Recovered fiber shippers have export markets, but freight rates are making some of them difficult to reach.
Attendees of the Paper Division meeting at the 2012 Bureau of International Recycling (BIR) World Recycling Convention in Rome heard encouraging news about global demand, but discouraging words about freight rates.
Paper Division President Ranjit Baxi of London-based J&H Sales International said as of late May increasing freight rates in Europe were “making exports very difficult.”
Having discussed the rates with shipping line representatives, Baxi said “there is no way to combat this increase; they don’t want to lose money” as they did when freight volumes plunged in late 2008.
European economic woes are a part of the problem, as there are fewer containers arriving in Europe. Freight increases in North America have not been nearly as high as those experienced by European shippers, panel members reported.
Paper recyclers based in Europe reported trends of declining generation and wavering demand for material from both European and overseas mills. “The order situation of the paper mills stayed predominantly firm in May,” said Reinhold Schmidt of Germany-based Recycling Karla Schmidt.
Ekrem Demircioglu of Turkey-based Tüdam, however, reported that in 2012’s second quarter, “the fall in demand [from the] Far East caused a drop in prices” in Turkey, while at the same time “the spring local collection rates increased.”
While demand from mills in China may advance and retreat in some markets, Baxi provided figures showing that the nation continues to consume imported scrap paper at an impressive level.
In the first quarter of 2012, China imported 3.4 million tons of recovered fiber from North America and nearly 2.4 million tons from Europe. Those figures exceed the pre-economic crisis levels of the first quarter of 2007, when China brought in 2.66 million tons from North America and 1.9 million tons from Europe.
Guest speaker Atul Kaul of Saudi Arabia’s Arab Paper Manufacturing Co. (WARAQ) provided an overview of that linerboard producer’s growth since starting in 1995. WARAQ will soon start up its third paper machine and will have the capacity to consume about 250,000 tons of recovered paper each year.
Kaul noted that a lack of forests makes mills in the Persian Gulf region “almost totally” dependent on recovered fiber. He said that even if collection rates rise in the region (they are currently 40 percent), more imported scrap paper will be needed since WARAQ and other paper makers in the region are adding capacity between 2013 and 2015. “There is going to be a deficit of fiber in the region,” he stated.
Guest speaker Jogarao Bhamidipati of India’s ITC Ltd. portrayed that nation as one that will continue to require imported scrap paper. India’s paper industry is “growing at an average of 10 percent across segments,” he commented.
Bhamidipati predicted that the scrap paper requirements of India’s mills will be at 16 million tons by 2025 and around 10 million tons of that may need to be imported. “There is room for big international players to come in and set up shop,” he stated.
The Paper Division’s Papyrus Award was presented to Italian paper recycling firm Lamacart SPA. The family company was formed in 1934 by Francesco Nicolis and has grown under the leadership of his son Luciano, who recently passed away.
Third-generation family member Thomas Nicolis, current managing director, accepted the award and said Lamacart handles some 1 million metric tons of recovered paper per year with a goal to double the business over the next five years.
The 2012 BIR World Recycling Convention was May 30-June 1 at the Rome Cavalieri Hotel in Italy.