The discussion occurred at the BIR’s World Recycling Convention and exhibition in Dubai last week.
The division’s president, Francisco Donoso explained that the high cost of energy is the main contributing factor, “as it has become by far the largest production cost for mills”.
Moreover, they cannot pass this cost on in their sales prices due to the low demand for their products, Mr Donoso added. “Therefore, the only cost they can manage is what they pay for their raw material.”
Low prices
In the USA, prices for mixed paper had reached zero dollars in some locations and thousands of tonnes were being landfilled, Mr Donoso continued. He highlighted that prices had fallen fastest in Europe and he anticipated further downtime, suggesting “it is difficult to know where the bottom is”.
India has also seen the high prices of more than six months ago “fall away dramatically”, Nishant Sahney, managing director at Gaurav Vipa Papers Pvt Ltd in the UEA set out. He listed a number of reasons for this, one being the lack of exports to China.
“On top of that, because of less demand in US and Europe, we are now competing with manufacturers from the Middle East and other Asian countries. Mills in India are now running at 70% capacity so that is why they cannot afford the prices of six months ago,” he added.
India
According to Mr Sahney, the Indian market imported 7 million tonnes of secondary fibre in 2021. Of this, 40% came from the USA, 25% from Europe and 22% from the Middle East with Sri Lanka, Australia and Africa making up the balance. While noting that consumerism was on the rise, Mr Sahney also said that China’s investment in Vietnam and Malaysia to cater for its domestic market has hit demand for Indian products, creating a supply-demand gap.
In another presentation, Atul Kaul, director pulp & paper, Waraq in Saudi Arabia considered the recovered paper market in the kingdom and his company’s activity. He outlined that in 1996, production required 85% virgin paper but it had now swung round to using 85% recycled paper. In 1995, 80% of recovered fibre was exported with the rest being landfilled. This year, 90% of recovered fibre is being consumed by local mills.
On the other hand, Ranjit Baxi, president of the Global Recycling Foundation, said that “the paper sector had always proved to be resilient”. He suggested “it’s time we supported new countries elsewhere – in the GCC or countries in Africa which could be the next manufacturing hub”.
UK
Export markets are critical for UK recovered paper as more than half the collected 7.5 million tonnes goes overseas as there is insufficient domestic demand.
With the energy costs of paper production soaring on the continent, especially in Germany, German mills are taking downtime and so demand for recovered paper – which has been important to UK exporters – has softened. German mills had been buying mixed paper from the UK in substantial volumes but these orders have now fallen away (see letsrecycle.com story).
Subscribe for free