Now that the summer holidays are over, we are in the run-up to Christmas, which is traditionally a strong period for the recovered fibre industry.
August was full of predictions by many that September would see strong price increases, but that doesn’t seem to have happened and the market has been relatively flat.
It seems some companies bought strongly at the end of August for September, but European buyers appeared to miss the boat as many were still on holiday. Once they got back, they found that orders had already been fulfilled for September and there was little left for them to take.
With all of the challenges around freight and shipping, the market tends to be trading for the month at the moment. In the first week of the trading month, you trade everything you can and then spend the rest of the month trying to sort out the logistics to move that material.
Covid and Brexit have caused these driver shortages, and neither of these looks like they will be resolved soon, so it appears that we will be in this situation for quite a while.
There is still really good demand out there, and we shouldn’t forget that prices are historically high.
OCC is still wanted by South East Asian mills and Turkey, while Europe is snapping up mixed. For mixed, Asian and Indian mills seem reluctant to match the high prices being paid by others.
One factor to look out for is what happens with all of the material affected by the recent storms and floods on the East Coast of the USA. With landfill cheap there, it might be that ends up being the cost-effective option for a lot of material that will have been damaged by flood waters.
With good demand from domestic mills, but also those in Central and South America, there could be further shortages of US fibre, and this could lead South East Asian and Indian mills to put more focus on sourcing UK and European material.
There is also positive news that Thai and Malaysian mills appear to be getting closer to full operation following recent lockdowns in those countries. Most mills appear to be running at 80% capacity at least, and should be moving towards full production.
For Malaysian inspections, it also appears that the can has been kicked down the road. While it is still being discussed by Malaysian authorities who want to keep quality on the agenda, a new Prime Minister and the country’s battles with Covid appear to show that these measures are now delayed.
Overall, I would expect September to remain relatively flat, but there are so many factors out there to consider at the moment, that we won’t have a better idea about October’s trading until we get to the first week of that trading month.
Colin Clarke is managing director of Winfibre UK