Demand for old corrugated cardboard (OCC) has plummeted leaving high stocks at paper mills, the Bureau of International Recycling (BIR) has heard.
At its World Recycling Convention in Dubai, paper division president Francisco Donoso - of Spain’s Dolaf Servicios Verdes - said prices for OCC had fallen by between 80% and 90% in recent months, amid extremely low global demand leaving stocks at paper mills.
Donoso said: “The high cost of energy - and specifically gas - is one of the reasons for this as it has become by far the largest production cost for mills.
“They cannot pass on this cost in their sales prices because demand for their products is also low owing to the financial crisis, and neither can they reduce their energy costs. Therefore, the only cost they can manage is what they pay for their raw material.”
He said that in the USA prices for mixed paper had reached zero in some locations and thousands of tonnes were being landfilled. Prices had fallen fastest in Europe and he said not was “difficult to know where the bottom is”.
Nishant Sahney, managing director of India’s Gaurav Vipa Papers said the high prices of more than six months ago had fallen away dramatically.
“We don’t have exports to China anymore because the Chinese are not buying pulp,” Sahney said.
“On top of that, because of less demand in US and Europe, we are now competing with manufacturers from the Middle East and other Asian countries. Mills in India are now running at 70% capacity so that is why they cannot afford the prices of six months ago.”
Sahney said on a more optimistic note that consumerism was increasing in India with 65% of the population aged below 35.
He said this presented a big opportunity for the paper industry, as did Swachh Bharat Abhiyan, a domestic programme to increase collections and reduce the reliance on imports.
But he said China had invested hugely in Vietnam and Malaysia in recent years to cater for its domestic market, hitting demand for Indian products and creating a supply-demand gap.
Ranjit Baxi, president of the Global Recycling Foundation, was also more optimistic and said the paper sector had historically proved resilient.
Baxi said: “Demand for paper is not falling - it will still be there. “t’s time we supported new countries elsewhere – in the [Gulf Cooperation Council] and countries in Africa which could be the next manufacturing hub.
"Let’s not be upset by the price fluctuation; market demand will be strong, so let’s be positive.”
