Export demand – from China, India and South East Asia – remains strong and buyers there are seen as willing to pay the additional war premium insurance costs of a round $7 a tonne. Alongside this demand, the price of pulp has risen for two months and further increases are due in June.
One industry expert remarked that the export market is likely to continue to seek large volumes of waste paper from the UK. He explained: “Despite the war, it will not be a case of China looking elsewhere for material as there are few other sources than the United States and Europe for material. Recovered paper from Japan, for example, is usually already contracted for.”
However, in the short term, European mills may take advantage of the current export difficulties – such as containers being diverted for military use – and seek to build stocks of Old KLS (cardboard) which had reduced sharply over the past few months. Domestic mills appear to be holding their prices level but may have to move them up to compete with the higher prices on offer from the Far East and Asia. The duration of the war in Iraq will also be a factor: a longer conflict could see Chinese supplies running low with a consequent rush for supplies later.
Tissue
A buoyant market is also apparent in the tissue sector with exports to Germany, Italy and France sucking material out of the UK market. Demand is also firm from India. The tissue market traditionally used middle grades and these are all showing price rises at present. Mills can afford to pay more as there is good demand for finished products.
In contrast, demand in the printing and writings sector in the UK – such as for company reports and brochures – is down. As a consequence recycling mills in this sector are finding it harder to obtain waste material and so if they try and buy office grade material are facing competition with the tissue mills who can offer higher prices for the recovered paper.
Newsprint
In the newsprint sector, where the UK has three mills – Aylesford, Bridgewater and Shotton – demand remains firm. This is being spurred on by the mills needing to secure material in the face of strong export competition.
But, demand for finished product – newsprint – has not been strong and so the mills are seeing their margins under pressure. Nevertheless, with Shotton due to have its new deinking capacity in production later this year and Stora Enso starting up in Langerbrugge this summer, both companies are securing their supplies. This is prompting contracts to be agreed, particularly by Shotton, for used newspapers at or above the current market rates.
Subscribe for free