In August, the major European paper for recycling markets witnessed stable prices, especially for in-demand grades like mixed paper, board and OCC, says the Bureau for International Recycling (BIR). This stability was attributed to decreased production during the holiday period, reduced demand from paper mills and favourable export opportunities.
However, prices began to shift again in September, particularly for the lower grades. Market professionals in the UK and Continental Europe reported price increases, mainly the result of European buyers’ efforts to balance domestic and export prices. European paper mills continued to face challenges owing to overcapacity and declining demand, leading them to maintain lower prices for their products. Meanwhile, exports to regions such as South East Asia influenced price adjustments in Europe.
Overall, internal demand in Europe remained low, with paper mills grappling with weak order books and high price pressure owing to overcapacity in the sector. Mill inventories remained high whereas they were low in the waste management sector. The drop in collection volumes after the holidays took some by surprise, suggesting perhaps people were consuming less.
In the period from January to July 2023, US OCC exports dropped 14.8% while mixed paper and ONP faced even sharper declines of 26.8% and 30.4%, respectively. Despite these year-to-date decreases, July saw month-over-month increases in exports for both OCC and mixed paper. India remains the largest importer of US mixed paper, with significant orders in September, although a potential slowdown is anticipated in November owing to the Diwali festival. Additionally, North American unbleached and bleached kraft paper prices remained stable in September owing to consistent demand.
The continuous rise in OCC prices this year led to a significant increase in the bulk grade’s national average in the USA. Despite increased demand, generation of bulk grades has slowed. Newly-launched recycled containerboard machines have placed additional demand on recovered paper, competing for an already limited supply. Meanwhile, US actual box shipments decreased considerably in the first half of the year. As the Christmas sales season approaches, mills are expected to stock up, leading to increased demand and prices for OCC across various US regions.
China-affiliated overseas purchasing arms are intensifying their sourcing of brown grades from the USA and Europe for deliveries to Asia, even while they seek to increase prices for imports in South East Asia and Taiwan. In recent transactions, they have paid large amounts for US and European-origin OCC. Owing to the increasing sourcing costs, vendors in these regions have had to adjust their prices accordingly, with some even halting purchases when prices exceed a certain threshold.
End-users, especially major board mills in South East Asia and Taiwan, have responded to the rising OCC prices by reducing their import volumes and shifting to cheaper alternatives such as local collections. Some smaller mills have even paused or stopped production owing to reduced demand. The increased reliance on domestic OCC collections has also pushed prices higher.
There are doubts surrounding the sustainability of the high purchasing rates, with some speculating these will stop before the end of October. However, the sourced materials are expected to be delivered to South East Asia within the next two months, to be processed and then shipped back to China for the production of finished products, especially in anticipation of the Lunar New Year in February 2024.
The devaluation of the Chinese RMB against the US Dollar has complicated matters by reducing exports of packaging materials from South East Asia and Taiwan to China. The market has also seen a shift in demand from high-priced US OCC to more affordable options from Europe, Japan, Australia and New Zealand. However, supply from these regions is dwindling because of recent low collection rates.
In India, the situation remains uncertain. While there is demand because of the monsoon season affecting local collections, the country’s mills are wary of pricing and are reluctant to stock up on high-priced US grades.
While US OCC prices have seen an increase, Japanese OCC has declined owing to aggressive buyer negotiation strategies. Europe’s OCC sellers had hoped for a price increase but market dynamics might prevent this.
