Chinese import permits for 2018 have been issued, with a heavy reduction in volume for domestic businesses that managed to get one. But this has created smaller capacity on the market, with orders being secured by merchants that offer the best quality material.
Paper merchants are more apprehensive about the inspections their shipment will face once it arrives as the new restrictions take effect in March, with some saying that material will be very thoroughly checked.
Surprisingly, mixed paper exports were down just 1% on the same month last year, following several months of double-digit percentage drops in volume towards the end of 2017, according to figures from HMRC and the Confederation of Paper Industries. But for January-November 2017, mixed paper exports were down by 8.8%, a fall of 128,921 tonnes.
What merchants are saying
”I think the view in China is that if quality comes in March and April, and it’s all okay with no major issues, then the quarter two licences will be bigger than quarter one.”
“At the end of the day, all it takes is one [contaminated] bale.”
“If there’s a risk, there has got to be a reward, and the reward should be a premium price for selling to China and there isn’t one currently. So I don’t think many people are going to take that risk.”
“The key to all of this now is quality – sending only quality.”
OCC exports were up 7% on the previous month and 3% higher when compared with November 2016. Overall for the year to November, exports were up marginally by 5,481 tonnes, a small 0.2% increase.
Mixed domestic and export prices have fallen to an average of around £20 per tonne, a fall of roughly £30 per tonne since January. Some are even trading at prices towards zero or negative amounts, although others were finding available markets.
OCC prices have also fallen, down £20-£30 per tonne on the month, to stand at an average price of £70 per tonne for both domestic and export.
News & pams prices remained steady at about £100 per tonne, up a couple of pounds since January.
The export of wood-free grades, which includes multigrade and sorted office waste, was down by 23% compared with a month ago, although October had a 52% spike compared with September. November 2017 figures were up by 7% on the year, and for the year to November, exports were 20% up.
For all other grades of recovered paper, including news & pams and the new KLS grade, exports in November were up by a massive 45% compared with 2016, an increase of 12,553 tonnes, and a 27% increase on October’s shipping volumes.
However, export volumes for the year to November were down 9% when compared to the same period in 2016, a fall of 34,201 tonnes.
- The paper market continued to struggle this month, with mixed paper prices falling further to record lows.
- Chinese import permits issued did not have the volume allowance expected, keeping capacity tight on what was once the biggest paper market.
- Some predict that the 1 March restrictions could see shipments returned if quality standards are not met.