Matching the market in 2015

As another calendar year begins for recovered fibre merchants and brokers, prospects for the New Year point to the likelihood of a market that will be flat by volume at best or with fewer overall tonnes to collect as another possibility.

Figures collected by Eurostat show recovered fibre traded across borders within the European Union dropped beneath 2.8 million tonnes in three of the four months from March to June 2014.

That is consistently below the average trading volumes of all prior years from 2008 to 2013. In 2011, some 3.29 million tonnes moved across international borders in the EU in the average month.

Traders in Europe do not foresee market conditions changing in any major, favorable way heading into the New Year.

“Collection is still on the same, lower level,” reports a Western European broker who specialises in exports, adding, “The market for waste paper is very slow.”

Another broker, who markets material collected throughout Europe, paints a more precise picture. “Collection throughout Europe is still shrinking. From 2008 until the beginning of 2014 it has shrunk by more than 18%,” he comments.

Although generation is down, so is demand. “The Chinese market is afraid to order because of the uncertainty about the extension of MEP (Ministry of Environmental Protection) licenses, and Chinese New Year is also approaching,” says the Western European broker.

Throughout 2014, China’s MEP has sent mixed signals as to whether, when or how importers of scrap materials into China will need to renew their licenses to import such materials. As of mid-December, says the broker, “There were talks that some of the licenses would be extended automatically through the end of March 2015, but this is still vague and [probably] not for all licenses.”

The uncertainty has left many importers in China unwilling to place orders for January delivery. Trading offices representing China’s largest mills, says the broker, “are still buying but not big volumes. They are very strict on quality and have begun to put in claims for moisture or non-conformity of the paper shipments.”

The second broker is seeing the same issues with the Chinese market. “Export to Asia is low,” he comments. “There are small and medium-sized exporters who are not shipping [to China] at all; the big exporters are complaining about quality, margin and regulations.”

Some smaller volume markets such as Indonesia and Vietnam are still buying, says the first broker, but “India has gone quiet after a reduction in price in the market over there.” (Markets in the Indian subcontinent will be the focus of Paper Recycling Conference India, co-hosted by the Recycling Today Media Group Jan. 29-30, 2015. More information can be found at www.paperrecyclingindia.com.)

The second broker sees a few bright spots amidst the current circumstances, including the potential for an upswing in price, perhaps after the Chinese New Year. “Needs and availability are in balance, so when there suddenly is a higher level of inquiry, prices will rise because there is no buffer.”

And while prices for OCC (old corrugated containers) may be slumping because of China’s economic and regulatory uncertainty, he says another grade is experiencing an uptick. “What we see is that there is more interest from exporters to ship sorted office waste (SOW) to China, Vietnam and Indonesia, which has already resulted in a structurally better price in northern Europe.”