However, reports from the Bureau of International Recycling and from senior figures in the UK, suggest that the market is not depressed and that there is grounds for optimism, led by partly by export demand. And, several commentators suggest that should there be a turnup in demand this September, with low stocks in UK merchant yards and only “comfortable” stocks in mills, there could be a sudden pick-up in demand and prices.
Gerry West, a vice president of BIR, said that while mills are running well, they are generally not at full capacity. “Mills have very little stocks, and although they can be seen as comfortable with this they are lower than they would really like.”
He added that with arisings down currently because of the summer months, if there was September turnaround, some material could be in short supply.
The BIR report for the UK says that despite falling prices for most grades and lower order intake in many mill sectors, demand has remained generally good which has meant that merchants' stocks are low. The report adds: “Export opportunities to the Far East improved, reflecting lower freight rates, while demand from mills on the near continent has been constant – especially for corrugated and news qualities. Overall, supply and demand are in balance, but lower summer collection may lead to shortages of some grades by the end of the third quarter.”
Industry opinion in the UK as to market trends are mixed. A keen watch is being kept on the American market which appears to be less optimistic than reports from some European countries.
One UK commentator reiterated the view that a shortage in September is possible. ” With a reduced supply in the UK into merchant yards because of the holiday period the danger period will come if the market picks up”. And he pointed to a firm export market where prices are better than the domestic, especially for some low grades. In particular, there is good competition for newsprint grades where export demand is high and all mills needing the material are said to be having some difficulty in obtaining supplies.
The old KLS (cardboard) market has seen some price reductions over the past month. A typical UK mill prices ex-works has been around the 30-35 mark. But, Smurfit has announced a price cut to 25 a tonne although it is not clear whether it is actually taking in much material to its mill at Snodland, Kent at this price.
Questions are also being asked as to how the lower prices reflect the PRN (packaging waste recovery note value). The price of paper PRNs – which are mostly issued by paper mills – is now above the 20 mark and so this means that in the case of Smurfit, it could be reasoned that only 5 is being paid for the old KLS.
BIR REGIONAL REPORTS on page 2
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