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Recovered paper - 19 April

As widely anticipated, the lower grades of recovered paper suffered export price falls around the turn of the quarter against the backdrop of China’s much-debated Green Fence import quality crackdown.

OCC values for exports to Asia have retreated from three-figure territory to £94-£95 per tonne, while mixed papers have been attracting typically £65-£75.

But many UK brokers are declining to export lower-grade mixed papers until the ramifications of China’s import policy are better understood, according to the latest World Mirror on Recovered Paper, published by the Bureau of International Recycling.

Exporters have become distinctly nervous as the Chinese authorities examine a larger proportion of containers to ensure com-pliance with requirements.

There are reports of a significant number of rejections, and also of cargoes being diverted in order to sidestep those Chinese ports operating a 100% inspection policy, and thus avoid extended and expensive clearance delays.

At least one major mill group in China has written to suppliers to stress the “major implications” of the Green Fence regime, highlighting the zero tolerance approach to banned items and the need to keep prohibitive levels below 1.5% on a bale-by-bale basis.

In other price develop-ments, OCC deliveries to the continent and even to some domestic buyers had been commanding upwards of £100 per tonne until very recently, while domestic sales of mixed papers have been generally at £60-£70 per tonne, depending on quality.

News & pams has been commanding £95-£100 per tonne, with domestic purchases more towards the bottom end of the range while exports have been nearer the top. India has been a stand-out buyer of multigrade, which has helped export values to climb to £120-£125 per tonne, while UK sales have been clinched largely in the £115-£120 range.

Meanwhile, the high grades of recovered fibre have witnessed firm to slightly higher prices in response to low volumes and stable demand.

With shipping lines continuing their efforts to strangle the supply of vessel space, freight rate increases of typically $100 (£65) per 40ft box have been pushed through for April.

Staying with overseas shipments, China mopped up almost 70% of UK recovered paper exports in 2012 compared with nearer 64% in the previous year, according to figures compiled by HM Revenue & Customs and the Confederation of Paper Industries (CPI). The Asian giant took delivery of 3.13 million of the 4.49 million tonnes dispatched from the UK in 2012 for a year-on-year increase of just over 10%.

Recovered fibre shipments to Asia as a whole totalled 3.755 million tonnes, which increased the continent’s share of UK exports from around 82% in 2011 to more than 83%.

After China, Indonesia was the next biggest overseas buyer of UK recovered fibre, although its purchases dipped from almost 362,000 tonnes in 2011 to 328,332 tonnes last year. When making the same comparison, the decline in UK shipments to India was even steeper, from just under 250,000 tonnes to 194,112 tonnes.

Germany emerged as the top European buyer of UK recovered fibre, with last year’s total being almost identical to that of 2011 at around 223,000 tonnes.

> Exports of UK recovered fibre returned to something like normality in the opening month of 2013, after what officials are describing as the “anomalous spike” of January 2012, when a massive 505,539 tonnes of recovered paper were reported as leaving these shores.

Shipments in the first month of this year were 24.2% lower at 383,396 tonnes, although this figure still exceeded eight of the monthly totals recorded in 2012.

Overseas shipments of mixed papers were actually 15.4% higher year-on-year in January, at 93,949 tonnes, whereas thumping declines were reported for corrugated & kraft (-26.5% to 218,612 tonnes), newspapers & magazines (-47.4% to 58,865 tonnes) and the high grades (-20% to 11,970 tonnes), according to statistics from the CPI and HMRC.

UK collections of recovered paper also established their 2012 peak as early as January last year at 796,672 tonnes.

In the corresponding month of 2013, incoming volumes were 14.2% lower at 683,385 tonnes, despite a 6.7% increase for mixed papers to 104,204 tonnes.

Collection volumes for corrugated & kraft, newspapers & magazines and the high grades fell, respectively, 14.7%, 22.2% and 12.4% year on year.

Domestic mill stocks, meanwhile, dipped from 146,213 tonnes at the end of December last year to 145,011 tonnes by the close of 2013’s first month.

Supply of corrugated & kraft fell from 3.7 weeks to three weeks, as mill inventories retreated from 89,849 tonnes to 86,994 tonnes during the course of January, while coverage of the high grades slid from 1.4 to 1.1 weeks as stocks declined almost 2,500 tonnes in January this year to 9,902 tonnes.  

Stocks of newspapers & magazines were swelled by approaching 4,000 tonnes during the same period to 44,786 tonnes, to nudge supply from 1.4 to 1.5 weeks, while a 335-tonne upturn in the mixed paper inventory failed to shift supply from 0.9 weeks at the prevailing rate of usage.

Once again, corrugated & kraft underpinned UK mill usage of recovered fibre, as consumption climbed 18.2% year on year in January to 127,953 tonnes.

Elsewhere, usage of mixed papers was 11.8% lower at 16,365 tonnes and the high grades witnessed a decline of 10.3% to 38,764 tonnes. Consumption of newspapers & magazines edged just 0.4% lower to 131,973 tonnes.

The combined impact of these figures was a 4.1% increase in domestic mill usage this January to 315,055 tonnes.

Similarly with UK mill intake, the January 2013 figure of 133,592 tonnes for newspapers & magazines was a mere 0.1% shy of the 133,769 tonnes recorded in the opening month last year.

Mixed papers (-19.5%) and the high grades (-1.1%) also registered year-on-year declines, whereas intake of corrugated & kraft climbed 9% to 124,615 tonnes. Rolling together all these stats, domestic mill intake was 1.8% higher in January this year at 315,763 tonnes.

UK paper and board producers made a stronger start to 2013, churning out a total of 385,858 tonnes in January for an increase of 7.1% over the 360,396 tonnes of the first month last year.

Output of packaging papers and boards leapt 15.6% and sanitary & household surged almost 8%, whereas production of newsprint and printings & writings dipped, respectively, 0.9% and 3.9%.

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