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Summer holidays make for lacklustre paper market

The summer months rarely produce any dramatic transformation in market conditions for the UK recovered paper sector, and the last few weeks have certainly not bucked this trend. In general, supply and demand appear to be broadly in balance, with the traditional summer lull in orders compensating for the holiday-related reduction in collection levels and for the general dearth of stock in merchant processors yards.

The only significant domestic price movement to occur during the height of the summer holiday period was an average £5 per tonne reduction for news and pams; this followed on the heels of an estimated £3 per tonne drop in the export price of this grade during July. Elsewhere, changes in price have been notable only by their absence. Overissue news has held firm while the domestic price of old KLS has continued to cling limpet-like to the level of £45 per tonne that was established as far back as the beginning of March. That said, some domestic consumers are understood to have been paying more for their KLS because of their greater sensitivity to market supply conditions. Some merchant processors are receiving in excess of £50 per tonne for old KLS on the export market, although it was also claimed this week that the upper end of the price range has generally been difficult to achieve for high-volume contracts.

Over the last month, the domestic price of mixed paper has also proved to be unshakeable from its level of £25 per tonne. The export price is hovering around the £35 per tonne mark and demand is said to be reasonably strong from India and China in particular. The former market is continuing to generate more demand than there are containers and to create extremely difficult trading conditions as a result, according to several recovered paper experts. At the same time, shipping lines are attempting to push through rate increases based on anything from higher insurance costs to rising fuel prices.

China remains active in the recovered paper market although not to the same extent as earlier this year. Many in the sector have blamed the restraining effect on trade of the countrys new Administration of Quality Supervision and Inspection and Quarantine (AQSIQ) registration scheme for overseas suppliers of recyclables, although several UK merchant processors contacted this week confirmed that they had been able to complete the licensing procedure within the space of four to five weeks; one put the total cost of the exercise, including use of an agency in China itself, at around US$6,000 (£3,333). Others in the recovered paper sector believe, however, that a reluctance to get containers bogged down with stricter inspection procedures is having a more pronounced impact on trade than the AQSIQ registration scheme itself.

The consensus is that China continues to offer an excellent outlet for UK recovered paper and that its authorities will not allow the flow of its raw material supplies to be significantly stemmed by this or, indeed, any other scheme. One UK merchant processor commented: It is still a revelation to be dealing in a marketplace where you get genuine stability with regard to prices and levels of intake.

Sustained export demand at marginally improved prices, in some instances has helped to pep up a previously gloomy tissue grades scene. Although no significant increases have been reported on the domestic market, one expert commented: A lot of people are chasing the same tonnage at the moment and there is upward pressure on prices. A similar situation exists among the higher grades: renewed demand is reported for both best white and white heavy letter, such that price increases are anticipated in due course.

News that Burnley-based Papermarc has entered administration (MRW, August 20) has done little to cheer the industry. Contacts within the recovered paper sector bemoaned the further erosion of the UKs production base but expected this development to have no major impact on the wider market. Packaging producers have adopted a slightly more

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