The Shotton investment is seeing increased use of recovered newspapers and magazines for papermaking, but parallel production increases at the mill have failed to compensate for reductions in the boardmaking sector.
And, the decline in packaging and boardmaking looks set to continue with yet another UK mill facing the possibility of closure. Mondi Paper UK has announced that it is entering a period of consultation with the workforce at its Creams Mill in Bolton and there are concerns that this is the signal that the mill could close in 2005.
Closure
A closure of Creams Mill would add to a series of closures within the board and packaging sector which is an important consumer of recovered material.
In recent years the UK has lost a number of mills including East Lancashire and Purfleet. Investment in the sector has been limited and while there remains speculation over plans for a large new boardmaking mill in the Hartlepool area, more plant closures could mean the UK's production capacity for board and packaging would be unlikely to rise above current levels. One factor influencing this is the strong competition from new machines on the Continent which can produce modern grades of material as well as being highly efficient to operate.
The export safety valve remains crucial to UK collectors. The continental demand, added to strong order books from China, India and other South East Asian countries, means the UK looks set to remain a major exporter of used cardboard and mixed papers.
Newsprint
In the newsprint sector there has been a substantial production increase of +6.4% in the first nine months of the year compared to the same period in 2003, driven by the Shotton investment. Total average weekly consumption of newspapers and magazines by the three UK deinking mills – Aylesford, Bridgewater and Shotton – was 28,429 tonnes compared to 23,022 tonnes in 2003.
The market outlook for the coming months for used newspapers and magazines has a note of uncertainty to it in contrast to the buoyant market of recent months, driven by orders from India and increased demand from Holmen to serve its planned new Spanish mill.
While demand is firm from Asia there are questions as to the level of orders from overseas buyers in a market which is seeing higher container prices, currency volatility and other factors including religious festivals influencing demand. The appetite of UK households for newspapers over the Christmas period will also be important. One expert remarked that magazines will be in good supply after Christmas but that there is a little uncertainty over newspaper arisings.
November prices for used newspapers and magazines have seen a very slight firming in the domestic market to about 45-46 per tonne. On the export market the price has weakened a little to about 48-52 a tonne.
Old-Kls
A stable market is probably the best hope among recovered paper merchants for Old-Kls for the next few months. With the UK mills reporting “steady running”, and at least one mill “not so busy”, there is among the mills “no panic situation at all”. One expert suggested that there could be pressure soon for a reduction in the price paid for material as mill stocks are higher than traditionally seen at this time of the year. In September – for which figures have just been released – board mill stocks provided cover for 1.4 weeks compared to 0.9 weeks in the same month in 2003.
The high stocks are likely to be assessed by UK mills before they decide whether or not to maintain current prices in December and January. Merchants are likely to resist any downward pressure but in the face of weak prices for packaging waste recovery notes, reductions of up to 10 per tonne in prices achieved for new product in the UK and a slower market in the Far East, small price cuts could be inevitable.
Current Old-Kls prices, ex-works (collected from a merchant) per tonne are from 45 or just below, with some premiums prices achievable of up to 48.
One factor that could help the price for Old-Kls is that the price for mixed material has remained convincingly firm in 2003 and the used board price usually stays well above mixed material.
Mid-grades and whites
In the office grade sector – coloured best pams and sorted office waste – there has been a strengthening in the market with tissue mills – main buyers for mid grades – pushing up price paid per tonne by about 5 this month. The mills had been expected to increase prices paid in September and October but delayed until November, partly to a desire to maintain margins between finished goods and the cost of the secondary raw material.
Stronger orders from continental branches of UK mills have been a factor in the upturn in the mid-grade price although Continental prices for the mid-grades have remained unchanged – they were already higher than UK prices for similar material.
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