22 April 2020 by Steve Eminton

Pandemic pushes up waste paper prices

Prices for waste (recovered) paper have risen during April due to shortages and demand caused by the coronavirus pandemic.

In particular there is a strong demand for recovered paper feedstock to supply the tissue and packaging board sectors within the UK  and on the Continent, with prices rebounding from some historically low levels over the past year.

Tissue

Tissue mills, depending on the individual mill machine, can make their product from recycled office grade materials or from wood-based pulp as well as a combination of both. Currently, in the face of a shortage of office grade materials because of the “work at home” policy, they face the choice of using more costly pulp or even using mechanical papers (such as used newspapers) as a substitute for office material.

Some tissue mills are buying newspapers as a feedstock because of office grade shortages (picture: Shutterstock)

The mills are also paying higher prices in a bid to secure office material amid strong UK and overseas competition for the grades. The need to also use some used newspapers for the production of tissue (which includes for toilet rolls, paper towels and similar products) is also forcing up the price of used newspapers in a market where newspaper publishing is in decline.

Pulp

Pulp prices are also on the rise with, for example, Scandinavian pulp producer SCA upping its pulp price by $40 from 1 May to $880 per tonne. The company’s pulp vice-president, Henning Ellstrom, said this week: “We see a strong pulp market with a growing demand from primarily tissue customers. The pulp market is global and we have already seen price increases on other continents.”

Used cardboard

And, prices for used cardboard (OCC/Old KLS) have also jumped, again partly because of a shortage caused by the pandemic. While arisings of cardboard are normal – or even higher than usual – from the food retail sector, generation from other retailers and the commercial sector has all but halted.

With strong demand for new cardboard to package consumer goods and health items, UK board mills are looking to keep their paper machines operating and so are striving to ensure they have enough feedstock. They typically use about 80% used cardboard and 20% mixed paper to make new cardboard. This has meant that mixed paper prices have also moved up, which is likely to be welcomed by councils and waste management companies.

Dusseldorf earlier this month; Demand for tissue products has also been strong in Germany (picture: Shutterstock)

Continent

Prices for used cardboard are also rising because of demand from Germany where mills are looking to secure sufficient material as the lockdown eases – some plants are said to be “desperately short”.

Unusually, South East Asian and Chinese demand is said not to be a price driver at present. However, prices in the deep-sea market could rise next month if America “reopens” and needs to keep its material for internal use. Despite this, one market expert suggested that he thought South East Asian demand could remain relatively slow as packaging for “big ticket” items to the West was not needed at present.

Government

Concerns about the market pressures for tissue and cardboard have been so great that they have been discussed by the paper industry with government. No emergency action, such as restricting the export of tissue feedstock, has been taken although it has been aired.

The UK’s Swindon-based Confederation of Paper Industries told letsrecycle.com that it was aware that “lockdown” has had a significant impact on the supply of recovered fibre.

In a statement, the CPI said: “Supplies of office grades for the tissue sector have reduced in the order of 50% and reductions in OCC supplies are significantly affected too.  CPI continues to work closely with government to monitor the situation and assess the likelihood of genuine supply shortages developing.

“Supplies of virgin fibres into the UK are currently unaffected by the crisis, and this, together with reduced production in the print and graphics sectors, mean that fibre is currently available on the spot market to serve the tissue mills.  The packaging sector is currently adequately supplied, but pressure from export markets and declining mill stocks bring the possibility of tighter markets in May.”

“Prices have risen particularly due to European demand but are still behind historical averages.”


Simon Ellin
Chief executive, Recycling Association

Recycling Association

Simon Ellin, chief executive of the Recycling Association, emphasised that while prices were rising, this was from a low level.

Dr Ellin said: “Prices have risen particularly due to European demand but are still behind historical averages. It has helped put a bit of margin into a really struggling sector at a time of at least 50% reductions in volume and high overheads, so it only slightly compensates for the other pressures facing businesses.”

He added: “The general consensus would be that we will have hit the peak of the rises by the end of May because supply will catch up with demand. We are already seeing in Germany people going back to work and so should start to see more tonnage come into the system which will help settle the market down.”

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