As a trader, I am not enjoying the savage market at the moment.
There are no second places to be had when trading currently. There is not enough material around, so if you get your pricing strategy wrong, then you lose out on it.
This isn’t affecting just IWPP, but everyone who is trading.
With the wider economy in trouble, and it seeming we are heading for recession (if we aren’t already there), then there is no sense that this is going to change.
Fuel prices keep going up, food prices keep going up, and the £400 help we’ll get with energy bills isn’t until October and will just be a drop in the ocean. People aren’t going to have a lot of spare money, and as Colin Clarke pointed out in his recent report, they will be changing their spending patterns as a result.
The Ukraine war hasn’t helped of course, but these problems were going to happen regardless. The world has been turned upside down as a result of Covid, and then we’ve had Brexit too.
Having said that, sending material into Europe hasn’t been that bad. One exception has been France. Even though German material uses the same route, it seems that French hauliers don’t want to come to the UK and getting material to French mills is difficult at the moment.
We are all having to get used to collections not being as accurate. While once lorries would turn up at the appointed time and day, now we are lucky if it is the same day. But we are all getting used to that and accommodating it.
Like is the case with almost all fibre grades, this market is savage. The lack of generation of OCC and an ever increasing PRN/PERN price has meant strong competition for it.
In the UK, trading has now shifted to once a month on the last Thursday. If you don’t get it right then, you have to wait until the next month.
Prices remain high, but there is a constant fear in the market that prices could suddenly change and all eggs end up being in one basket if you don’t get your pricing strategy right at the end of each month.
Everyone seems to want mixed at the moment, and it is the in-demand grade. Mills seem to have changed their demand for mixed, especially as it is a richer grade these days. However, like OCC, you have to get your ducks in order at the end of each month so you get to buy and sell it, as otherwise you miss out until the next month.
With the ongoing structural changes in newspaper readership, there isn’t a lot of this material around, and prices for it have gone up recently as a result.
Again, it is the same with both of these increasing for June due to high demand and low availability of material.
Chris Burton is commercial director of IWPP