BIR Recovered Paper Division president Jean-Luc Petithuguenin has said that it is “valid to talk about a crisis” in the recycled paper industry.
In the new quarterly BIR World Mirror Recovered Paper, he writes that “the crisis gathered pace in the second three months of the year” with demand weak and stocks swelling everywhere.
The owner and founder of French recycling company Paprec said that Chinese quotas are low and buying is mainly focused on Japan and USA.
In Europe, packaging demand has weakened, he warned, with reel prices tight as paper mills struggle to offload finished products.
As European mills are being offered plenty of recovered paper and have significant stocks, they are responding by paying lower prices.
He also noted that UK and US traders are also selling heavily into Europe, making it difficult for their European counterparts to compete.
In other markets, he also said that South East Asian markets are overflowing with offers from US, UK and elsewhere.
He added: “The medium-grade market is also under pressure. Usually at this time of year, prices and demand are rising together, but the opposite has been the case this year.
“There are not enough exports and demand is low, with some paper mills stopping their machines from time to time in order to control their stocks and reduce the pressure. Prices are therefore dropping and buyers are becoming difficult to find for some grades such as magazines.
“This summer is going to be complicated as we will have to deal with high stocks at a time when there are almost no exports to Asia. The situation for some grades – such as white heavily-printed multiply board and newspapers – is becoming ever more complex. Sales are hard to make and prices are unstable.
“Regarding the high grades, prices have kept dropping for several months after reaching peaks in 2018. Pulp prices are falling too, as are its substitutes.”
He fears there are few positive signs for the second half of the year, especially as he expects Chinese quotas will fall by 50% next year to around 6 million tonnes.
However, he finishes with some optimism that the market is “cyclic, so we have to expect that the wheel of fortune will turn and the market will set off again”.
