The reductions are being made against a background of weaker old KLS prices in the United States and lower demand from UK mills.
The January reductions are thought to follow moves by some mills to take in extra material in December so that the tonnages would qualify for the issuing of PRNs – packaging waste recovery notes – that could be sold in January this year as 2001 PRNs.
Prices held firm at the end of last year until BPB Recycling, which supplies its parent company with material for plasterboard lining, reduced its prices. Makers of liner paper and KLS had generally sought to maintain firm prices for old KLS fearing that if they paid less for the waste material, customers would demand price cuts for the packaging grades that they bought which are made from the recycled material.
Industry experts say the current situation in the UK for all grades is looking “pretty serious” and predict “a definite downturn for at least a few months”. And, a close eye is being kept on linerboard prices in the US. If they were to fall then it is expected that old KLS prices and some other grades could fall sharply in Europe.
The price reductions for old KLS which now see the UK mill price down to about 45-55 are likely to fall to 40 or lower next week, are already said to be reducing the number of small collectors and totters willing to seek out material.
Prices paid for material at this level is now around 10-20 mark at best.
Other grades are also seeing reductions with news and pams prices falling to about 35 or less in the home market. The export price is even weaker with quotes currently in the low twenties.
A slowdown is said not to be too evident on the continent yet. One factor there is that material, such as mixed paper and old KLS is collected by waste management companies with more subsidy available. Accordingly if mills in Northern Europe do reduce prices the material supplied by the waste management companies is likely to continue to flow, whereas exports from the UK could slow because less subsidy is available via local authorities or other sources.
Knife-edge
Gerry West, vice president of the European Recovered Paper Association said: “The market is rather on a knife-edge and we are watching the US market closely. Exports from the UK are also down although more material could start to move from Northern Europe soon because of reductions in deep sea freight prices.”
Ray Watson, chief executive of the British Recovered Paper Association, said that the industry was paying particular attention to the situation in the US. “We are aware that the economy there has slowed and at home some prices are moving down.”
Meanwhile, there is still no news on what will happen to the East Lancs Paper Co (letsrecycle January 19). The plant produces coloured papers and lining papers and is a purchaser of various recovered material including mixed paper and coloured grades and is currently with administrators, Arthur Andersen.
Several expressions of interest are said to have been made for the company.
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