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Germany

Looking back on the second quarter of this year, recovered paper collection volumes achieved good levels in April, with the Easter holidays not leading to any exceptional decline. Overall, demand for recovered paper was also at very healthy levels during that month.

While industrial packaging saw comparatively lower demand, food packaging was in strong demand. The qualities of recovered paper needed by the busy newsprint manufacturers continued to be in short supply. Recovered paper imports from the UK became more difficult at times owing to massive internal changes at a major ferry company. All parties involved in the paper chain suffered from a multitude of problems relating to logistics and energy. In addition, there was massive uncertainty surrounding the direction of the conflict in Ukraine. Cost increases for consumers as well as rising inflation were already producing some signs of buyer restraint.

The paper and board industry also placed large orders for recovered paper in May. While processors of our industry’s raw materials tried to keep stocks at good levels, nothing stayed for long in recyclers’ warehouses as everything left promptly after processing. Recovered paper collection volumes were unchanged from the previous month. Although the recovered paper market was quite balanced, slight increases in payment could be observed, although this was often compensation for increased energy and transportation costs rather than a price increase for the material itself.

As usual in months with public holidays, there were problems with freight space availability. Given the already tight situation, competition for freight capacity increased again and led to some exorbitantly high prices.

Recovered paper imports into Germany remained at a high level in May, with mainly the medium and higher grades being purchased. There continued to be good export demand, mainly for brown grades. Conditions in the sea freight sector remained tense, not least due to the lockdown in Shanghai.

Recovered paper collections decreased slightly in June compared to the previous month. The combination of the holiday period and an improved COVID situation tempted many people to travel, which was reflected in municipal collection containers. At the same time, the paper industry ordered more recovered paper of all types. Obviously, there was a demand backlog in view of the slightly lower stocks resulting from the holiday-related lack of deliveries.

Producers of food packaging seemed to be working to capacity, as were the remaining producers of graphic papers. Some paper and board producers also seemed to want to stock up for the summer. This almost unexpected pull from the mills led to consistently rising recovered paper prices.

Various grades of recovered paper continued to be imported from the UK and the USA. The export market was almost unchanged: sea freight rates remained high and revenues, especially in the brown sector, declined somewhat owing to the lockdowns in China and associated limited shipping and marketing opportunities in the consumer goods sector. Market insiders described the freight situation as devastating. More than 10,000 drivers from Ukraine and their trucks are missing from the market as a result of the conflict with Russia, leading to further increases in freight costs. Around 10% of deliverable recovered paper could not be transported to paper mills in June for purely logistical reasons.