And, a rise in mixed paper and used cardboard values has been highlighted by Viridor’s Keith Trower who represents the UK at BIR.
In a first quarter report for 2020, Jean-Luc Petithuguenin, president of the BIR’s recovered paper division and from France’s Paprec recycling business, says that while demand has been boosted, there is a supply constraint.
Mr Petithuguenin, stated: “With borders closing one after the other, mills wanted to make sure they could secure deliveries; we still have to produce packaging for pasta and for medicines, and so mills do not want to risk any supply shortage.
“For France, high levels of export demand are also coming mostly from neighbouring countries but we are hardly in a position to supply their needs.”
And, he reflected that “with May being a short working month in France because of bank holidays, paper mills are nervous about this period and usually look to stock up in advance; this year, however, it will be impossible because of the low collection rate.”
Commenting on the markets, Mr Petithuguenin noted: “Steady prices are anticipated for deinking grades and should be supported by those for OCC… Mills have high stocks and are expecting lower demand as people are having to stay at home and work online.
“The tissue sector is under pressure and needs recovered paper to feed its production. High grade prices are also increasing where quality can be offered.”
UK perspective
From the UK, Keith Trover, managing director of Viridor Resource Management, said: “Demand for recyclates has actually increased owing to restrictions on businesses and the enforced lockdown causing lower volumes to be produced… Packaging demand is strong and increasing owing to the ‘Amazon factor’ as more households order groceries and other items online.
“Along with packaging, the tissue sector has also experienced significant increases in demand, linked to growing medical needs as well as consumer panic-buying. As a result, specific infeed grades have risen.”
Export
Mr Trower also pointed to rise in prices on the export markets. He said: “In the already-vulnerable export sphere, the coronavirus impact has been felt in the recovered paper markets across Asia, with disruptions to the supply chain and rising prices for recovered paper imports. COVID-19 has significantly impacted general imports and exports, leading to vessel omissions and container shortages.
“The coronavirus impact has been felt in the recovered paper markets across Asia.”
“As a result of a severe shortage of containers and limited capacity, shipping lines have been increasing freight rates for recovered paper cargoes globally. And owing to a shortage in Europe caused by collection disruptions and an increase in demand for packaging, OCC and mixed paper prices are increasing.”
Global view
Former BIR president, the UK’s Ranjit Baxhi, commented on the global perspective in the report. He noted how “coronavirus has inflicted tremendous pain, uncertainty and pressure on the world’s second-largest economy China. Industrial production, investment, consumer spending and employment levels all took a steep dive at the start of the year, badly affected by COVID-19. All hopes of a recovery in its economy after the Chinese New Year were shattered by the virus.”
He also highlighted how sea freight rates continued to rise during the first quarter, with some increasing by over 200% from around US$ 800 to US$ 2500 as vessel capacity was withdrawn due to reduced cargo volumes at the start of the period. Obtaining container space continued to be a major hurdle to maintaining export levels, said Mr Baxhi.
He commented that China’s fibre imports in 2019 were around 10.3 million tonnes compared to over 17 million tonnes in 2018; its import volumes are anticipated to be around 5 million tonnes in 2020, dropping to zero in 2021.
And Mr Baxhi reported that prices for China’s domestic OCC continued to increase during the first quarter from US$ 300 per tonne in January to around US$ 350-plus whereas European OCC opened the quarter at US$ 100-plus and ended in March at US$ 145-plus, with shipping space still at a premium. US OCC rose during the quarter from US$ 135-plus to around US$ 180.
Overall said Mr Baxhi, “Markets are all preparing for fibre imports at higher prices following the drop in collection volumes during the second quarter. Looking further ahead, everyone is waiting to see how the global markets will stabilise with the easing of lockdowns and the resumption of normal trade channels, with increased availability of container space at much-reduced freight rates compared to the high levels of the first quarter.”
Germany
From Germany, Reinhold Schmidt from Recycling Karla Schmidt, highlighted price falls in the first few months of the year with for example, for baled mixed paper “additional payments were requested in some instances”.
Mr Schmidt noted that Europe as a whole still has a major recovered paper surplus and that until recently, more than enough recovered paper was also available in Germany.
“The paper industry’s raw material requirements remained very high.”
He continued: “With the COVID-19 crisis, however, the slight decrease in domestic collection volumes in the second half of March has already caused unrest. The closure of numerous municipal recycling centres contributed to this decline. In addition, imports of recovered paper – on which Germany has always been dependent – were hampered by truck backlogs at borders as a result of virus containment measures and staffing issues among logistics service providers. Meanwhile, the paper industry’s raw material requirements remained very high, especially among manufacturers of urgently-needed packaging.”
BIR Convention
The Bureau of International Recycling will be discussing recovered paper and other materials at its next Convention in October 2020 in Istanbul.
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