I’m going to give myself a pat on the back. Last month when I wrote this column, I said I was optimistic that fibre prices would rise, and I called it correctly.
While some were predicting doom and gloom, it hasn’t happened.
Big prices are now being touted around. A month ago, mid-£80s per tonne for OCC was seen as a really good price, but now if you traded at that you would feel like you were being diddled.
There is a lack of supply of material and good demand coming from all markets, apart from China which has wound down ahead of the import ban at the end of the year. Indian, Far Eastern, European and UK mills all want material at the moment and arisings continue to be low due to lockdowns.
I do think these high prices will last through the rest of the month. There is an issue with getting hold of containers and that means it will take time for all the demand from the mills to be satisfied.
Clearly, the end of the Brexit transition at the end of the year is going to be carnage, whether we get a deal or not, and there is a sense that European mills are buying ahead of that.
The EU has always been an easy option for the UK as we could send material there without the paperwork and logistical issues that you have when sending to India or the Far East for example.
But we are now having to warn our suppliers that they will need to provide more photos to show the quality of the fibre and potentially country import duties, as well as advise the end destination that there will be longer lorry queues so material will take longer to get there.
Looking ahead, January is typically a month of oversupply when you get all of the material that has arisen over Christmas. But with shops closed until next week, and still tough restrictions after then likely for many areas of the UK, supply is going to come mainly from domestic sources.
I can’t see prices tanking in January as I think supply will be more restricted than in previous years and mills will still need fibre, even if the logistical challenges of shipping from the UK become more tricky.
OCC has been strong all month and prices have continued to rise throughout November. You could almost argue that December’s orders started on 1 November as people seem to be buying ahead and holding stock of material if they can, perhaps because they fear shortages if further lockdowns happen.
I see demand only getting stronger. There is a possibility that European buyers may decide to sit it out to see if prices start to come down, especially if container availability to Asia continues to become a problem and Asian buyers step out of the market. Personally, I can’t see that happening as everywhere seems to want OCC at the moment.
Like OCC, demand for mixed has been really strong and prices have risen throughout November. I’m getting enquiries from all over for mixed, including from some buyers that would have laughed at you if you offered them UK mixed previously. Mills seem really short of it at the moment.
European demand could possibly be Brexit related as they want to ensure they have enough supply before it gets tougher to buy it. But it also seems to be a reflection of lockdowns meaning there is less commercially sourced fibre around.
News & pam
There is a big mill in Europe set to take some downtime apparently so this could soften prices. Having said that, other mills are taking news & pam when they are finding mixed too hard, so I wouldn’t expect too much to happen with the news & pam price and it will probably bubble along for now.
The second lockdown has led to printers and offices being shut, less material around and prices have risen. The public have learned from the last lockdown so crazy demand for loo roll like we saw last time hasn’t happened this time, plus the manufacturers were prepared. However, prices are still rising due to the shortage of material.
Chris Burton is commercial director at IWPP