Since the start of 2022, we have seen an unexpectedly rising market. Like many, I didn’t really see this coming.
From my perspective, it seemed prices across packaging, graphic and de-inking grades started rising around 10 January and have kept going.
Supply was a big issue in January and has continued to be so. Everybody seems to be scrabbling around looking for material.
The reasons why there isn’t enough are complex. But it could be that Christmas fell on a Saturday and when combined with the Omicron variant emerging then, meant people spent more time at home than at the shops and out and about.
Plus, it seems that people wanted to enjoy Christmas but were aware of rising prices so didn’t want to spend in the January sales.
Everybody knows that energy bills are going up, food prices are on the increase – in fact everything seems to cost more.
The question is, why is there so much demand?
Clearly, people are still buying stuff. There seems to be an increasing transition from plastic to paper packaging, and that is creating more and more demand. For example, people might still be going to restaurants, but they are now getting a paper straw instead of a plastic one. The change all adds to demand for fibre.
On top of this, people continue to shop online and the Amazon effect means more material in domestic collections than from retail.
Logistics continues to be challenging, especially into Europe. January was particularly bad as there were delays caused by paperwork for incoming lorries. This also put off a lot of European drivers from coming here. While that situation has got a little bit better in February, haulage is still taking up a lot of time. I think things will gradually get better, but we will have pockets of craziness occasionally.
At the moment, most trading continues to be done at the end of the month in advance, although some continue to do mid-month trades and that is reflected in changing weekly prices.
Will this last forever? I don’t think so, but I think monthly trading is here for now until the logistics issues improve.
We also need to watch the situation with Ukraine as geopolitical events like this can cause all sorts of things that destabilise markets like ours.
OCC
There has been really good demand for OCC so far this year, with India and South-East Asia in particular driving higher prices. UK and European mills didn’t respond at the time seeing it as a blip, and while some are still not too keen at these price levels, others are stepping in if they have to.
Mixed
This grade has tended to be popular with European buyers and they are still happy using it rather than OCC. While there has been some minor price increases, the fact it has been relatively stable has convinced European mills to keep taking it.
News & pams
Things have trundled along with it bubbling around the same price levels for the last few months. However, the ongoing strikes in UPM’s newsprint mills in Finland continues to be watched avidly by some in case it has an impact on the market.
Multi/SOW
Although there was an increase in January, these have been stable in February. There is good demand for these, and UK mills seem happy taking it at current levels.
Chris Burton is commercial director of IWPP
