According to latest available figures at the time of writing, domestic paper and board production amounted to 8.042 million tonnes in the first 10 months of last year for an increase of 12% over the same period in 2020, including: printing & writing +21% year on year; tissue -3.2%; packaging and board +17%; and other packaging +16%. Paper and board imports climbed 5.4% to 3.58 million tonnes while exports jumped 13.8% to 3.094 million tonnes.
As for recovered paper data, collections increased by 4.8% to 5.26 million tonnes and imports soared 28.6% to 231,918 tonnes whereas exports tumbled 29% to 962,000 tonnes when making the same 10-month comparison. Consumption was 18% higher at 5.025 million tonnes.
The recovered paper market is rather confusing and fluctuating for a number of reasons. Collections in the last two months have been stable to slightly lower as a consequence of COVID-related measures restricting movements and even the flow of traditional Christmas gifts. This reduced availability of material would have normally led to price increases but the dramatic surge in energy costs had a negative effect.
Domestic paper mills’ energy bills were already higher than those of their European competitors. Furthermore, Italy is a major importer of electricity from its neighbours as a result of “green” policies ruling out nuclear power. The country has only a few thermal recovery plants and a low number of paper mills granted permission to run co-generation plants. Notification of a doubling (or even more) of energy costs in December
created a need for many to renegotiate contracts along the value chain, from collectors through to converters.
Meanwhile, exports of recovered paper have been hindered not only by problems surrounding the availability and cost of shipping containers but also by difficulties with road deliveries because of a COVID-related lack of drivers. There is still reasonable demand from consumers in Asia and no problems have been encountered in terms of quality, but issues with transportation have yet to be resolved.
Domestic paper mills have good order books and have been well supplied, with few maintenance stoppages over the festive period.
As regards the municipal collection auctions, bids have indicated only limited reductions from normal price levels and so are implying reasonable stability for the early months of 2022.
The above-mentioned problems have brought repercussions for paper and board producers in terms of the prices of their finished products at a time when all the talk is about the circular economy. At the same time, the unresolved shipping container problems are overlapping with Chinese New Year, and there is also the crisis concerning all raw materials, including secondary raw materials such as the recovered paper supplied by our sector which continues to be absolutely essential to the entire paper industry.
It is difficult to make trustworthy market predictions for the first quarter of 2022. All operators would wish for some stability given the challenges expressed above, but shipping problems seem far from finding a solution.
There was some reduction in orders last December from European recovered paper consumers and, as a consequence, OCC and mixed paper prices fell by between Euro 5 and 10 per tonne. Price indications as at the end of that month included Euro 145 per tonne for mixed paper and the supermarket grades, with OCC and deinking material at nearer Euro 160. Higher grade prices were less sensitive because of increases for cellulose and the scarcity of collection volumes. At the end of last year, white letter was around Euro 300 per tonne and white woodfree around Euro 440. Conditions opened up the possibility of requests for surcharges on the higher grades but some minor rebates for the bulk grades.