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Rising container rates almost a ‘death blow’ for paper market

Freight rate increases of more than $1,000 (£775) per container “had nearly dealt a death blow” to the paper market, according to Bureau of International Recycling (BIR) paper division president Reinhold Schmidt. 

The comment came at BIR’s World Recycling Convention in Hong Kong, where its world president Ranjit Baxi of J&H Sales International called for a greater dialogue with the shipping industry to ensure it understood the effects of such increases.

“We never have an audience with the shipping lines,” he said, as rates dropped below $2,000 per container and were likely to stabilise between $1,200 and $1,400 in the coming months.

Referring to China’s National Sword programme, Baxi supported more rigorous quality checks. But he felt that a zero tolerance approach would affect all traders because sorting systems were unable to achieve 100% purity. Even so, he urged European exporters to “move their quality a notch higher”.

BIR was told strong demand for fibre in Europe had helped the paper market to recover from a steep decline in the second quarter of this year, as well as lower stocks being available in China.

Nobuyuki Shiose of Daiwa-Shiryo of Japan noted a growing preference among Japanese paper mills to deal with fibre suppliers able to offer larger tonnages.

“It is possible to get higher prices if you can offer more volume,” he said. This trend could lead to consolidation within the supply sector and create a competitive environment in which “small companies will be the losers”.

Thomas Braun of BVSE and vice-president of the European Recycling Industries’ Confederation and its recovered paper branch ERPA, pointed to continuing tensions with the paper manufacturing industry which was concerned the that EU’s circular economy package would “restrict exports of recovered paper outside Europe”.

Braun argued this “short-term vision” should be opposed because the European market’s “structural oversupply” of recovered paper made exports necessary to “support collection, increase recycling rates and maintain competitive prices”.


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