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Market Focus: Recovered paper

Recovered paper

The most recent annual meeting of the Bureau of International Recycling (BIR)’s paper division heard a warning from Wade Schuetzeberg, executive director for Europe of American Chung Nam, to expect new Chinese import controls and regulations that “could eliminate complete segments of second­ary raw material imports”.

It is understood that a key driver for this will be further restrictions within China from 1 January 2017 on the issu­ing of licences to businesses that process imported materials.

Speaking to MRW after the confer­ence, another expert in the supply of fibre to China claimed that any new regulations are likely to be stricter on specifications. He added that certain elements within the country’s political hierarchy have been pushing for a total ban on ‘waste’ imports.

If paper mills relying on recovered fibre imports were to counter such moves, it would be vital for suppliers to build on the quality improvements already achieved.

Owing to the generally lower quality of material collected within China itself, suppliers from the UK and the rest of the developed world would remain important fibre providers, argued another expert based on recent, first-hand Chinese feedback. The ‘Quality First’ campaign launched by the UK’s Recycling Association in September had been well received by Chinese mills because it acknowledged the impor­tance of continuing the push for quality improvements. Moisture was a particu­lar concern, the expert added.

These words echoed Schuetzeberg’s observation in Amsterdam that Europe had improved its recovered paper qual­ity “but still has further to go”, and he urged the recovered paper industry to take a greater role in self-regulation.

Schuetzeberg estimated that annual collections of recovered paper in China are now around to 80 million tonnes whereas imports had peaked at 30 mil­lion tonnes in 2013 and were unlikely to better 27 million tonnes this year.

BIR president Ranjit Baxi, of Wan­stead-based J&H Sales International, pointed to increased collection activity in India and South Korea, adding that these locally sourced volumes were affecting the grades of recovered paper booked with suppliers in Europe and elsewhere. Furthermore, buyers in these emerging markets have an expanding number of options when it comes to sourcing material.

Tarek Al Sharif, of Sharif Metals International in the United Arab Emir­ates, highlighted growth in the Middle East’s exports of mixed paper, OCC, newspapers and office paper to, princi­pally, India and Pakistan on the back of relatively low freight rates.

Market overview

According to one industry sage, there are three issues dominating the recov­ered paper scene at present: “Shipping, shipping and shipping.”

Armed with the leverage of Hanjin Shipping’s collapse, lines have been successful in pushing freight rates from around $600 (£480) per 40ft container in early October to nearer $800 at the time of writing. Even then, customers are not guaranteed immediate con­tainer availability, with notice periods reportedly stretching to two weeks in many instances.

There are also complaints of con­tainer deals being cancelled as well as shipping lines going back on agreed deals and demanding higher numbers at the last minute.

Lines are also accused of cutting sail­ings to tighten the market. Indeed, sev­eral shipping companies are already talking about rates of $900 per box, a prospect which prompted one exporter to comment: “I would pay it if I knew I was going to get the containers when I needed them.” Container availability in mainland Europe is less problematic than in the UK “but still tight”, accord­ing to one exporter.

As a result of this tumult in the ship­ping world, many UK processors’ yards are full of material that would otherwise have been exported by now. Although this situation has presented opportuni­ties for local buyers, UK and continental mills are now generally well stocked in any case.

In recent weeks, OCC and mixed paper export prices into China went higher before retreating to around, respectively, £116-£119 and £91-£94 per tonne. UK mill buyers of OCC are paying a much wider range of prices at below export levels.

China is still purchasing the UK’s multigrade for white top production and Indian buyers are also keen to source this grade, thereby driving export prices to £150-£155 per tonne; domestic prices are said to be even hot­ter at nearer £158-£160. The UK and overseas markets are both paying typi­cally £155-£160 per tonne for sorted office waste.

Middle grades of recovered paper have been maintaining upward price momentum, said one expert, because of the potent combination of “far more competition and fibre shortages”.

Meanwhile, some of the continental interest in news & pams has diminished of late. The result has been a dip in prices to £100-£105 per tonne for both domestic and export-oriented business. Among the high grades, stable prices have been reported for best whites as supply is finding a ready home.

 

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