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Paper prices bounce back after ‘Aylesford factor’

Prices for news grades of recovered paper are now back up after a hiatus caused by Aylesford Newsprint’s closure in February.

Robust European demand has reportedly driven prices almost back to the levels seen before the closure announcement, according to the Recycling Association (RA).

Recycled newsprint paper manufacturer Aylesford Newsprint went into administration in February with 233 employees redundant and significant debt.

After the loss of the mill and the decommissioning of a line at UPM’s Shotton plant, Palm Paper announced a £30 per tonne reduction in price but merchants now report a recovery.

Simon Ellin

Writing in the BIR World Mirror quarterly report, RA chief executive Simon Ellin, left, said: “As predicted by many forecasters, the demise of Aylesford, although unexpected, has merely removed capacity from the market that would have had to be taken out in any case owing to the worldwide reduction in newsprint consumption.”

Activity in the old corrugated container (OCC) sector was described as “underwhelming”, with prices carried over from the year-end then dipping in February before returning in March to the levels seen at the beginning of the year.

Ellin said a healthy demand for UK exports was fuelled by the recent ports dispute on the west coast of the US and freezing weather in the east. The price increased due to healthy Chinese demand for OCC from the UK and sterling’s weakness in relation to the dollar.

“Some softening of mixed prices in March was fuelled largely by increased availability owing to Aylesford’s demise, although this ‘Aylesford factor’ has abated to some extent,” he said.

He added that domestic mills were fairly well stocked with brown grades, with more orders available than at the beginning of the year. Full start-up of the new Smurfit Kappa machine in Kent was awaited which should have a positive effect on domestic brown prices. There is still decent demand from mainland Europe, Ellin said.

Ranjit Baxi, BIR treasurer and founder chairman of J&H Sales International, predicted that falling oil prices and a weakening euro would have only an initial positive impact on domestic economies and exports.

He said: “By the second half of 2015, weakening oil prices will have less influence and so the challenge for the Eurozone economies will be to sustain the growth achieved during the first half of this year.”

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