China is the largest export market for UK paper, while Japan exports 250,000 tonnes of OCC each month to China. The scale of the damage the tsunami has had on Japanese paper recycling infrastructure is not yet known, with industry experts outlining various possibilities on how this will impact on the global and UK market. It is thought the situation will become clearer towards the end of the week.
ACN Europe managing director Niels van Binsbergen said: “There are a couple of possible scenarios that may happen, although I do not know which is more likely. We are currently trying to find out what has been more affected – collection or production or possibly both have been equally affected. We don’t know which Japanese paper mills are running because there is very restricted electricity out there. Indeed, you might assume the country has higher priorities at the moment than collecting recovered paper, so if there are mills running they may not have any paper to process.
“Japan annually exports 4m tonnes, the greater part of which goes to China. That’s the big question, whether China will actually receive more material from Japan because it has no working mills to feed but logistics of transporting material are also hampered.
“[It would also] be interesting to find out what effect the disaster will have on general production (and therefore the need for packaging) of consumer goods. For sure newspaper will be thicker in Japan, but again having electricity for printing and distributing them may be difficult.
The assumption is, if China cannot get hold of enough paper from Japan it will buy from other markets. Currently, paper prices have remained high, with no price impact caused by the tsunami as yet. According to the WRAP Materials Pricing Report produced by MRW, OCC and news and pams are both trading at £120-125 per tonne.
UK-based paper recycler Mark Lyndon’s parent company is Lee and Man Manufacturing based in China. Mark Lyndon managing director Paul Briggs agreed that the impact the disaster will have on recovered paper markets is unknown. “How much material Japan will now be able to export to China, who knows? It could be that China will be short of material but because of Japan’s lack of power, they may not be able to process the paper and send it to China instead.
“We are just watching the market and trying to make sense of it. It may mean buyers will hold off from purchasing, thinking that the prices will drop but then other businesses may think the price is going to go up and therefore are buying everything now. This will create volatility.”
One UK recovered paper exporter observed that business has become quieter recently. This is thought to be a result of businesses buying cautiously to find out how the markets will move once the impact on the recovered paper market is known.