shipments to certain Chinese ports.
Compared to early August, UK mixed paper has been commanding slightly higher prices of £70-£75 per tonne in the export market whereas domestic values are nearer £65-£70 for mixed and £85-£90 for old KLS. Deinking prices have remained largely unaltered in recent weeks such that, at the time of writing, news & pams is continuing to attract £95-£100 per tonne at home and £100-£110 in the export channel. However, prices of the middle grades have suffered further erosion, with domestic multigrade business now being conducted largely in the £115-£118 per tonne bracket while export orders have been clinched recently for anything between £105 and £120 per tonne; buyers in the important Indian market are still being deterred by the massive swing against their currency. As regards the high grades of recovered paper, volumes remain low but demand continues to be unexciting, resulting in only minor price fluctuations.
On the issue of supply, the economic downturn of recent years has combined with fundamental shifts in usage to bring about a sea-change in overall paper generation. According to the annual monitoring report from the European Recovered Paper Council, current paper consumption in Europe has dropped by 13% to the level of 1998 whereas recycled paper volumes are 1.5 times higher than 15 years ago. In 2012, it notes, the paper and board recycling rate for Europe was “an impressive 71.7%” - sustaining the continent as “the global champion” in this field. Some 13 European countries now have paper recycling rates exceeding 70%.
UK recovered paper exports entered the doldrums in June this year, with overseas shipments slumping to their lowest monthly level in almost five years. The total of 299,749 tonnes represented a drop of 11.7% over the same month last year and was only a fraction ahead of the 299,366 tonnes recorded in November 2008 amid the early upheaval of the global financial and economic crisis.
With the exception of a 35% year-on-year leap in exports of mixed papers to 83,176 tonnes, all other classes of recovered paper registered substantial declines in June with newspapers & magazines leading the way on 45.5%. The falls posted by corrugated & kraft and the high grades were, respectively, 13.4% and 5.4%.
In the first half of 2013 as a whole, overseas shipments of recovered fibre slid 8.5% to 2.098 million tonnes from 2.293 million tonnes in the same period last year. Once again, mixed papers (+12.9% to 502,388 tonnes) failed to offset the reductions charted by corrugated & kraft (-4.1% to 1.189 million tonnes), newspapers & magazines (-35.4% to 335,848 tonnes) and the high grades (-20.6% to 70,514 tonnes).
Figures from the Confederation of Paper Industries and HM Revenue & Customs revealed a rather more stable home market. UK mill consumption of all classes of recovered paper edged 1.5% lower in June to give a half-year total of 1.919 million tonnes - equivalent to an increase of 0.1% over the January-June 2012 tally. Usage of mixed papers surged 61.9% in June and 45.1% across the opening six months of 2013. Newspapers & magazines also witnessed a consumption increase for the January-June period (+2.8% to 764,420 tonnes), whereas June itself brought a decline of 4.7%. Domestic usage of corrugated & kraft fell 4% in June and 2.5% in the first half of this year; making the same comparisons, the high grades recorded drops of, respectively, 11.9% and 16.6%.
In June, UK mill intake of recovered paper actually mounted a year-on-year improvement of 2.1%, but the year-to-date total was 0.9% lower at 1.904 million tonnes, with respective increases of 48.2% and 1.8% for mixed papers and newspapers & magazines more than offset by declines for corrugated & kraft and the high grades of, in turn, 4.9% and 14.8%.
Domestic consumers’ stocks of recovered paper climbed almost 5,000 tonnes to 104,788 tonnes in June to extend supply at the prevailing rate of usage from 1.3 to 1.4 weeks. The increase followed a jump in the corrugated & kraft inventory from 50,666 tonnes to 57,611 tonnes, nudging supply from 1.8 to 1.9 weeks. A small gain in the high grades inventory left supply unchanged at 1.2 weeks while newspapers & magazines saw coverage increase from one week to 1.1 weeks despite a slight erosion of stocks during June. Meanwhile, the dip in mixed paper stocks from 6,965 tonnes to 5,217 tonnes served to slash supply from 1.2 to 0.7 weeks.
At the half-way point of 2013, UK collections of recovered paper were trailing those for the corresponding period last year by 4.6% at 3.936 million tonnes. An increase of 15.5% for mixed papers was more than negated by declines of 3.6% for corrugated & kraft, 13.2% for newspapers & magazines and 10.6% for the high grades. Total collections in June were 7% lower year on year at 609,582 tonnes.
Domestic paper and board production recorded only its second monthly fall of the year in June. However, comparison of January-June 2013 with the same period last year confirmed an increase of 5.4% from 2.199 million tonnes to 2.318 million tonnes.