Recovered fibre prices in Europe and North America had been on an upward trend in the first seven months of 2016, with most recyclers and analysts pointing to consistent demand for materials globally in a sector where supplies are not elastic enough to grow to meet that demand.
In North America, forest products information services company RISI, based in Boston, characterised demand for old corrugated containers (OCC) as in a “frenzy” in early August, saying domestic mills and export brokers were competing to bid up prices by $10 to $20 per short ton.
A recycling plant operator in the United Kingdom describes the European market in early August as “very hot and all around is driven by the imbalance between supply and demand.” However, by late August, a Dutch trader says buyers were pulling back, and prices seemed destined to drop in the late summer.
It will mark a downturn from what had been an environment of better pricing when turning in almost any direction. According to RISI, North American recyclers during the summer were receiving higher bids from mills in Mexico, as well as from those in the United States and China.
The early summer months were equally kind to European sellers, according to a report prepared by the U.K.-based www.LetsRecycle.com. The report indicated U.K. sellers in particular were benefitting from the declining value of the British pound after the Brexit vote.
What the Brexit vote will mean for exporters is unclear, according to the U.K. recycler. “It’s still too early in the Brexit process to tell, but I’m afraid it will have an impact on the market in total, whether regarding imports and exports, currency exchange, manufacturing location decisions or other things,” he comments.
Ranjit Baxi, president of the Brussels-based Bureau of International Recycling (BIR), has expressed regret and concern regarding the referendum result. Baxi was the long-time president of the BIR’s Paper Division and is managing director of London-based J&H Sales International Ltd.
“The decision of the people of the United Kingdom to leave the EU will undoubtedly have a deep impact on trade,” he says. “The economic and political consequences of this vote cannot be fully assessed. We need to continue working together to promote free and fair trade globally while strengthening our diversity and reducing legislative and bureaucratic burdens on businesses”
Baxi’s report in the BIR’s July 2016 World Mirror tempered his concern about the Brexit vote with some of the favourable conditions in global demand for recovered fibre.
“Demand from the other regular Asian markets of India, Indonesia, Vietnam and Thailand [has] remained steady for news and pams and the middle grades,” writes Baxi, referring to deinking grades, sorted office paper and boxboard cuttings.
Demand from mills in China reportedly likewise has been strong, helping abet the global price run-up. Hong Kong-based Lee & Man Paper Manufacturing Ltd. reports a profitable first half of 2016 and says it is ramping up new production capacity in the tissue sector.
Lee & Man says it sold some 2.67 million short tons of paper products in the first half of 2016, earning revenue of $1.08 billion (€967 million). The company’s first half 2016 net profit of $184 million (€165 million) marked a 30.5% improvement in its earnings per share compared with the same period in 2015.
The company’s chairman Dr. Raymond Lee says room for growth in papermaking in China and East Asia remains. “The demand for packaging paper in China is expected to grow steadily in the long run,” he says in comments accompanying Lee & Man’s earnings.“