Downward pressure has been applied to both OCC and mixed paper export values in recent weeks amid reports of low volumes purchased and some major buyers failing to offer any price at all.
Uncertainties cloaking the lower grades market are said to have contributed to the significant decline in export prices. Many mills in China are unsure what licence conditions will apply to them for next year and, at the same time, the authorities there have yet to offer clarity regarding the detail and extent of their proposed restrictions on imports of recovered fibre.
The Recycling Association (RA) has called on the Chinese government to reconsider its proposal to cut permitted contamination levels in imported bales from the current specified level of 1.5% to 0.3% by the end of the year – a figure the UK organisation describes as “un-realistic”.
Chief executive Simon Ellin told MRW: “Even the best material would struggle to achieve 0.3%.”
He added that the codes used by China’s Ministry of Environmental Protection seem to indicate an import ban applying to all mixed paper and yet the term quoted is ‘unsorted mixed paper’. Ellin commented: “Hopefully, this will mean there is some wriggle room.”
The RA has made its views known to the World Trade Organization, among others, and has had a meeting with Defra to discuss the issues. Ellin added: “Quality has improved – everyone will tell you that – but we are happy to work with the Chinese to improve quality still further.”
“The Recycling Association has called on the Chinese to reconsider the proposal to cut permitted contamination levels in imported bales… Chief executive Simon Ellin said that ‘Even the best material would struggle to achieve 0.3%’.”
An unusually widespread OCC export market has emerged. While most transactions appear to have been concluded in the £100-£105 per tonne range, numbers up to £115 have been heard on the broker front while even higher figures have been paid recently by one major export player.
While some experts argue that there is sufficient fibre available at present to keep export prices at lower levels, others believe the downward correction is temporary and that, in the words of one, “a fourth-quarter bun fight” for material will push values sharply higher again.
“OCC prices can’t stay as low as this, especially with the question mark over mixed paper exports to China,” he insisted.
In contrast to export values, domestic OCC prices have held on to their £125- £135 per tonne levels.
In terms of mixed paper exports, buyers in continental Europe have been paying up to £90 per tonne of late. Elsewhere, the top end for deep-sea shipments has been £70-£80 per tonne, although some other long-haul export outlets are said to have been handing over as little as £40.
In a news & pams market described as “solid”, the combination of good demand and “not a great deal of material around” has cemented export and domestic prices in the £115-£120 per tonne bracket. Among the middle grades, meanwhile, buyers at home and abroad are generally paying £155-£165 per tonne for multigrade, although some niche European prices are slightly higher.
View from the UK
UK recovered paper exporters pressed the accelerator pedal in June, with levels soaring 22% year-on-year to 436,353 tonnes from 357,782 tonnes in the same month of 2016. This brings the half-year running total to 2.458 million tonnes and to within 2.6% of last year’s 2.523 million tonnes.
occ export price trends
But while overseas shipments of OCC continued to post massive gains, exports of mixed paper remained well off last year’s pace.
Latest statistics from the Confederation of Paper Industries and HM Revenue & Customs confirm that mixed paper exports slumped 14.8% year-on-year in June to 117,596 tonnes, contributing to a half-year total that was 14.5% down on the same period of 2016 at 735,582 tonnes.
Conversely, exports of OCC enjoyed their biggest hike of the year to date in June, sky-rocketing 53.8% to 268,193 tonnes. Across the opening six months of 2017, volumes of OCC dispatched abroad amounted to 1.434 million tonnes for an 8.1% increase over the 1.326 million tonnes of January-June 2016.
Even more dramatic figures are reported for the wood-free grades, exports of which followed up three months of year-on-year growth with a further 71.1% surge in June to 19,450 tonnes. Overseas shipments in the first half of 2017 were 10.9% higher year-on-year at 117,301 tonnes.
In contrast, the ‘other grades’ of recovered fibre covered (Class IIb new KLS + Class III newspapers & magazines) recorded an 8.7% export decline in June to 31,114 tonnes, with the result that outbound shipments in the opening half of the year were 25.7% lower than in the corresponding period of 2016 at 171,058 tonnes.
Unlike the other grades, wood-free statistics also cover consumption and collection. Usage completed six months of year-on-year declines in June by falling 6% to 36,757 tonnes, contributing to a year-to-date drop of 4.4% to 236,466 tonnes. Meanwhile, a 10.3% upturn in June collections to 55,642 tonnes reduced the deficit to 1.9% when comparing volumes in the first half of 2017 (345,056 tonnes) with those amassed in the corresponding period last year (351,819 tonnes).
For all grades of recovered fibre combined, UK collection volumes in June exceeded 700,000 tonnes for only the second time since March 2016, reaching 704,199 tonnes – an increase of 15% over the 612,386 tonnes of June last year. But the year-to-date collection total was 1.3% lower than the same period in 2016 at 3.965 million tonnes.
UK mill usage of recovered fibre posted its fourth consecutive monthly increase by climbing 1.2% year-on-year in June to 274,577 tonnes, in line with year-to-date average growth of 1% to 1.567 million tonnes.