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Material Focus - Recovered paper

Paper merchants were forced to get shipments on the water well before the January deadline for the Chinese restric­tions. Exports of mixed papers were down 16% in October when compared with the same month the previous year, according to figures from HMRC and the Confederation of Paper Industries.

This was a fall of 24,053 tonnes, and overall tonnage for the year was down 10% against 2016 figures, which stood at 127,673 tonnes.

China’s import clampdown continues to have a downward effect on demand. Some mills were not granted import licences until very recently and, as a result, there was a lack of buying and prices fell accordingly.

Overview

  • Paper merchants remain cautious of the new Chinese restrictions that are now in place, and are unsure of whether the remaining markets have the capacity to take the displaced material
  • In the past month, prices fell across most of the recovered paper grades
  • Exports of all paper grades were down 3.4% for 2017 compared with 2016, a fall of 138,587 tonnes.

The average mixed paper export price stands at £50 per tonne, down £10 on the past month. Domestic mixed paper prices were the same. One merchant said that alternative markets were not a long-term solution to the Chinese mar­ket disappearing.

Shipping lines are reported to be hesitant to push up freight rates too much because of the lack of traffic.

Some recovered paper merchants still feel that the market is a guessing game, with many waiting to see how it will play out in the coming months.

Both domestic and export OCC prices have softened by £10-£20 per tonne during the past few weeks, achieving around £110 per tonne. The latter is a few pounds less than that.

Although OCC export tonnage was down by 31% in October compared with September, representing a drop of 88,000 tonnes, the overall tonnage for the past year was flat.

The news & pams price remained largely stable, with a drop of only a few pounds per tonne, although this could escalate if domestic buying does not pick up in the coming weeks.

For all other grades of recovered paper, including news & pams and the new KLS grade, exports were up 11.7% in October compared with the previous month. Between July and October 2017, export volumes were higher than in the same period in 2016, although the over­all total volume for 2017 so far is down 13.7%, a drop of 46,754 tonnes.

Multigrade and sorted office waste grades saw no price movement, but best white no.2 prices softened by around £10 per tonne. Wood-free export vol­umes were up by 9,077 tonnes in Octo­ber compared with September.

What merchants are saying

“We’ve got a very uncertain period until everybody better understands the Chinese market.”

“It’s not as if the Chinese didn’t warn us.”

“Waste paper is a bit like a river running down a mountain – a river will always find a way to the sea – and waste paper will always find an end market, eventually. But it can be a circuitous route and a bit rocky along the way.”

“I’m very confident that paper and cardboard will be OK, but it could be a few months.”

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