The international trade in mixed paper appears to have reached a tipping point. China has notified the World Trade Organization of plans to ban imports of certain recyclables. While this list references ‘unsorted’ paper, some major players in the market have been given to understand that imports even of sorted mixed paper are to be prohibited. And final consignments had to be loaded on a vessel before the end of August, a senior buying figure for one of China’s top mill groups has been told.
Many experts believe any such a ban would prove unworkable given that China has come to rely heavily on imports of this grade for many millions of the tonnes of recovered fibre consumed annually by its mills. And the same experts question where the replacement fibre will be sought and whether it can be made available in sufficient quantities to meet China’s epic needs.
“It’s a real mess,” said the buyer. “The environmentalists [in China] have won the day.” Others said the situation has become “very confused”, although many within the exporter community believe a solution may be found through a reclassification of materials that is acceptable to all parties.
To confuse the picture even further, a number of Chinese mills are understood to have failed recent thorough evaluations of their environmental and administrative performance.
Against this backdrop, OCC – one of the potential alternative sources of fibre – has sustained a fall in export prices, from a July high of around £165 per tonne to around £130 or slightly higher in early August; domestic levels are reportedly similar.
occ export price trends
At the time of writing, mixed paper for the home and export market is pitched at around £105-£110 per tonne, with isolated examples of higher numbers. Export buying activity for both grades is said to be “quite limited”, despite freight rates continuing to trend down to $850 (£653) per 40ft container or even lower.
As regards other grades of recovered paper, news & pams has been attracting around £115-£119 per tonne both at home and for overseas business, with prices buoyed by low generation and evidence of shortages. Among the middle grades, multigrade is commanding either side of £165 per tonne domestically and up to £180 from abroad, with the highest prices being paid by mills in continental Europe.
Experts question where the replacement fibre will be sought and whether it can be made available in sufficient quantities to meet china’s epic needs. “It’s a real mess,” said one buyer. “The environmentalists [in China] have won the day.”
View from the UK
Across the first five months of 2017, UK mills’ consumption of recovered paper was 1% higher than in the same period of 2016 at 1.292 million tonnes, with May producing the largest year-on-year gain to date of 6.8% to 255,532 tonnes.
Indeed, May was the third consecutive month in which domestic mills’ usage total outstripped that for the corresponding month last year. And this pattern was followed by the UK’s recovered paper collection volumes and its exports, according to data from the Confederation of Paper Industries (CPI) and HM Revenue & Customs.
Collections climbed 1.8% year-on-year in May to 631,669 tonnes, backing up gains of 2.9% in March and 6.9% in April. But the combined total for the January-May period was 4.2% lower than last year at 3.261 million tonnes.
Overseas shipments followed up March and April gains of, respectively, 4.9% and 8.7%, with a slender 0.4% year-on-year increase in May to 397,119 tonnes, although the five-month running total of 2.021 million tonnes trailed January-May 2016 by 6.6%.
Exports of mixed paper continued their sharp decline, with the 13.6% year-on-year reverse in May to 124,863 tonnes broadly matching the 14.4% decrease for the year to date. In contrast, the UK’s outbound volumes of OCC recorded their third successive month of thumping gains, following up increases of 22.8% in March and 45.7% in April with another year-on-year surge of 16.2% in May to 224,714 tonnes.
These increases more than offset a disappointing January and February, with UK exports moving ahead of 2016 levels to reach 1.166 million tonnes for the opening five months of 2017: a plus of 1.2% compared to the 1.152 million tonnes of January-May last year.
The so-called ‘other grades’ of recovered fibre covered by the statistics (Class IIb new KLS + Class III newspapers & magazines) recorded a year-on-year export slump in May of more than 40% for the second consecutive month, with the total of 26,649 tonnes falling some 41% short of the 45,136 tonnes dispatched abroad in the corresponding month of 2016.
Across the first five months of 2017, exports of these grades were 28.7% lower than last year at 139,943 tonnes.
The wood-free grades proved to be the star export turn this May, soaring 67.5% year-on-year to 20,892 tonnes, although the five-month running total of 97,853 tonnes confirmed a far more muted increase of 3.7% over January-May 2016.
As a result of the CPI’s new statistics format, year-on-year consumption and collection comparisons are confined to these wood-free grades. Usage fell 6.2% in May and 4.1% to 199,709 tonnes across the first five months of the year, while a collection increase of 3.1% in May failed to prevent a year-to-date decline of 4% to 289,413 tonnes.
PAPER AND BOARD
Compared with January-May 2016, UK mills consumed 1% more recovered paper in the opening five months of 2017. But paper and board production climbed nearer 5% when comparing the same two periods.
With the exception of a 6.3% year-on-year decline for graphics (including newsprint), all product areas recorded production increases, among them notably 9.1% for corrugated case materials and 5.2% for parent reels of tissue.