Colin Clarke’s Fibre Report: December 2020

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Colin Clarke Winfibre
Colin Clarke, managing director, Winfibre UK

As we enter the final straight towards Christmas, it seemed like an opportune time to look back at quite a remarkable year.

When we started 2020, we had little idea of what was ahead and the stresses and strains that we would find ourselves under.

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What we discovered is that the recovered paper and cardboard market is an extremely resilient one.

We’ve faced Covid, challenges with shipping, Brexit and the upcoming China ban and proved that we could thrive.

Compared to where we were in January, prices for OCC have approximately doubled so that we finish the year in a place roughly similar to the long-term average over the last decade. This shows that despite everything, overall we are in a better place than when we started the year.

What we have also seen this year is the flexibility of the UK market. When other European regions went into lockdowns this year, we were still able to provide material to those markets and benefitted from the higher prices available.

This flexibility has also been shown during the current container crisis. With containers being repositioned and importers paying four times than what is being paid to go to China, we have still found ways to move material.

It isn’t easy finding boxes at the moment, and there are delays, but our industry has continued to ship fibre to manufacturing centres around the world.

Something I’ve found fascinating is how the Chinese ban on all solid waste imports from 1 January 2021 has affected the market. Clearly, Winfibre and other exporters to China stopped sending material there in October.

But the Chinese sphere has continued, and will continue, to influence us. Chinese domestic recovery has been a success and China is meeting some of the shortfall from there.

The impact on other areas of the world from the Chinese ban has been massive though.

There is new capacity coming on stream funded by China. Our first Lee & Man paper machine in Malaysia was commissioned in October and three more will join it over the next few years. We’ll also see a new machine in Thailand in the first quarter of 2021 and another in Indonesia next year. Our competitors have also invested in new capacity in other parts of Asia and we are rapidly closing the shortfall gap on what used to be sent to China.

Interestingly, China’s influence is strong on India too. We are seeing pulp being manufactured in India from recovered fibre imports and then exported to China. Investment has also been made in US pulp mills this year that will supply China too.

We’ve yet to see a flood of US material on the market that once found its way to China, but I would expect that to happen in the New Year once Christmas tonnage comes onto the market.

The era of China comes to an end in 2021 as far as direct exports are concerned, but it still holds a very strong indirect impact on the UK and global market.

As we look ahead into 2021, it is difficult to predict how it will go, but I am confident the resilience we have seen this year will keep our industry strong and Chinese investment will provide us with new opportunities.

What I do know though is that we have to keep improving quality. As mentioned above, there is potentially going to be a lot of competition with US material, and by being better quality we will find markets easier to access when our American friends are trying to sell into them too.

Brexit will also mean that we will need to produce a quality product in order for our European neighbours to want UK material with the added bureaucracy that it will bring.

We also know that Indonesia recently introduced a new registration scheme, and Malaysia is believed to be ready to launch a pre-inspection regime. Again, we’ve got to have high quality material or risk losing these markets.

I’ve always known that relationships are important, but 2020 cemented that view in my mind. In 2021, from the source of the material to the end user, having strong partnerships will be key throughout the supply chain so that we can face our challenges together and then thrive together.

Finally, as we look ahead knowing with optimism that at some point next year we will put Covid behind us, let’s look forward to the opportunities that 2021 will bring where we can once again network and socialise with colleagues at industry events and renew and strengthen those relationships.

I hope that you all have a very Merry Christmas and a Happy New Year and 2021 is a prosperous year for all.

Colin Clarke is managing director of Winfibre UK

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