Filling order books at the right price is a challenge for the recycled paper market, according to BIR Paper Division president Ranjit Baxi.
In the latest BIR World Mirror, for the paper division, the J&H Sales International managing director wrote that the eurozone debt crisis and weakening global economic confidence continued to dampen European export aspirations.
He added: “Businesses were left to grapple with the unknown, not only the eurozone debt crisis but also weakening Asian growth forecasts, turmoil in the financial markets, freight rate increases and even geo-political risks are now a consideration. Filling order books at the right price has remained a big challenge.”
It was also noted by Ranjit Baxi that freight continued to rise up to June with freight increasing by more than $500 per container, which is equivalent to $20 per tonne.
As a result of all of this, OCC export prices continued to drop from levels of $215+ per tonne to $195 per tonne while mixed paper prices fell from around $185 per tonne to $170+, he wrote. Ex-works prices for both OCC and mixed papers continued to decline so as to accommodate both the freight increases as well as the weakening market. This exerted more pressure upon the balers. Similar market sentiments were seen across all other grades.
He added: “Stock levels of both finished goods and recovered fibre at all Asian producers remained above average during the quarter, with these mills finding it difficult to either maintain or increase prices of new paper.
“Prices of locally-collected recovered fibre remained weak and collection volumes continued to grow, meaning that mills opted to use more domestic fibre as opposed to European fibre. With the projected strengthening of the market in the third quarter, it can be anticipated that this trend will be reversed.”
Additionally, shipping rates announced on 1 July added another $200 to $250 per box, which he said will intensify the pressure on domestic pricing.
He warned that these difficulties are rolling over to the third quarter which will probably result in weakening export prices and decreasing volumes.