By the turn of the year, OCC export values recovered some of the ground lost earlier in December, climbing from around £80-£82 per tonne to £87-£90 at the time of writing. But experts remain divided on the likely direction of the market in the coming weeks, given the welter of conflicting economic messages circulating at present.
For example, recovered paper prices have declined slightly in the key Chinese market despite evidence of containerboard price increases in some quarters.
At the same time, the increased throughflow of import licences within China has failed to produce the widely anticipated increase in international buying activity.
Containerboard price increases in China are not a reflection of higher demand, according to a local expert. Instead, he suggested, the market could be reacting to the idling of significant domestic production capacity during recent months, with rumours of substantially more to come in February.
Despite some leading UK mills claiming to be “rammed” with recovered fibre, old KLS has been fetching more than £80 per tonne in certain instances. Decent-quality mixed paper has been attracting £65-£70 per tonne in the export market and generally a few pounds less at home.
The quality of incoming recovered fibre remains a key concern for China, as evidenced by a report that one of the country’s major producers recently issued a list for internal consumption of UK suppliers with which it is no longer prepared to deal owing to dissatisfaction with either moisture or non-paper component levels, or indeed a combination of both.
Meanwhile, it was intimated at last month’s China International Recycled Fiber Conference in Beijing that the country is considering implementation of national standards for recovered paper.
Jiang Xingsan, president of the China Resources Recycling Association, told delegates that low-level competition and the lack of market regulation/standards “are problems that need to be dealt with in the future”.
At present, export prices for the middle grades of recovered paper are continuing to benefit from increased Chinese interest, with multigrade attracting either side of £110 per tonne. UK domestic values have been slightly lower.
Recent international sales of news & pams have operated in the £100-£110 per tonne bracket, while domestic business has been conducted at £100 or just above. Prices for the high grades have changed little in recent weeks.
For those with an eye to the historical perspective, UK paper and board production climbed 8% year-on-year last October to 387,469 tonnes - the first month it had reached this level since November 2008 - when the world was in the earliest days of the financial and economic downturn from which it has yet to recover.
This strong performance was underpinned by year-on-year increases for packaging papers and boards (+19.4%), newsprint (+6.4%) and printings & writings (+3.9%).
Total UK paper and board output in the first 10 months of last year was 1% higher than in the corresponding period of 2011 at 3.696 million tonnes. But production of newsprint and printings & writings during the January-October period was actually lower by, respectively, 3.6% and 0.7%.
According to latest figures from the Confederation of Paper Industries and HM Revenue & Customs, several notable highs were achieved in October last year, including the UK’s biggest monthly paper and board production total for more than four years.
This stand-out month also produced the largest volume of recovered paper collections and of exports since the start of 2012, as well as a substantial hike in domestic mill consumption levels.
UK collections of recovered fibre leapt 12.3% year-on-year to 733,058 tonnes in October, their highest level since January 2012.
There were substantial increases for mixed papers (+9.9%), corrugated & kraft (+14.9%) and newspapers & magazines (+13.7%), whereas collections of the high grades were 3% lower than in October 2011. In January-October as a whole, recovered paper collections were 1.6% higher last year at 6.857 million tonnes.
Domestic mill usage of recovered fibre soared 11.6% from 291,811 tonnes in October 2011 to 325,668 tonnes a year later on the back of 28.7% and 13.3% hikes for, respectively, corrugated & kraft and newspapers & magazines. In contrast, consumption of mixed papers declined 9.3% while the high grades total tumbled 19.6%.
Compared with 2011, January-October running totals for last year revealed a consumption leap of 17.9% for corrugated & kraft to 1.352 million tonnes, while the other classes of recovered paper suffered year-on-year usage declines.
High grades sustained the steepest drop of 20.1% while mixed papers and newspapers & magazines dipped by, in turn, 5.3% and 2.2%.
Adopting the same 10-month comparison, UK mill intake of corrugated & kraft jumped 16.8% to 1.347 million tonnes last year.
But, once again, the other three classes recorded smaller totals when compared with January-October 2011: mixed papers 168,736 tonnes (-5.9%); high grades 445,464 tonnes (-21.8%); and newspapers & magazines 1.257 million tonnes (-5.8%).
In October itself, however, intake of newspapers & magazines was 9.5% higher year-on-year at 139,229 tonnes. The other recovered paper classes followed established trends, with mixed papers and high grades registering declines of, in turn, 13.3% and 18.3%, whereas corrugated & kraft posted an increase of 11.9%.
Overall, UK mill intake of recovered fibre climbed 4.4% to 315,454 tonnes in October 2012 but fell 0.6% to 3.218 million tonnes from the 10-month perspective.
Around 10,000 tonnes was wiped off recovered paper inventories at UK mills during the course of October,
with the end-month total of 93,148 tonnes constituting a dip in supply from 1.4 to 1.3 weeks.
Stocks of mixed papers were effectively halved to just 919 tonnes to leave supply at a precarious 0.3 weeks, while a third of the corrugated & kraft inventory also disappeared to trim supply from 1.1 to 0.8 weeks.
Despite an almost 7% increase in stocks of newspapers & magazines during October, supply retreated from 1.9 to 1.7 weeks. And a small rise in the high grades inventory nudged supply from 1.4 to 1.5 weeks.
In common with domestic collections, UK exports of recovered paper recorded their highest total for nine months in October last year. The tally of 418,232 tonnes compared with 370,559 tonnes in the same month of the previous year, helped by year-on-year gains of 16.5% for mixed papers, 13.8% for newspapers & magazines and 7.8% for corrugated & kraft.
This October boost left exports 1.4% higher after 10 months of 2012 at 3.768 million tonnes.