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France

The second quarter sustained the momentum of what we have now been observing for two years. Collection tonnages were low but demand was very strong, especially in Europe.

In searching for volumes, Germany raised its prices for all grades. The combination of these weak collections, the low volumes imported from the UK/Eastern Europe and the desire to produce as much as possible before autumn created tension in the markets.

Regarding the lower grades, the market is supported mainly by Germany but also by France and Spain. Despite the marked absence of Asian buyers, there was no problem in selling production at good prices and stocks were close to zero.

The lower grades market reached its peak at the beginning of summer but, since mid-July, there has been a change of atmosphere. Finished product stocks are rising and some European papermakers are implementing machine downtime. These slowdowns or stops are a response to a lack of orders, to elevated energy costs and even on occasions to a lack of water (in Italy), as well as to a desire to maintain reel prices.

Asia was almost entirely absent from the market in July, with sharply lower prices announced at the end of that month and in August. Selling prices for the lower grades will fall steeply in Europe this month given the low volumes ordered. It will not be possible to sell everything and our warehouse stocks may rise.

In the deinking and medium grade markets, demand is very strong and prices have kept rising to historic levels. Collections have been unable to match the volumes requested by the mills. Faced with enormous energy costs, papermakers have compensated by increasing the prices of their reels. The market reached its highest level in July, except for coloured papers which continued to rise in some places in August. However, prices could go down again from September or October.

The high grade market is also under pressure and demand is strong across the board. Prices are reaching peak levels but should stabilize in August.

With the COVID crisis, the market has once again become very dynamic in Europe. For two years, collection has decreased slightly at a time when e-commerce has boosted demand, putting so much pressure on the markets that they have reached unprecedented levels this year.

The Ukraine conflict, rising inflation, soaring energy costs and fears of an abrupt economic downturn in the autumn/winter have triggered a correction in the board market in August. Without doubt, it will be more difficult to sell all our volumes as order books are thinner and logistics are very complicated.

In the packaging sector, orders are decreasing and reel stocks are rising. The potential for gas delivery disruptions this winter is creating fear among board makers. In our sector, collections remain average and stocks are low despite the almost complete absence of Asian buyers. Prices have been falling steadily for several weeks and the economy is not picking up again.

September and October will be important months, and the market should settle down. If there is a gas crisis, however, the market could become seriously complicated, starting with Germany.