Uncertainty for the UK’s recovered paper sector continues following China’s fresh crackdown on illegal imports and a jump in shipping freight prices.
During the past month, freight rates have soared from $1,300-$1,400 (£1,060-£1,140) per container to $1,600-$1,800, with one merchant telling MRW that he was quoted up to $2,800. Some merchants have complained that some shipping lines were looking to increase agreed rates after purchase orders had been signed.
“When will it stop?” was the sentiment expressed by one paper merchant.
Container availability remains an issue, with the average gap between making a booking and securing a vessel around one week.
Prices for bulk grades of recovered paper have risen strongly in recent weeks, with mixed and OCC both performing well. But there are suggestions that the market is starting to cool, with orders from China being reined in and lower offers being made.
In addition to rising freight costs, the Chinese government’s National Sword clampdown on smuggling has cranked up the nervousness within the recovered paper sector.
While experts are urging exporters to take particular care over quality, one said that “a bad container-load from any origin could trigger an over-reaction and lead to delays at best”.
A leading industry figure added: “If I were a broker, I would be very selective about the MRF mixed I was collecting at the moment. We are certainly seeing premiums emerge for higher-quality MRF mixed.”
Another told MRW they were achieving higher prices because the market remained competitive for higher quality material that was not from a MRF.