The price uplift which the paper sector has experienced over the past several months looks to have peaked in June with only minor increases now recorded on some grades.
This upward trend is typical for this time of year as seasonal demand kicks in, particularly from Europe. However, this year has not seen prices jumping up as much as they have in previous periods.
This can be speculatively attributed to the War in the Middle East and associated rise in energy and haulage costs.
The past two months have seen demand increase across the board (both domestic and export), but this seems to now be coming to an end. Some in the industry theorised that this demand may have been linked to those wishing to process material ahead of energy costs rising even further. Overall, it does not seem that too many tonnes are moving through the domestic market.
However, the general consensus is that energy costs are unlikely to rise much further, especially if a peace deal is struck this week (and manages to hold). However it is important to note that any effects of this will not be immediate and it may still be several months until energy costs start to decrease meaningfully. Indian demand, which has increased recently, may continue to hold. Southeast Asian demand remained strong throughout June.
OCC 1.05 has seen a minor increase of £3 on the top end and £5 at the bottom end, whereas export has seen a slightly larger increase of £4 at the top end only.
On the export side, graphic paper grades have seen increases while they have been stable on the domestic trades.
Meanwhile most other grades have remained stable.
Looking ahead
Most have cautioned that demand seems to have peaked in June and July is likely to be a quieter month.
The industry is waiting to see if the Essity Prudhoe mill will increase its purchasing over the coming month. While the mill is technically operational, it has not been hungry for demand and is likely working through stock built up throughout its commissioning phase.
Paper prices in the US are reported to have fallen by between $5 and $10 in June, with some theorising that this may be a sign of similar decreases to come for other markets.
There have also been reports that Indonesia has introduced additional checks due to fears around contamination and quality. Some mentioned concerns that this may cause knock-on delays or flood other markets with stock, but this remains to be seen.
View our more detailed paper price index here.
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