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RTGE Staff September 10, 2013

Familiarity has not necessarily turned to comfort when it comes to European paper recyclers and their relationship with China’s Operation Green Fence.

Recovered fibre collectors and traders in northern Europe say they are still encountering problems when shipping to China and are even avoiding the Chinese market in some cases.

“The risk delivering to China is too high, and the costs, as result, are not acceptable and cannot be absorbed because of the low margin trade we are in,” says one Netherlands-based collector.

“The only [grade that] goes to China is OCC,” he continues. “European waste paper companies are selling their volumes more and more into Europe because of the bad behavior of some local Chinese quality control [personnel] in various ports in China,” he states.

A broker, also based in the Netherlands, has observed the same patterns. “Most fibre stays in Europe, [though] OCC is being exported and some mixed paper is still being exported from the U.K.” The reason, he says, is that “concern about Green Fence has only grown. The rules are very unclear at the moment.”

Collectors and brokers in Europe say they do not have significant excess volumes of fibre to export anyway considering the ongoing slow state of material generation in 2013 as well as stable demand from European paper mills.

“Collection is really at a very low level caused by the economic situation in Europe,” says the Dutch recycler.

The broker agrees, saying, “Fibre generation is still low, and those of us in the business are hoping for collection to improve in September.”

 

While the still slumbering economy is a source of concern on the supply side, the demand side of the equation is a little better. “The demand in Europe is quite good from all the mills,” says the Dutch collector. “There is a good demand for news and pams from the local mills in Europe.”

Demand for news grades is high in light of “the low collection rate but even more because of the composition of this grade as something closer to mixed paper,” the recycler says.

He points to the recovered fibre shipped from some U.K. material recovery facilities (MRFs) in particular, saying, “The percentage of news and pams [in grades packed for newsprint mills] is nowadays not more than about 50%.” He adds, “That means [U.K.] mills are also buying from mainland Europe and will accept the higher transport costs.”

A MRF operator in the U.K. characterises the export market from Europe to Asia as “a little tricky in the last two weeks of July and the beginning of August.” However, he adds that export orders started picking up in the second week of that month.

He says his own company’s products have faced “no real disruption” as a result of Operation Green Fence owing to good operating procedures. He adds, “I do know there are still players in the market suffering, but that is more because they have taken uncontrolled risks.”

In terms of the performance of paper producers, South Africa-based Mondi Ltd. reports positive financial results for the first half of 2013. Mondi reports ¤366 million in operating profits, up 35% from the first half of 2012.

Mondi says it is optimistic that it can manufacture paper profitably and in line with its executives expectations for the company.

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