Blue circles represent tonnes traded in thousands, grey circles represent € per tonne; Source: Eurostat, http://ec.europa.eu/eurostat/web/waste; tonnes traded figure includes tonnes imported, exported and traded between EU nations

European suppliers of recovered fibre continued to enjoy strong demand from domestic and overseas mills in the first four months of 2016—enough to prompt some price increases for major grades.

Recyclers on the continent call the supply of old corrugated containers (OCC) steady, though some say the spring uptick in material generated was less than expected.

A Netherlands-based recycler sees it as a seller’s market. “Supply has not really picked up,” he says. “Especially on OCC there is a war going on; European mills are buying more material, so less is available for export,” the recycler adds.

A broker based in Western Europe detects less tension. “The market has been pretty stable, to be honest. Demand from both the EU and the Far East has not caused any unrest,” he says.

However, a third recycler, a plant operator based in Netherlands, says he sees demand beginning to put a strain on supply, with prices rising as a result. “Spring is in the air, and there is no oversupply of recovered paper,” he says. “European mills have increased their buying prices by €5 to €10 per tonne, depending on the grade and region.”

Among the scarce grades in early 2016, continuing a years-long trend, is news and pams (N&P), the operator says. “Deinking mills are all in the market to search for good N&P, but because of the [current] composition of mixed paper, we get less N&P as output on the sorting lines.”

Questions surround the near- and medium-term pricing trend for OCC in Europe, since finished product containerboard prices there “dropped €20 to €30 per tonne,” according to the plant operator.

He continues, “Packaging mills in the Benelux countries and the northern part of Germany are a little bit nervous about new mill capacity that will come online in the second part of 2016. The mills are driving the prices up at the sources to secure volumes and are blaming the recycling companies.”

Source: Eurostat, http://epp.eurostat.ec.europa.eu

The other Dutch recycler cites a recent study on the containerboard market that points to the same issue. “According to a French research report, there will be a net increase in Europe of 4 million tonnes of production capacity through 2018. We are seeing a lot of graphic machines (news and lightweight coated lines) being rebuilt to linerboard,” he says.

At the same time, export brokers continue to seek material. Shipping lines have maintained low rates, says the Western European broker, and “Indonesia was in the market for a bit,” adding additional temporary demand pressure. The euro gaining strength against the U.S. dollar may also make a difference in future buying, he adds.

In the short term, the Dutch plant operator says, “The overseas markets provide very stable and good demand; sea freight is still very low, and there are enough containers available.” He adds, “Buyers are looking for mixed paper, and the prices increased in early 2016 by about €15 per tonne. They have come back to more normal levels now when compared to OCC prices and the local European prices for mixed.”

In the USA, containerboard production eased back in March 2016 compared with one year ago and with the previous month. According to the Washington-based American Forest & Paper Association (AF&PA), containerboard production in March 2016 “was 1.1% lower compared with March 2015. The month-over-month average daily production compared to February 2016 was 2.6% lower.”

AF&PA says, “The containerboard [mill] operating rate for March decreased to 94.4% and the year-to-date operating rate of 94.9% is 0.6 percentage points lower compared to the same period in 2015.”