Pressure grows on recovered paper prices

Most of the larger mills are still maintaining prices for old KLS – cardboard – at around the 37-40 level ex works with revenue from packaging waste recovery notes playing a big part in helping to maintain this figure. However, several smaller mills have reduced the price to an equivalent of about 28 ex works.

The situation with old KLS is complicated by the fact that mills can issue packaging waste recovery notes on the old KLS and these are currently selling from 18 upwards with mills thought to be expecting prices at 20 or more over the coming months for the PRN.

Accordingly, this means that cardboard prices could hold at or near the current level, even though the prices are in many instances higher than on the Continent because of the PRN support. But, with a low corrugated value in the US, the prices could be dragged lower although some reports from America suggest that the cardboard sector has started to bottom out there although the market is still at a low ebb.

On the newsprint side, the market is excited by the prospect of good demand from the Stora Enso plant in Langerbruge which is looking to build stocks of about 700,000 tonnes for its opening next year. Nevertheless, current prices for news and pams have reduced to around the 25 level although some mills may pay slightly more for new contracts.

One grade that has seen big reductions is mixed papers with one observer describing the mixed market as “dire”. Even though a proportion of mixed paper is eligible for PRN support, prices have fallen to around 5-10 ex works and more merchants are paying zero for the material or instigating charges.

Meanwhile, a close watch is being kept by several companies on the Far East, especially in the wake of the financial crisis facing the large pulp and paper company Asia Pulp & Paper. Trading in the company's shares on the New York Stock Exchange were suspended earlier this month and the company's predicament is seen as having a knock-on effect around the globe.

The Far East is seen as increasingly largely to drag the market down, although the downturn in the US and rising fuel prices there are adding to concerns.