BIR World Mirror on Recovered Paper: Quieter market as collections and demand both head lower
A concise summary of the BIR World Mirror on Recovered Paper – Quarterly Report May 2023. Full version with detailed market reports available in the Members Only section of the BIR website.
Demand for OCC grades has been rather low all over the world, although in Asia it seems to be particularly weak. Fewer goods exports from China and other Asian countries to Europe and the USA mean that packaging production is declining and therefore demand and prices for OCC are weaker, according to the latest BIR World Mirror publication released by the global recycling organization’s Paper Division.
The market in Europe has brightened slightly, with higher demand for bulk grades and price increases since March of up to Euro 25 per tonne in southern Europe on expectations of additional production capacity. Other potential factors include low stocks at mills, weak collection volumes, the presence of Asian buyers in the market and a short month in May punctuated by a number of public holidays.
The continuing robustness of lower- and medium-grade exports is credited in Germany for enabling recovered paper collection and processing costs to be covered and for preventing separate collections from coming under pressure. However, volumes of recovered paper available for collection are being undermined by the public’s growing reluctance to spend in response to rising household bills.
Given their thin order books, several paper mills using recovered fibre have brought forward their machine maintenance programmes, it is also reported from Germany. Across all grades, the recovered paper recycling industry is estimated to be marketing at least 20% less volume than in previous years.
According to assessments from France, some grades are proving difficult to sell in a quiet medium grades market while the high grades environment is gradually becoming more difficult amid flat demand and decreasing sales prices. Very low spot prices for paper pulp are creating competition for recovered grades.
In other European news, demand from the insulation industry in Scandinavia has decreased owing to the economic situation and higher interest rates. While the high cost of logistics remains a concern, the situation has improved significantly since the winter months.
Meanwhile, the devastating earthquakes that struck Turkey in February this year had a significant adverse impact on the economy and led to the closure of the Kahraman Maraş Paper Mill and Kipas Holding mills in the region owing to the damage incurred.
Among a number of paper and board developments, Eren Holding is rapidly proceeding with its PM6 investment at Zonguldak which will add 700,000 tonnes to the 1.3 million tonnes of production capacity at its existing factory in Çorlu. Start-up of operations is targeted for the second half of 2024.
North America has not emerged from the slow market conditions of the fourth quarter of 2022 and the first quarter of 2023. Paper mills have been cutting back on recovered fibre purchases because of thinner order books, full inventories and plans in some instances to take additional downtime - notably at tissue as well as containerboard mills. There have also been mill closures, with Sonoco recently shutting a facility in Kansas while Pactiv/Evergreen has shuttered a mill in North Carolina.
More encouraging conditions on the US West Coast have been supported by export orders following another drop in ocean freight rates.
With contributions from its members, BIR publishes periodical commodity reports under the label "BIR World Mirror". These detailed reports exist for Non-Ferrous Metals, Ferrous, Stainless Steel / Alloys, Paper, Plastics and Latin America and provide BIR members with up-to-date information on the respective commodity or market segment.
The report on Non-Ferrous Metals appears once every two months, whereas Ferrous, Stainless Steel, Paper and Plastics are published quarterly. Latin America is covered twice per year.