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Recovered paper - 14 December

By early December, OCC export prices had slid to their lowest level for a couple of months amid reduced buying interest from European and Asian mills. At the time of writing, the market level is around £80-£82 per tonne compared to £94 at the time of our early-November report.

But should overseas purchases remain below the norm for the balance of this month, it is widely believed that a bounce-back in OCC buying activity - and prices - could be witnessed in either January or February.

UK mills are holding healthy inventories of the brown grades. One leading producer spokesman commented: “We have started this period with higher stocks than normal and so we expect to test the market at lower prices.”

For the moment, old KLS is commanding upwards of £75 per tonne on the domestic front. Good-quality mixed paper is generally attracting more than £60 per tonne in the export market and the other side of this at home.

News & pams prices have also reflected cooler buying interest of late. In contrast, the middle grades have made some gains. For export, multigrade is currently fetching around £105-£115 per tonne, and support for the sorted office waste price has also been maintained, partly as a result of increased orders from China for new white-top production. In the UK, multigrade is generally attracting prices slightly shy of the export level.

Among the higher grades of recovered paper, minor price increases have been reported recently for white and light letter.

So far in December, shipping lines have largely failed to push through what one trader described as their “wish-list” price increases;

a major fibre buyer for the Chinese market actually suggested that the cost of shipping a 40ft container from the UK had dropped some $50 (£31) of late.

Meanwhile, it was suggested at the recent Paper Recycling Conference Europe that China will need to import 35 million tonnes of recovered fibre by 2014 compared with just over 27 million tonnes last year. The prediction came from Joris de Caluwe, managing director of Dutch trading company Ciparo.

The outlook for Indian imports of recovered fibre is similarly positive, delegates to the London event were informed. PR Ray, an adviser on international business to the Esskay Impex trading house, said India bought in 3.46 million tonnes from overseas in 2010/11 to meet 36% of domestic paper producers’ raw material requirements - an increase of five percentage points over the previous year.

And he anticipated that the figure would approach 6.5 million tonnes by 2020, with the UK providing around 390,000 tonnes of this total compared with just short of 250,000 tonnes in 2011.

Less encouraging forecasts were made with regard to the future of newspapers.

Dr Martin Kay, chief consultant at Smithers Pira, presented an ‘extinction timeline’ map of the world depicting when printed newspapers were likely to become insignificant in their current form. For the US, he believed that day would dawn as early as 2017 and in the UK a mere two years later.

There is not a lot of daylight between the headline totals for January-September 2011 and 2012 contained within the latest statistics from the Confederation of Paper Industries and HM Revenue & Customs.

UK mill intake of recovered paper fell 1.1% to 2.902 million tonnes whereas consumption (up 0.8% to 2.895 million tonnes), exports (+0.1% to 3.35 million tonnes) and domestic collections (+0.5% to 6.125 million tonnes) all registered fractional increases.

Domestic mill consumption partially corrected a 4.7% decline in August with an improvement of 0.7% to 317,240 tonnes the following month. This was on the back of substantial increases for mixed papers and corrugated & kraft of, respectively, 12.9% to 17,744 tonnes and 36.3% to 146,992 tonnes.

By contrast, UK mills cut their usage of newspapers & magazines by 18.2% to 110,496 tonnes and their consumption of the high grades by 25.4% to 42,008 tonnes.

After the first 10 months of 2012, overall consumption of mixed papers was still running 5% behind that of the same period last year at 155,474 tonnes. The respective running totals for newspapers & magazines and the high grades were 3.8% and 20.1% lower, whereas usage of corrugated & kraft was almost 17% higher at 1.22 million tonnes.

Total UK mill intake fell 3.9% year-on-year in September to 319,210 tonnes, despite major growth for both mixed papers (15.7%) and corrugated & kraft (32.4%). The counterbalance was provided by newspapers & magazines and the high grades, intake of which slumped 21.4% and 33.7%, respectively.

Across the first three quarters of 2012, only corrugated & kraft recorded an intake increase, of 17.3% to 1.227 million tonnes, whereas mixed papers, newspapers & magazines and the high grades suffered declines of, in turn, 5.3%, 7.4% and 22.2%.

UK mill stocks ended September some 2,678 tonnes higher than a month earlier at 102,195 tonnes, to nudge overall supply at the prevailing rate of usage from 1.3 to 1.4 weeks. In the only significant change, the mixed papers inventory almost doubled in size to 1,804 tonnes to advance supply from 0.2 to 0.4 weeks.

As for domestic collections of recovered fibre, a 0.4% decline in September to 640,618 tonnes when compared with the same month last year was precipitated by a 5.8% drop to 198,131 tonnes for newspapers & magazines and a decline of 17.8% to 49,544 tonnes for the high grades.

Again, mixed papers (+24.7% to 91,263 tonnes) and corrugated & kraft (+0.8% to 301,680 tonnes) limited the overall fall.

Comparing January-September 2012 with the corresponding period last year, the same pattern emerged: mixed papers and corrugated & kraft recorded collection gains 4% and 5.1%, respectively, whereas newspapers & magazines and the high grades retreated, in turn, 0.2% and 22.8%.

UK recovered paper exports dipped 2.3% year-on-year in September to 333,906 tonnes, the second lowest monthly total to date in 2012, despite hefty increases of 26.4% for mixed papers, 13.1% for newspapers & magazines and 22.4% for the high grades.

No prizes for guessing, therefore, that overseas shipments of corrugated & kraft plunged 19% or more than 36,000 tonnes year-on- year to 155,757 tonnes.

