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Material Focus: Recovered paper

Following another period of relentless gains, paper industry experts are not ruling out OCC export prices of £200 per tonne by the end of the year or early in 2018.

Having dipped below £100 a tonne at one stage in recent months, renewed Chinese buying has already catapulted prices to £150 per tonne and beyond, with some sellers reportedly gleaning up to £158. Supply is struggling to keep pace with demand, it is widely reported.

Mills in China are said to be “chasing” OCC because of their decent order levels, low raw material inventories and their need to find replacement fibre now that mixed paper is no longer heading into the country because of recently introduced import restrictions.

With so much OCC now being sucked into China, buyers in other parts of the world have been keen to snap up the more abundant supplies of relatively cheap mixed paper. Compared with the £40 per tonne price reported last month, standard-quality mixed is now attracting up to £60 in both the domes­tic and export markets, while some Continental mills are understood to be paying as much as £75 a tonne for top-quality loads.

In contrast, other sectors of the recov­ered paper market have been quite stable in recent weeks. News & pams is fetching typically £110 per tonne on the export front while domestic buyers are paying either side of £100. Domestic multigrade prices are in the range of £160-£165 per tonne, whereas certain mills on mainland Europe are prepared to buy at up to £170 per tonne.

However, there have been recent signs of a drop in the volumes traded at these higher levels.

View from the UK

In August, as word circulated that China was raising the drawbridge on imports of mixed paper, UK exporters got busy with completing significantly more ship­ments than normal.

Volumes of mixed paper leaving UK shores surged 18.1% year-on-year to 138,674 tonnes – the highest monthly total since January 2017 and well ahead of the year-to-date average of just over 124,000 tonnes.

Despite this August boost, UK exports of mixed paper fell 10.2% across the opening eight months of the year to 992,600 tonnes, from 1.105 million tonnes in the corresponding period of 2016, according to the latest figures published by the Confederation of Paper Industries and HM Revenue & Cus­toms.

With so much more mixed paper on the move in August, there was less emphasis on UK exports of OCC. Ship­ments slumped 33.9% year-on-year to 161,003 tonnes, the lowest monthly total to date in 2017 and more than 100,000 tonnes short of the March peak of 269,910 tonnes. Nevertheless, exports in the year to August were still 0.3% higher than in the same period of 2016 at 1.770 million tonnes.

The UK’s overseas deliveries of all forms of recovered fibre amounted to 345,538 tonnes in August for a year-on-year drop of 13.5%. Wood-free ship­ments soared 95.2% year-on-year to 21,063 tonnes, although this total was still short of the 2017 high point of 21,704 tonnes recorded in March.

occ export price

occ export price

As for the ‘other’ grades (Class IIb new KLS + Class III newspapers & magazines), exports in August slid to their lowest level since January at 24,798 tonnes for a year-on-year decline of 10.9%.

Rolling together the figures for the first eight months of the year, the UK’s total recovered fibre exports were 4.5% lower than in 2016 at 3.146 million tonnes, with wood-free shipments climbing 15% from 135,519 tonnes to 155,866 tonnes and other grades diving 21% from 288,735 tonnes to 228,200 tonnes.

August’s recovered fibre collections were higher than in the previous month at 602,505 tonnes, but more than 100,000 tonnes down on the 704,199 tonnes of June. In the opening eight months of 2017, collected volumes slipped 2.2% to 5.154 million tonnes from 5.270 million tonnes in January- August 2016.

Having upped their recovered fibre requirements in each of the previous five months, UK mills’ consumption edged 0.1% lower year-on-year in August to 261,807 tonnes. But the running total of 2.08 million tonnes represented an increase of 1% over the 2.06 million tonnes of January-August 2016.

Meanwhile, the UK’s paper and board production was 2.5% higher in August than in the same month last year at 329,441 tonnes to give a year-to-date total of 2.568 million tonnes, an increase of 3.9% over the 2.472 million tonnes of the same period last year.

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