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Hope Springs Eternal

Market Reports - Paper

RTGE Staff February 26, 2013

Recovered fibre collectors in Europe are not characterizing business as booming, but the thought of Spring weather is perhaps bringing with it some signs of hope that the worst is over for the economies of Western Europe.

“Generation has increased just a bit, but is still below normal levels,” says a fibre trader based in the Netherlands.

One of trends that seems likely to continue in 2013 is the downward spiral in the generation of old newspapers (ONP) and magazines as well as the production of newsprint and printing and writing papers.

Merja Helander of Lassila & Tikanoja PLC in Finland says, “The production of printing and writing papers including newsprint dropped 10% in 2012 from 2011,” in that Nordic nation.

“Newspaper reading habits are changing very rapidly—faster than expected,” says Helander. “People are reading news from the Internet and less printed media is used. Newspapers have become thinner.”

She adds, “The biggest and very traditional Finnish newspaper has changed its format to tabloid to cut costs. I think most of the readers are happy with the new smaller size as it is easier to read in trains, busses and airplanes, but less newsprint is needed so paper consumption goes down.”

What’s being printed in Finland is being collected for recycling, says Helander. “Collection of news and pams itself is effective and brings material in very well.”
 


 

While Internet reading is reducing news and pam generation, online shopping is resulting in the use of more cardboard. “Collection figures for packaging grades—OCC (old corrugated containers) and smaller grades—are growing as consumers have learned to order goods at cheaper prices through the Internet. Production of cardboard increased 1% in Finland in 2012,” Helander remarks.

In Scandinavia, where some paper is still manufactured for export, the changing nature of fibre collected balances with the different production scenarios for newsprint and board.

“All in all the market here in the North is stable and demand is good,” says Helander. “We have enough recovered paper to fill our domestic customers’ needs and only small volumes go for export. Prices are on a reasonably good level. I expect a very stable year in 2013.”

For the Dutch trader, the export markets that Helander is able to avoid are a source of concern as of early February. “There are rumours going around about mills in Vietnam falling down and the situation of some Chinese mills is quite unclear as well,” he comments.

Beyond the rumours, he adds, “Offshore buying is steady for OCC, but deinking grades are difficult.”

The signs of hope for Europe’s economy included a December 2012 unemployment figure for the 17-nation euro zone of 11.7%. An Associated Press report referred to the figure as “still high [but] lower than feared.”

In January 2013, a euro zone purchasing managers’ index calculated by the research firm Markit Group Ltd., Amsterdam, rose to 47.9, the highest it has been since February of 2012. The figure demonstrated a sizable increase from the 46.1 that was recorded the month before.

Manufacturers and the recyclers who serve them can only hope it signals a turn in the downward momentum that has been plaguing industrial production in Europe for the previous year.

Figures gathered by Eurostat, http://epp.eurostat.ec.europa.eu, display an almost uniform declining trend in industrial production among the national economies of Europe.

Manufacturing in Italy and Spain has declined by some 20% compared to the 2005 benchmark figure used in Eurostat’s industrial production index. France and the United Kingdom, meanwhile, show declines in the 10% to 12% range.

While the manufacturing sectors in Germany and the Netherlands returned to growth modes in 2010 and 2011—rising well above the 2005 index benchmark of 100—in the later months of 2012 the industrial production figures for even these two nations began to move in reverse.

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