(Updated: October 17) The picture in the UK remains one of concern with prices falling throughout much of the chain.
One small business with a municipal contract in the north of the UK said this morning that the company was being offered as little as £10 a tonne for cardboard by his merchant.
A merchant in the Home Counties said at midday today that he was finding it hard to get any UK prices and there are no prices for the Far East. “I have been in this for more than 30 years – it is so different to when the market collapsed 15 years ago. Now there is a lot more material around, so much more has been collected nowadays to feed the Chinese appetite and the Far East. The Chinese have said with a click of the finger that their warehouses are full of finished product so they don't want any more material.” In the UK, he added, mills with their own internal merchants “will be bound to use up their stocks before seeking material from the industry as a whole”.
Waste management industry sources suggested that some major companies are already facing problems in moving paper and card from materials recycling facilities, although newspapers are not proving a problem. Particular problems could arise with mixed material.
However, UK mills have indicated that they are resolved to stand by their existing suppliers and are more likely to pay firmer prices to them rather than to exporters now looking to sell material into the domestic market rather than overseas. The bottom-line appears to be that where customers have long-term relationships with a UK mill in the current turbulent market they will generally be supported and material taken in. However, those businesses with material who have concentrated on export markets in recent years may well find it more difficult to find a home for the used cardboard in the UK. Lower prices are expected to be paid accordingly for any export and additional tonnage that UK mills actually choose to accept. However, established suppliers appear, at the present time, likely to receive above £50 a tonne in a range up to about £58. letsrecycle.com guide prices for October for used Cardboard are currently in the range of £45-58.”
Commenting on the market situation in China, Wade Schuetzeberg, managing director of ACN Europe which supplied China's Nine Dragons, emphasised today that there was still demand for material to be supplied to China. He said that ACN had through the first 13 days of October boughtmore material than in the same period in September. He said: “Throughout the rest of the month my hope is that the tonnage we bought is shipped in good order. And, people also need to make sure their operations are in good order and remember that good quality is of great importance as ever, for both export and domestic markets.” Mr Schuetzeberg added that looking ahead, “ACN is maintaining its service to its existing suppliers. For the rest of the month we will be buying our regular volumes at the market price, we do still need to feed our mill. The challenge is of balancing the market and that is a challenge to be taken.”
(October 15 2008): Mills and merchants painted a picture of a confused market with an overwhelming sense of uncertainty and foreboding.
One leading export company told letsrecycle.com: “There is some distress in the market. Even people with tonnages on the water may find it has to be resold and people who thought loads were going out of the country may find they are not.”
St Regis, the UK's largest buyer of used cardboard (Old KLS), is thought to have reduced its price below £50 a tonne, close to the £45 a tonne mark and reduced its intake. The domestic mills have been paying up to £60 per tonne but demand from these, including SCA and Smurfit Kappa is thought to have reduced sharply.
The board mills are said to be holding good stocks of finished product and with the uncertainty over prices and the prospect of thousands of tonnes of export material needing to find a home in the UK, the domestic mills may find they are offered large tonnages and able to negotiate lower prices for this.
One London merchant said: “These prices are moving quarterly – on the quarter hour they are changing downwards.”
Others said it was wrong to say the market was collapsing and claimed exports were still being made at £60+. However, the consensus in the marketplace seems clear, that prices for Old KLS and mixed paper are turning down sharply and reductions are also being seen in the price of used newspapers.There is also concern over the difficulties in obtaining letters of credit for some export orders.
China
The two main buyers for the Chinese market – ACN and Mark Lyndon Paper – are both suggested to have reduced demand. However: (UPDATED October 17 2008 ACN Europe has reported that it has this month bought more tonnage than in September, please see updated report in italics above) And there is talk of downtime in China in terms of machines. ACN supplies Nine Dragons which has strong home demand for its finished material but with the world economy slowing, stocks of finished product are said to be building in China as in Europe. Mark Lyndon has also substantially reduced its order books in the past two months.
UK and European mills are also switching off machines or implementing maintenance periods and the two UK mills expected to shut at the end of year – owned by Mondi and Rigid – are said to be cutting orders and may stop machines sooner.
Newspapers
Waste management companies are expected to suffer because of a fall in the value of mixed material, particularly that produced by materials recycling facilities. The newspaper and magazines (news and pams) market was in overdrive earlier this year and prices for newspapers are starting to fall. Mixed paper with high volumes of newspapers will still fetch a fair price, one merchant said, adding: “low grade mixed will start to fall away in terms of price”.
Panic
Some in the sector are predicting that the export market could almost switch off for a few months and that the export price may fall below the UK price. One expert said: “There is a need to maintain the price gap in the export market between the UK and the United States. If there is some panic in the UK, it is nothing like the panic at the moment in the US.”
letsrecycle.com guide prices have been adjusted to reflect the volatile October market – however, the situation is expected to remain uncertain and prices offered in the marketplace may change further in the coming weeks.
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