Colin Clarke’s fibre market report: May 2023

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Winfibre UK managing director Colin Clarke gives his opinion on the recent paper and cardboard market

The main driver of the market in recent weeks has been the Q1 data from the National Packaging Waste Database and the impact this had on the PERN.

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Volumes were up by around 150,000 tonnes compared to the same period in 2022.

This goes against the grain of anecdotal evidence that there is tumbleweed finding its way between bales that are stacked in yards.

But we saw the PERN value decline in the last few weeks. This was in response to this high data that was unexpected because of the low consumer confidence we are seeing in the economy and the low volume of material generation.

There are some green shoots emerging in the Chinese economy that may drive some demand. Official Chinese GDP growth was 4.5%, which suggests the country is on track to meet its 5% target for this year.

On the other side, we are seeing low consumption in the west. Closer to home, the UK and European mill consumption is sluggish at best.

There is enough material for exports at the moment, and we are seeing some small improvement in demand from the European market despite it being overall quiet. Indeed, there is some evidence that they are starting to match Asian prices, but it remains to be seen how long this will last.

Looking ahead, much depends on what happens with the PERN price. I do know that Asian mills will not be prepared to take a hit on higher ex-works prices to compensate for the lower PERN. But if we see an upturn in the PERN price at some point, then values may recover. 

In my view, the next quarter will mirror what has been seen in 2023 so far when it comes to supply and demand.

Other factors such as foreign exchange and shipping remain stable at present. 

Overall, these are interesting times for the market. Some will be doing well, and it will be tough for others, especially with having had a high PERN in recent months. This has been a new experience for many of us, and we have learned a lot about the PERN market as a result.