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Recovered paper - November 2012

The export price of OCC has been hovering close to the £100 per tonne mark in recent days as major mill operators in China have looked to replenish their stocks against a backdrop of generally low availability, even though demand for their finished products remains far from booming. The price settled back at around £94 per tonne after having reached £97 at one point.

Excluding the bulk grades, the values of most other qualities of recovered fibre have changed little in recent weeks.

The Chinese mill groups have also been looking to buy OCC in the US - although Hurricane Sandy disrupted domestic and export shipping schedules on the east coast.

At the time of writing, terminals in the New York/New Jersey area are reopening for business although services are yet to return completely to normal. Some trucking operations have been hampered by fleet damage and the lack of steady availability of fuel.

As a result, there has been some shift in the recovered paper buying focus to the US west coast.

Back on this side of the Atlantic, shipping companies have again attempted to impose freight rate increases for the current month - but with little success to date, according to the trade.

The latest monitoring report from the European Recovered Paper Council confirms that the continent’s paper recycling rate exceeded 70% last year. Having dipped to 68.9% in 2010, the rate climbed to 70.4% in 2011 to better the 70% objective set in the European Declaration on Paper Recycling for 2015.

With a rate of 78.7%, the UK was on the list of 13 EU member states to recycle more than 70%. The amount of paper collected and recycled in Europe’s paper sector remained stable at around 58 million tonnes, with some 9.2 million tonnes or 15.9% of this total imported for recycling by third countries outside the commitment region of the EU-27 plus Norway and Switzerland.

At the Bureau of International Recycling’s (BIR) paper round table in Barcelona on 29 October, the president of the European Recovered Paper Association Merja Helander pointed to pressure on collection volumes, and called for greater encouragement of recovery efforts in European countries that have paper recycling rates still below 60%.

She also expressed the hope that the revised EN643 European list of standard grades of recovered paper and board would be in use “by the end of 2013”.

Paper division president Ranjit Baxi, of Wanstead-based J&H Sales International, returned to a familiar theme: the Europeans are losing the race with the Americans to supply the Chinese with recovered paper and should “get back to the drawing board” on quality, he said.

US fibre exports to China surged some 3.3 million tonnes (66.6%) when comparing January to June 2007 with the first half of 2012, whereas European shipments to the same market climbed just 1.4 million tonnes (35%).

Nuno Messias, raw materials purchasing manager for Spain-based Europac, complained that every 1kg of non-paper components in fibre supplied to his company entailed 4kg of material being rejected and landfilled at a cost.

l During August, UK mill consumption of recovered fibre suffered its first dip since January this year, falling 4.7% when compared with August 2011 to 333,224 tonnes. Domestic usage across the first eight months of this year was 0.8% higher than in the corresponding period of 2011 at 2.578 million tonnes, according to statistics from the Confederation of Paper Industries and HM Revenue & Customs.

The same comparison reveals that the other major totals - UK mill intake, exports and domestic collections - all showed variations of less than 1% from January to August 2011 levels. Intake was 0.7% lower at 2.583 million tonnes, whereas exports registered an increase of 0.4% to 3.016 million tonnes and collections climbed 0.6% to 5.484 million tonnes.  

Consumption-wise, an increase of 3.7% in August for corrugated and craft propelled the cumulative total into seven-figure territory, with 1.073 million tonnes used domestically in the first eight months of 2012 for a year-on-year improvement of 14.7%.

But mill demand for the other classes of recovered paper remained in negative ground. Consumption of mixed papers slumped 11.2% in August and 6.9% across the first eight months of the year, while the same comparisons yielded declines of 1.3% and 1.8% for newspapers and magazines and of 28.4% and 19.5% for the high grades.

Also for UK mill intake, corrugated and craft was alone in posting positive figures, with a 1% upturn in August contributing to a 15.5% increase to 1.079 million tonnes for the first eight months of the year as a whole.

Using that same eight-month comparison, intake of mixed papers was 7.6% lower at 136,373 tonnes, newspapers and magazines suffered a drop of 5.5% to 1.006 million tonnes, and the high grades total plummeted 20.6% to 361,678 tonnes.

August certainly marked a bumper month for domestic collections of mixed papers, with six-figure incoming volumes recorded for the first time since November 2011. The total of 105,826 tonnes represented a jump of 31% compared with the same month last year, pushing the cumulative total 1.8% ahead of that for January to August last year to 714,620 tonnes.

Collection totals for corrugated and craft were also higher, by 2% in August and 5.6% for the year to date, whereas incoming volumes of newspapers and magazines were 0.5% higher in January to August despite a sizeable 10.8% decline in the eighth month itself.

Collections of the high grades, meanwhile, were lower by 26.8% in August and by 23.4% across the first eight months of 2012.

UK mill stocks of recovered paper had dipped below 100,000 tonnes by the close of August after four month-ends above this threshold. The mixed paper inventory almost doubled to 996 tonnes but supply remained perilously short at 0.2 weeks, while the only other significant change was the drop from 1.7 to 1.4 weeks recorded by the high grades.

With UK recovered fibre exports just 0.1% lower than for the same month last year at 369,272 tonnes, August’s export performance was underpinned by a 38.8% surge in overseas shipments of mixed papers to 90,369 tonnes, giving an eight-month running total some 3.1% higher at 605,796 tonnes.

Corrugated and craft exports were barely changed at 1.612 million tonnes whereas shipments of newspapers and magazines climbed 1.8% to 684,367 tonnes and the high grades recorded a decline of 15% to 113,931 tonnes.

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