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BIR World Mirror on Recovered Paper - Quarterly Report July/August 2022: Change of atmosphere detected as markets enter more uncertain phase

  • 03 August 2022

A concise summary of the BIR World Mirror on Recovered Paper – Quarterly Report July/August 2022. Full version with detailed market reports available in the Members Only section of the BIR website.

Recent months have witnessed a pronounced market split in terms of demand for recovered fibre: high in Europe and the USA but much lower in Asia. Meanwhile, ocean freight costs have been on a downtrend in almost all instances, according to the latest BIR World Mirror publication from the global recycling organization’s Paper Division.

COVID-related lockdowns in China have dented demand for board products, recycled pulp and recovered paper, creating a major impact across India and South East Asia. Many paper mills, including regional players, have been forced to take downtime while recovered fibre buyers have been cutting import prices sharply.

In Europe, meanwhile, very strong demand for all recovered paper grades over recent months led to tight availability and really low stocks at the yards, not least because of the impact of the summer holiday period on municipal collection volumes. Supply was under pressure despite the diminished presence of Asian buyers. In this seller’s market, prices for deinking grades increased in some instances to levels never seen before, while OCC remained relatively stable around the high levels established during the first quarter. Packaging producers are said to have been particularly effective at passing on raw material increases in their finished product prices.

According to feedback from Scandinavia, high price levels for recovered fibre have prompted some mills to move away as much as possible from the more expensive qualities, replacing them with cheaper alternatives. Also in that region, insulation manufacturers are claimed to be experiencing a severe shortage of material.

All this said, more recent weeks have produced signs of a change of atmosphere in many parts of Europe, most notably affecting the lower grades market. Some producers have opted for machine downtime in the face of falling orders and rising reel stocks. And mills across all product segments are being badly hit by elevated gas costs and continuing uncertainty over its supply from Russia.

The Ukraine/Russia conflict has also had a significant impact on raw material movements, with many drivers from Ukraine - and their trucks - said to be missing from the market. From Germany, it is claimed that around 10% of deliverable recovered fibre could not be transported to paper mills in June for purely logistical reasons.

Developments in Ukraine, rising inflation, soaring energy costs and fear of an abrupt economic decline in the autumn/winter are likely to impact mills’ order books to an even greater extent in the coming months, leading to suggestions that recovered fibre will become more difficult to sell. Market expectations will be even more seriously downgraded in the event of a full-on gas crisis, it is contended.

Meanwhile, the USA is reporting the first signs that high inflation is damaging consumers’ discretionary spending to the extent of slowing orders for finished goods and thus packaging.

US OCC exports recorded a year-on-year gain in the first six months of 2022 thanks to growth in shipments to Malaysia. Meanwhile, slow GDP growth is dampening the demand from mills in China.

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With contributions from its members, BIR publishes periodical commodity reports under the label "BIR World Mirror". These detailed reports exist for Non-Ferrous MetalsFerrousStainless Steel / AlloysPaperPlastics 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.

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