So, after three quarters of 2012 trading, UK exports of corrugated & kraft were 2% lower than in the same period last year at 1.768 million tonnes. Making the same comparison, high grades fell 12.5% whereas exports of mixed papers and newspapers & magazines climbed 5.3% and 3%, respectively.

 

 

 

 

 

 

 

 

UK mills too are holding healthy inventories of the brown grades, with one leading producer spokesman commenting: “We have started this period with higher stocks than normal and so we expect to test the market at lower prices”. For the moment, old KLS is commanding upwards of £75 per tonne on the domestic front.

Good-quality mixed paper is generally attracting over £60 per tonne in the export market and the other side of this mark at home.

News & pams prices have also reflected cooler buying interest of late. In contrast, the middle grades have made some gains: for export, multigrade is currently fetching around £105-115 per tonne and support for the sorted office waste price has also been maintained, partly as a result of increased orders from China for new white-top production. In the UK, multigrade is generally attracting prices slightly shy of the export level.

Among the higher grades of recovered paper, minor price increases have been reported recently for white and light letter.

Thus far in December, shipping lines have largely failed to push through what one trader described as their “wish-list” price increases, with a major fibre buyer for the Chinese market actually suggesting the cost of shipping a 40-foot container from the UK has dropped some US$ 50 of late. Meanwhile, it was suggested at the recent Paper Recycling Conference Europe that China will need to import 35 million tonnes of recovered fibre by 2014 (compared to just over 27 million tonnes last year). The prediction came from Joris de Caluwe, Managing Director of Dutch trading company Ciparo.

The outlook for Indian imports of recovered fibre is similarly positive, delegates to the London event were informed. P. R. Ray, Advisor on International Business to the Esskay Impex trading house, said India bought in 3.46 million tonnes from overseas in 2010/11 to meet 36% of domestic paper producers’ raw material requirements - an increase of five percentage points over the previous year. And he anticipated the figure would approach 6.5 million tonnes by 2020, with the UK providing around 390,000 tonnes of this total compared to just short of 250,000 tonnes in 2011.

Less encouraging forecasts were made with regard to the future of newspapers. Dr Martin Kay, Chief Consultant at Smithers Pira, presented an “extinction timeline” map of the world depicting when printed newspapers were likely to become insignificant in their current form:  for the USA, he believed that day would dawn as early as the year 2017, and in the UK a mere two years later.

There’s not a whole lot of daylight between the headline totals for January-September 2011 and 2012 contained within the latest statistics from the Confederation of Paper Industries and HM Revenue & Customs. UK mill intake of recovered paper fell 1.1% to 2.902 million tonnes whereas consumption (+0.8% to 2.895 million tonnes), exports (+0.1% to 3.35 million tonnes) and domestic collections (+0.5% to 6.125 million tonnes) all registered fractional increases.

Domestic mill consumption partially corrected a 4.7% decline in August with an improvement of 0.7% to 317,240 tonnes the following month on the back of substantial increases for mixed papers and corrugated & kraft of, respectively, 12.9% to 17,744 tonnes and 36.3% to 146,992 tonnes. By contrast, UK mills cut their usage of newspapers & magazines by 18.2% to 110,496 tonnes and their consumption of the high grades by 25.4% to 42,008 tonnes.

After the first 10 months of 2012, overall consumption of mixed papers was still running 5% behind that of the same period last year at 155,474 tonnes. The respective running totals for newspapers & magazines and the high grades were 3.8% and 20.1% lower, whereas usage of corrugated & kraft was almost 17% higher at 1.22 million tonnes.

Total UK mill intake fell 3.9% year on year in September to 319,210 tonnes despite major growth for both mixed papers (+15.7%) and corrugated & kraft (32.4%); the counterbalance was provided by newspapers & magazines and the high grades, intake of which slumped 21.4% and 33.7%, respectively. Across the first three quarters of 2012, only corrugated & kraft recorded an intake increase - of 17.3% to 1.227 million tonnes - whereas mixed papers, newspapers & magazines and the high grades suffered declines of, in turn, 5.3%, 7.4% and 22.2%.

UK mill stocks ended September some 2,678 tonnes higher than a month earlier at 102,195 tonnes to nudge overall supply at the prevailing rate of usage from 1.3 to 1.4 weeks. In the only significant change, the mixed papers inventory almost doubled in size to 1,804 tonnes to advance supply from 0.2 to 0.4 weeks.

As for domestic collections of recovered fibre, a 0.4% decline in September to 640,618 tonnes when compared to the same month last year was precipitated by a 5.8% drop to 198,131 tonnes for newspapers & magazines and a decline of 17.8% to 49,544 tonnes for the high grades. Again, mixed papers (+24.7% to 91,263 tonnes) and corrugated & kraft (+0.8% to 301,680 tonnes) limited the overall fall. Comparing January-September 2012 with the corresponding period last year, the same pattern emerged: mixed papers and corrugated & kraft recorded collection gains of, respectively, 4% and 5.1% whereas newspapers & magazines and the high grades retreated, in turn, 0.2% and 22.8%.

UK recovered paper exports dipped 2.3% year on year in September to 333,906 tonnes - the second lowest monthly total to date in 2012 - despite hefty increases of 26.4% for mixed papers, 13.1% for newspapers & magazines and 22.4% for the high grades. No prizes for guessing, therefore, that overseas shipments of corrugated & kraft plunged 19% or more than 36,000 tonnes year on year to 155,757 tonnes.

Thus, after three quarters of 2012, UK exports of corrugated & kraft were 2% lower than in the same period last year at 1.768 million tonnes. Making the same comparison, high grades fell 12.5% whereas exports of mixed papers and newspapers & magazines climbed 5.3% and 3%, respectively.

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