As we all know, Covid has been an unprecedented event in modern times, and this makes the recovered fibre market very hard to predict.
Traditional buying patterns have gone out of the window, as the market responds to where and when mills need material, as they try to deal with the implications of Covid waves.
When I wrote my last report in mid-May, I was not expecting the market we have had over the last few weeks.
There has been a scramble for material, with arisings still low and those who want it prepared to pay high prices across all grades.
As we head into July, I expect high prices will continue, but it would seem likely there will be some sort of price correction when the summer holidays start in late-July, early-August, especially when Europe takes time off.
With haulage, we’ve managed to do well and get it booked most of the time, but we are still getting occasional cancellations. This can be really frustrating.
From 1 July, EU hauliers will now have to book to enter into the UK, as our hauliers have had to do to go there. This adds another layer of bureaucracy.
While Brexit has played a part, Covid has had a bigger impact on haulage with some drivers off sick, or those from Europe not coming back in because of the pandemic. Some drivers have also stepped away, deciding they are better doing delivery driving for Amazon or supermarkets.
In particular, London is very challenging. Drivers don’t want to be stuck in traffic, or haulage companies don’t want to pay the congestion charging fees.
OCC
South East Asia has been the dominant factor in recent weeks, buying for China. After sitting back, they have come back strongly for OCC.
European mills have taken the view that they are not competing, but have said to suppliers to take our price if you want a long-term relationship with us.
I expect the buyers for South East Asian mills will have a smash and grab to get material as they are probably running a bit short, especially when taking Christmas purchasing into account.
Therefore, I expect a price correction for OCC once they have got what they need, and potentially by the end of July. I’m not thinking the market will crash, but it might go up a bit before coming back down.
European mills will also calm down in August due to holidays, so won’t chase the price.
Mixed
Mixed has been a great grade in recent months and prices have been high but stable in recent weeks. While OCC has risen, mixed hasn’t followed.
With Europe the key market at the moment for this grade, there has been a nice balance between supply and demand. Europe wants to tail off, but whether they will, is a different matter.
India has been significantly lower in price than Europe, while South East Asia has been somewhere in-between these.
News and Pam
Prices have been higher in recent weeks and mills have been clamouring for supply. Europe wants material, but many suppliers also want to feed UK mills.
With UPM Shotton expected to end production of newsprint in September before it converts to cardboard, this will mean one less source for news and pams. With less demand, and just one newsprint mill in the UK, it would be expected that current prices will be unsustainable.
Multi/SOW
I was surprised to come back after a week’s holiday to a £10 price rise for these grades. I can only assume that there was a shortage of this material and the mills were happy to pay more for it.
Chris Burton is commercial director of IWPP
