Overseas demand keeps pressure on paper prices

And, with pulp prices also rising because of increased demand for wood and pulp, there are a range of factors that appear likely to keep the pressure on for small but steady increases in the prices paid for used material.

As yet, the steady increase in export prices in May and June appears not to have had any big impact on the UK market but questions are now being asked as to whether the UK will be able to continue to contain price pressures, or have to make increases over the summer.

On stream

The pressure on prices is coming because of the large number of new papermaking machines coming on stream in China this year, mainly to make cardboard with used cardboard and mixed papers as the source material. As a consequence, Chinese demand is expected to stay firm and move upwards rather than downwards.

Other export buyers, from countries such as Indonesia and Thailand, are also looking for material and even though they buy relatively small tonnages this is adding to the price pressure.
Because of the demand from China, UK firms are reporting that more and more overseas buyers are sending representatives to the UK to source material direct.

One of the major UK manufacturers is currently investing in new equipment at one of its mills and so demand for used cardboard to feed the plant is reduced this month. Other mills too are reported to have reasonable stocks of material but they are well aware that the summer months will bring less arisings with the potential for a squeeze on supplies.

In the newsprint sector, prices continue to edge up in the export market. Some UK experts have questioned how easy it will be to get extra tonnage out of the UK and more mills are looking to maximise their use of soft mixed material. The government is trying to reduce the amount of unwanted leaflets sent to homes so this could lead to a fall in some of the mixed that is collected from the domestic waste stream.

The real pressure on the price of newspapers and magazines is expected to come when one of the three contenders – Aylesford, Ecco and Palm – move ahead to start construction of a new newsprint making machine in the UK.

Mid-grades, largely used for tissue making, are also in good demand with some prices rising this month within the domestic market, and more especially on the export grades. One reason for this is said to be that office arisings are not increasing very much and that printers are only busy, rather than “very busy”.

Kilbagie

One sign of the decline in papermaking within the UK is the sale announced last week of the Kilbagie mill in Scotland to waste management firm the Oran Group, based near Alloa.Originally a distillery, the plants was transformed into a paper mill by James Alexander Weir (J A Weir Ltd) following the Industrial Revolution. The mill underwent a series of changed ownerships, including Gestetner Papers Ltd In 1969, The Pratt Group in 1987, Inveresk in 1997 and finally the LPC Group in 2002. The mill has been lying empty since 2004, when the LPC Group abandoned plans for a £22m investment to develop the facility into a state-of-the-art paper mill.