Paper market cooling from recent highs

Markets for waste paper in May are said to be levelling or cooling for a number of reasons including weaker demand from India for mixed paper and seasonal lower demand from China.

Exporters of recovered – or waste – paper for recycling have told letsrecycle.com that “it is not a crash but we are seeing significant reductions. These are still good prices but there is some nervousness about what might follow.”

However, a sharp fall was seen 12 months ago and then markets recovered over the summer of 2020.

Demand from India for mixed paper and OCC (used cardboard) is currently being hit by the rise in coronavirus cases although there is a view that this will just be a temporary reduction in demand, potentially stretching through to the end of June.

Export markets have softened (picture: Shutterstock)

China

Despite the official exit of China from the waste paper import market at the end of 2020, the country is still having a huge impact on demand and pricing as it has in effect ‘exported’ the production of recycled pulp.

It is now a major buyer of recycled fibre and pulp from plants in South East Asia, India and elsewhere with a number of these owned by Chinese companies. May is typically a quieter month of the year in terms of demand in China and buyers there do not want to see the price of recovered pulp going any higher.

Europe

Demand from Europe is also easing for used cardboard with prices for used cardboard and mixed paper reducing, according to some exporters to around £120 per tonne whereas they have been in excess of £140 per tonne. Partly this is due to German mills being reluctant to pay the high prices that have been seen in recent weeks in the face of weaker deep sea export demand and more arisings internally. However, the value of deinking material (typically newspapers) remains steady.

“India has a Covid situation and a lot of measures including lockdown are being taken”


Pankaj Chowdhary
Ekman Recycling UK

One paper recycling expert Pankaj Chowdhary,  director of Ekman Recycling UK, told letsrecycle.com: “It is not just India, there is pressure from all sides. China has reduced the amount it is willing to pay for recycled pulp as the buyers of finished product are not willing to pay the higher prices.

“India has a Covid situation and a lot of measures including lockdown are being taken”. Mr Chowdhary said Indian ports and paper mills are running but could face some disruption.”

China

Colin Clarke, managing director of export business Winfibre UK, said: “The prevailing market is that China is out of its peak season and corrugators and packer fillers do not want to pay the higher prices which have been seen. The market also factoring in the increases in export freight costs with shipping lines raising prices to levels that can put costs up by £20-30 per tonne.”

“The prevailing market is that China is out of its peak season”


Colin Clarke
Winfibre UK

Mr Clarke added that European buyers were also not willing to continue to pay the higher prices that they have been paying because of a fall in the value of material sent to the South East Asian market.

Within the UK there is an expectation that volumes of waste paper available should increase as more commercial material arises as lockdown ends.

Outlook

Overall, there appears to be a consensus that the recovered – waste – paper market is likely to remain volatile over coming months. But, with more mills being built in south east Asia and demand from India expected to pick up in the early summer prices could well settle at relatively high levels, even if they are off from recent highs. The current downturn appears most likely to be seasonal and something of a market correction.

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