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General market overview

The final two months of last year seemed to confirm a positive trend for finished product and recovered paper demand in Asia and Europe. Prices were increasing slightly despite a shipping cost increase of around US$ 200 which had been announced for January 2024 - a week before the Red Sea vessel attacks and the “war surcharge” applied by shipping lines.

Domestic market prices in Europe had been almost the same as those for export and a downtrend had not been expected for the coming months.

The surcharge of between US$ 1000 and US$ 3000 per container suddenly applied by the shipping lines blocked the loadings between the final week of 2023 and the opening week of 2024. Amid this temporary interruption, mills in Italy and elsewhere in Europe confirmed prices and volumes to ensure regular supply in the case of a rapid resolution of the Red Sea issue and a resumption of shipping, which would lead to increased competition in the form of Asian demand. This uptrend vanished a few weeks after the start of the Red Sea attacks as finished product demand and prices fell 5 to 10% when compared to their levels of the previous two months.

The significantly higher increase in shipping costs to Indian ports compared to other Asian destinations put India out of the market as sales prices had to be 30 to 40% higher than for other countries in Asia in order to be competitive.

A temporary lack of containers caused by longer shipment transit times initially created a worry for the mills in India and elsewhere in Asia but this lasted only a couple of weeks as the local recovered paper market dropped at the end of January. At the same time, more material was available in Europe despite decreasing local recovered paper demand.

China, the main engine of the Asian economy, seems unlikely to see a recovery in the near future, with low consumption, higher costs and a lack of orders for finished product creating a fight for survival across the entire industry.

Simone Scaramuzzi