Paper export levels unshaken by freight costs (10.01.2008)
The level of recovered paper being sent from Europe to the Far East has remained stable despite soaring export prices, according to the latest market report from the Bureau of International Recycling (BIR).
Reflecting on the last quarter of 2007, BIR paper division president Ranjit Baxi of London-based J&H Sales International confirmed that there had been a "major reduction" in the number of exports out of Europe during the first two weeks of October 2007.
Some mills reduced their prices for mixed and OCC but others held firm, indicating a belief that export demand will remain strong.
This came after freight charges jumped by as much as $950 for a 40-foot containerHowever, Mr Baxi reported that after the initial impact, European paper merchants and Asian mills managed to absorb the price increases.
He said: "European merchants and Asian mills each absorbed part of the freight increase to arrive at a workable position, resulting in increased European exports in the second half of October at prices of $210 plus-per-tonne for OCC [used cardboard]".
In the UK in particular, figures show that in October, almost 204,000 tonnes of recovered paper was exported to China in October- which was close to the average for 2007.
David Symmers, chief executive of the UK's Independent Waste Paper Processors Association, explained in his UK market report that export orders had remained "strong" and that some mills had not even adjusted their prices as they were confident that the market disruption was only temporary.
He said: "Some mills reduced their prices for mixed and OCC but others held firm, indicating a belief that export demand will remain strong and be reflected by a price recovery early in 2008."
However, Mr Symmers acknowledged that some material which used to be sent to India was not being sent to Germany.
He said: "Supply of woodfree grades remains tight and export orders remain strong, although there has been a shift in demand away from India and towards the German market."
Germany
Giving the German market report, Reinhold Schmidt, of German firm Recycling Karla Schmidt, confirmed that more material had arrived in Germany as a result of the price hikes, which had prompted a price drop.
He said: "Prices for the lower grades of recovered paper fell during the first half of December by, reportedly, up to Euro 10 per tonne. Determining market factors were decreasing export quantities to Asia, a seasonal increase in domestic recovered paper generation, as well as a slight reduction in domestic demand in the face of high recovered paper stocks in the mills."
Despite expressing some confidence in the recovered paper market, the BIR warned recyclers about the year ahead.
He said: "In summary, we end a rather difficult 2007 on a subdued note, and see 2008 as another challenging year."