In a tumultuous few weeks for the old corrugated containers (OCC) market, prices have soared, slumped and then soared again, ultimately eclipsing the heights achieved barely two months earlier.
Having peaked at around £155 per tonne during this latest upsurge, the UK’s OCC export values have generally settled into a relatively wide range in the £140s, although some buyers are still reportedly paying above £150.
Major consumers in the UK have also paid some peak prices ahead of the market dropping back into, once again, the £140s per tonne.
In contrast, continental European prices into China topped out at around £142-£143 per tonne during this latest spike and remain around that level at the time of writing.
The latest steep recovery reflects the “tremendous demand” for OCC across all markets, according to one expert: “The UK, Europe, Asia and the US have all got demand. As we move into the summer months of low generation, mills will be conscious of the need to maintain their stocks.”
Another driver of OCC prices has been the impact of China’s National Sword import restrictions, with a significant number of exporters opting to sell to other markets at lower returns rather than risk rejections, as the Chinese move increasingly towards 100% inspection at all ports. As a result, China is looking to OCC to make up for the missing fibre.
UK mixed paper export prices are currently way behind OCC values at £80-£84 per tonne, with one expert commenting: “OCC is a seller’s market and mixed is a buyer’s market.” But he and others added that this differential is likely to prove unsustainable.
The mills’ mission to keep stocked for the summer has also galvanised news & pams export values, with deliveries to Europe said to be commanding typically £120-£125 per tonne compared with nearer £100 only a few weeks ago.
The domestic market has been trailing at around £110 per tonne but, again, experts are anticipating some upward movement towards the export price.
For once, the middle grades market has been the one to suffer price weakness in recent times. With buyers in the UK and India now well stocked, multigrade prices have fallen from around £170 per tonne to nearer £150 and £160 for these respective markets. Continental buyers, however, are continuing to pay around £170 per tonne at the time of writing.
View from the UK
After widespread losses in the first two months of the year, the UK’s recovered paper exports and collections sector spent March making up some of the lost ground, according to latest statistics from the Confederation of Paper Industries (CPI) and HM Revenue & Customs.
Overseas shipments climbed 4.9% year-on-year to 450,936 tonnes in March – their highest level since October 2016 – while collections advanced 2.9% to 726,331 tonnes, the biggest total in 13 months. But comparison with Q1 as a whole with the same period last year reveals a 12.6% drop in exports to 1.226 million tonnes and an 8.9% decline in collection volumes to 1.985 million tonnes.
The UK’s improved export performance in March was underpinned by a year-on-year increase of 22.8% for OCC to 269,910 tonnes, although the cumulative total for January-March 2017 was still more than 12% below that for last year’s corresponding period at 693,328 tonnes.
“The UK, Europe, Asia and the US have all got demand. As we move into the summer months of low generation, mills will be conscious of the need to maintain their stocks.”
Similarly, exports of wood-free grades (consisting of Class IV high grades) were 27% higher in March at 21,704 tonnes but 9.1% in arrears for the first quarter at 58,389 tonnes. And the same pattern applied to ‘other’ grades (consisting of Class IIb new KLS + Class III newspapers & magazines), for which overseas shipments climbed almost 8% to 37,365 tonnes in March while falling 18.7% for Q1 to 88,037 tonnes.
Taking some of the gloss off UK exports in March was mixed paper, outbound shipments of which slid 23.1% for the month to 121,956 tonnes and 12.6% for the first quarter as a whole to 386,005 tonnes.
The CPI’s new statistics format means year-on-year collection comparisons are limited to the wood-free grades, for which there was a 5.1% jump in March 2017 to 65,601 tonnes but a decline of 7% for Q1 to 177,435 tonnes.
Mixed paper collections in March bettered the previous month by some 11,000 tonnes in reaching 157,973 tonnes, while the third month provided the highest collection tallies to date in 2017 for both OCC and ‘other’ grades at, respectively, 374,804 tonnes and 127,953 tonnes.
UK mill consumption of wood-free grades dipped 1.8% in March to 44,555 tonnes, yielding a Q1 total that was some 4.6% lower year-on-year at 121,602 tonnes. But domestic usage of mixed paper, OCC and ‘other’ grades all posted year-to-date highs in March of, respectively, 40,605 tonnes, 107,698 tonnes and 91,397 tonnes.
UK mills consumed a total of 284,255 tonnes of recovered fibre in March for a year-on-year increase of 1.3%. However, the first-quarter total of 781,892 tonnes trailed the 794,299 tonnes of January-March 2016 by 1.6%.
Having exceeded $2,000 (£1,560) per 40ft container earlier in the second quarter, some shipping lines are prepared to accept as little as $1,300 for large-volume bookings at the time of writing.
But at the BIR’s late-May world recycling convention in Hong Kong, Deepak Saxena of local firm Kerry Logistics argued that structural changes and/or alliances within the shipping sector and capacity rationalisation measures adopted by the lines would ensure that rates did not drop below $1,100 per container for the remainder of 2017.
BIR world president Ranjit Baxi, of Wanstead-based J&H Sales International, suggested the market would stabilise at $1,200-$1,400 per box in the coming months.