The latest BIR World Mirror for Recovered Paper showed that there wasn’t a huge amount of confidence in the market at present.
Looking ahead after a challenging quarter that saw the impact of the Covid-19 crisis on the paper sector, those who reported on major European markets for the BIR World Mirror July 2020 quarterly report, were generally not full of optimism.
Viridor Resource Management managing director Keith Trower reporting on the UK wrote that the market was moderately optimistic but market conditions were tough. He added: “Quality will keep material moving and must remain the area of focus for all UK waste management companies and recyclers alike.
“The wider export market was already vulnerable and now finds itself in the middle of the Covid crisis. The impact of the virus has already been felt across Asia’s recovered paper market, with the supply chain disrupted by a severe shortage of available containers; prices for containers are increasing. The pandemic has significantly impacted general imports and exports; vessel omissions and container shortages are forecast to continue in July, with upward pressure on freight rates.
“There are minimal opportunities to supply China directly owing to low import quotas and lower CIF prices from mainland Europe. At the same time, demand from South East Asia for the UK’s OCC has been stabilising or growing as these markets slowly open up to supply China with finished paper and recycled pulp.
“Political unrest in China/Hong Kong, port congestion in parts of Asia and regulatory uncertainty in South East Asia make market demand over the next two to three months difficult to forecast.”
Turkey’s Ekrem Demircioglu wrote: “Entering the third quarter, paper mills are asking for a slight drop in fibre prices whereas the recovered paper sector is seeking an increase.
“As there are so many uncertainties, it is very difficult to be optimistic about the future.
“Domestic collection rates are not adequate for Turkey’s needs and so imports remain a must, such that the cost of imported recovered paper will affect domestic prices and bring about a balance. All investments have slowed but are proceeding as the pandemic allows.”
Francisco J. Donoso from ALBA Servicios Verdes in Spain added: “The current global scenario is similar to that prior to March: lower collection volumes are exceeding an overall mill consumption which has declined even more, not least because China has reduced its overseas purchases.
“The market outlook is even worse because China will totally close its borders from September.
“Several paper machines are reducing machine speeds in response to a lack of orders. Overall, therefore, there is a smaller volume in a less balanced market.”
But BIR Recovered Paper Section president Jean-Luc Petithuguenin from Paprec in France was a little more optimistic. He wrote: “So this year so far has brought a roller-coaster market: we started with high stocks and low prices, the reverse applied in April/May and now the markets have been turned upside down once again.
“What can we expect in the second half of the year? All will depend on how the Covid-19 crisis develops.
“Activity levels appear to remain acceptable, with some industries and sectors suffering more than others. If this trend continues, then demand could return in Europe as well as in Asia.
“New cardboard capacities in Germany, Italy and Turkey should help sustain demand for recovered fibre.
“To end on a positive note from France, Norske has just announced a major investment at its Golbey site where, by 2023, more than 1 million tonnes of test liner and newsprint is to be produced annually from recovered fibres.”