Colin Clarke’s Fibre Report: January 2021

0
133
Colin Clarke Winfibre
Colin Clarke, managing director, Winfibre UK

Since the start of the year, the market has been quite subdued so far, but prices have crept up.

Clearly, the Brexit situation has made it harder to send material into Europe with those who trade there hit by bureaucracy.

Advertisement

Plus, we have also had Covid lockdowns here in the UK and around the world. In the UK, this has meant that generation of material seems to have been lower. There is almost no tonnage coming from hospitality at the moment, while fibre is only being generated by essential retailers. Even supermarket tonnage appears to be down at the moment.

In the run-up to Christmas, there was more domestic material, but since then this has eased off as consumers wait for their January salary to pay off Christmas credit card bills. January sales were also hit by the current lockdown.

It is this weaker availability of fibre that is having the strongest influence on the market with mills wanting it, but suppliers struggling to provide it.

In the international market, the big buyers are focusing on the United States where they tend to get dryer material from the West Coast in particular. At the moment, US fibre is also cheaper than that available from here.

Indian buyers have also eased back as they have been buying a lot of material to make into pulp to send to China. However, with Chinese New Year on the way, this has taken the edge off their buying patterns. I would expect India to return to the market soon though at stronger levels than it is now.

The Chinese sphere of influence has driven buying for countries such as Malaysia, Vietnam and other South East Asian nations. Chinese mill groups such as ours have been buying consistently for our mills there over recent months, and with new capacity set to begin operating over this year, is only likely to grow.

If this low generation continues over the coming weeks and demand remains good, we might see the current heat in the market continue.

I wouldn’t expect prices to rise too much more over the coming weeks, but I wouldn’t imagine prices will drop too much either unless circumstances change.

One factor that could affect price will be shipping costs. At the moment, there is plenty of container availability after all the boxes stuck in China last year headed westwards prior to Christmas.

Although it remains hard, getting these boxes onto vessels is possible, but prices remain high. As we ship from Felixstowe and Southampton typically, we haven’t been too affected by the Brexit disruption. Haulage within the UK has proven a bit harder with drivers off sick, or in some cases due to the knock-on effect of them being stuck in vehicles waiting for customs clearance into Europe.

With Chinese New Year on the horizon, this often causes disruption and if shipping prices were to head higher, then this will act on a drag on the prices that can be paid for South East Asian exports.

Over the next few weeks therefore, I expect the market to be quite challenging and generation to remain low. Until those sending material into Europe get used to the paperwork, and lockdowns begin to ease, I’d expect the market to be largely where it is for the time being.

But as we know in the recovered fibre market, things can change quickly.

One final thing I’d like to add is that all of the current challenges we are facing show the resilience of the UK paper and cardboard recycling sector. With the backdrop of Covid, Brexit, and low generation, key workers are still collecting material and it is still being moved to mills. At a particularly difficult time, as an industry we should be proud of how we have responded to keep going the manufacture of essential paper and cardboard.

Colin Clarke is managing director of Winfibre UK

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.