2022 was a year of contrasts: the first half was like 2021, with strong demand and rising prices, but the Ukraine conflict broke that pattern and led to a second half that was significantly less dynamic. Rising energy prices, an industrial crisis and falling consumption combined to bring serious consequences, notably in Germany.
The leader in the paper market, Germany saw this business head into crisis. Amid lower demand, some factories cut or even stopped production, thereby affecting demand for recovered paper and its pricing throughout Europe. Other countries such as France, Spain and Italy were impacted to a lesser extent by the crisis.
The same bearish developments also affected the tissue market throughout the second half of 2022.
Conditions were around average at the end of last year and January 2023 followed the same trend. France has concluded a few sales to Germany, on occasions at low prices. Sales into France and Spain were around average too. Only exports to Asia maintained prices higher than those prevailing in the local market, reaching a peak at the beginning of December.
The euphoria of early 2022 is over but prices remain interesting and demand is still there.
Only a good export market and low collection volumes have prevented high stocks from building up at our sites.
The lower grades moved well in the second half of 2022, with good Asian demand really helping in this regard. There is no real problem in finding sales outlets if the different grades are of good quality. Material sorted from waste collections are less purchased on occasions but stock levels are still fine.
The middle grades market has changed. Newsprint customers are lacking orders and reel prices are falling, thus making it more difficult to sell certain grades such as deinking.
Some administrative measures such as stopping the use of leaflets for mass distribution will lead to reduced production by paper-makers.
The pulp and paper market has been declining over recent months, with lower demand and falling prices as for tissue. As for the high grades, prices have shifted downwards but remain at correct levels. With lower demand but also less collection activity, this market is holding up better than the others.
The outlook for 2023 is full of uncertainty, not least because no-one can predict what will happen regarding the Ukraine conflict. The energy crisis has led to higher inflation which, in turn, is holding back consumption. Doubts, uncertainty and a drop in purchasing power bring consequences in people’s daily lives. Even the GAFAs (Google, Apple, Facebook and Amazon) have been affected, which is not without consequences for the paper industry in Europe.
Some believe conditions will be complicated in the first quarter of 2023 but should improve in the second quarter. Looking at the very beginning of this year, only major exports are at similar volumes to those seen in the second half of 2022, but this is far from the case in Europe.