The pace of change in the past month has been mental – almost uncontrollable.
Prices for OCC, mixed and news & pam have all been really high in recent weeks. At the start of March I thought I knew were prices were headed by the end of this month, but they reached those levels within days.
The main reason for this appears to be Covid. Demand from European mills is really strong as lockdowns in various European countries has made them want UK material.
Europe seems to be in a bad place with Covid, and some countries like Poland and France have gone into even tougher lockdown, and Germany seems to be on the verge of going into a more difficult one too.
In terms of the impacts of Brexit, while it is still challenging, trucks are moving and mills want to work with us to make sure material reaches there. We are gradually getting used to the new reality.
There are signs that OCC might have reached its peak, although in this market you never know and it could easily prove me and the market wrong. Covid has changed things in the past year, and what we thought would happen previously, doesn’t necessarily follow in these strange times.
Recent high prices have been driven by strong demand across the board with European mills wanting material, and Asian mills happy to match them.
But increasingly, there is a bit of resistance to these high prices from domestic mills, while Asian buyers seem a bit more reluctant to match the current prices too. As we get closer to Easter, which is traditionally a time when mills here and in Europe stock up, this effect will weaken too.
For the time being, the interest in mixed has remained strong and people are looking for it because it offers good value. These days, mixed tends to be quite board heavy, and with prices high, it has managed to keep interest.
The question is will it keep going higher even if OCC comes off? There is some potential for it to climb for a couple more weeks, but it depends on if OCC falls and by how much.
News & pam
This grade had to go higher than mixed in order for it to incentivise MRFs and merchants to sort the newsprint out of the mixed. Newsprint mills will be uncomfortable with these prices though, and will be looking to lower prices as soon as they can. With not too much material around, that could prove more difficult than they wish for though.
This has been a bit of a strange one recently. Prices dropped off a bit but then recovered after getting slightly better into Europe. At one point, orders were scarce but there seems to be more available now.
For this grade, much will depend on the extent to which the away from home market opens up in the coming weeks in terms of restaurants, hotels etc. I would imagine they will be risk averse in stocking up on the end product until they are sure they can reopen, which might mean a subdued market for these grades for a little while yet.
Chris Burton is commercial director of IWPP