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UK set to usurp Germany as leading European exporter

At the end of another month characterised by virtually no movement in the domestic recovered paper market, UK industry experts have been almost unanimous in their description of 2004 as a disappointing year for prices on the home front. However, compensation has come in the form of yet another record year for exports.

At the recent BIR Autumn Convention in London, the guest speaker at the paper round table highly-respected Esko Uutela of EU Consulting argued that the UK was rapidly usurping Germanys role as the EUs leading exporter. Having peaked at around half a million tonnes per annum in the run-up to the new millennium, the UKs overseas shipments soared to 1.861m tonnes in 2003 and, according to Uutela, are on course to top 2.4m tonnes in the current year. By 2010, he believes, this countrys export total could be well in excess of 3m tonnes.

These estimates are far from being unrealistic, according to UK recovered paper industry experts. One commented: UK mills continue to shut down, and so there is less domestic consumption at the same time as a drive to increase the recovery rate so the only outlet is exports. Another observed: It is impossible to see how, without exports, we could ever achieve (recovery) target requirements. The only major concern surrounding export growth prospects appears to be the availability of suitably priced container capacity to carry product to key markets such as India, China and the Far East.

Of course, concerns over shipments to India are extremely topical: congestion and delays at major ports have led some shipping lines to withdraw services, although a fair tonnage of UK recovered paper is still entering the country. And with Chinas requirement for AQSIQ certification now subject to postponement, fears over the impact of this scheme on short- to medium-term export business have been alleviated to some extent. Several contacts said that demand from China was still buoyant and that these days Chinese New Year created no more than a minor blip in buying patterns.

While 2004 has failed to meet the expectations of many UK recovered paper industry participants, hugely encouraging consumption and capacity developments in India, South East Asia and the Far East are prompting many to predict a brighter 2005. Certainly, UK merchant processors appear to be experiencing strong demand for most of their products and are encountering few problems in selling whatever they produce. As one commented with seasonal lyricism: Stock in our yard is like snow in summer; it no sooner hits the floor than it is swept away for despatch.

China is paying up to £55 per tonne for KLS of UK origin, whereas £45 per tonne remains the price on the UK domestic market, although some merchant processors claim to be securing a little more than in the recent past. Against a backdrop of strong demand, mixed papers are continuing to fetch between £25 and £30 per tonne on the home market compared with £3740 on the export front, where China and India are again among the leading buyers. One leading UK processor commented: Mixed paper prices for export are well ahead of those in the UK and many packers are no longer segregating marginal grades, such as coloured card, and are exporting a hard mixed.

A broadly similar picture emerges among the de-inking grades, although an export price of £4852 per tonne for news and pams is not so far above the domestic level. Overissue news is commanding £55 or more on the export front, while overissue pams is attracting £5355 from the export market against some £45 at home. A lot of the UKs export growth is on the back of de-ink, which is logical because thats where the supply is, MRW was told.

Following the £57 per tonne increases in tissue prices noted in the previous report, domestic demand appears to have been reasonably good. That said, export price levels are still exceeding those prevailing on the domestic market. As for the high grades, demand has been fairly firm and few merchant processors are understood to

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