Rising operating costs hits recovered paper sector

Graham Coombs, president of the Independent Waste Paper Association, said today that there was no doubt that rising operating costs were hitting merchants and companies across the recovered paper sector.

” Our operating costs are rising and the industry is not getting any more for its waste paper from the mills.“
– Graham Coombs, IWPA
“Our operating costs are rising and the industry is not getting any more for its waste paper from the mills. Wherever possible the sector will have to pass this extra cost on through increases in charges for its services,” he said.

Mr Coombs, who is also recovered paper manager for SITA UK, added that the passing on of extra costs was not always easy to do, but that there did appear to be an acceptance among some customers that charges had to increase.

Merchants are unable to take much comfort from the recovered paper market itself at present which is generally flat. Arisings are down by as much as 30% in some grades, such as newsprint which is one grade that is proving popular in the export market.

In other materials, including Old-kls (used cardboard) there is also something of a downturn, although one industry expert said that more efficient segregation of material by supermarkets and other retailers meant that more material was being generated back-of-store.

Pessimism
The flat tone to the market is causing some pessimism, especially with fears that demand from China could slow in the coming months if mills there take downtime as a result of higher energy costs. Already American exports to China are seeing a softening of market prices, notwithstanding that in recent weeks there has been a slight firming in UK export prices for cardboard and mixed with prices achieved of up to 62-63 per tonne.

One bright note is that the market is being boosted by the increased value of the paper export PRN, which is worth in the order of 14 and forms part of the export price. And, with a slight weakening in the value of the US dollar, merchants are also gaining a few pounds in sterling on the export front.

In the UK the PRN is also important in keeping the value up to the 45 level for used cardboard and contributes to an element of the mixed price. There is optimism that the price of the PRN could rise further although some experts are voicing caution over further increases because of the high level of collection and exports of packaging grade material.