Home Magazine Prospecting for a Rebound

Prospecting for a Rebound

Market Reports - Paper

The summer of 2012 was not one that most recovered fibre merchants or traders will remember fondly, as generation remained weak and prices for many grades turned downward sharply.

RTGE Staff November 15, 2012

The summer of 2012 was not one that most recovered fibre merchants or traders will remember fondly, as generation remained weak and prices for many grades turned downward sharply.

To what extent autumn will re-energize economic activity remains a question in the minds of traders and recyclers around the world. In Europe, a sovereign debt plan that has been agreed to by all key parties seems to be in place, but the on-again-off-again nature of that process remains.

Many business owners and managers in the U.S. have put their plans on hold pending the early November presidential and congressional elections. The outcome of the general election could lead to any of several different corporate and individual taxation scenarios.

Traders all over the world are keeping a close eye on China, where the economy is still growing (but more slowly than previously) and where reports throughout the summer pointed to an excess of finished paper and recovered fibre in inventory.

As of late October, one trader in northern Europe reports slightly higher prices in his market region. He cites bids by buyers representing Chinese mills as the key to the price rebound.

Despite this potentially good news, the same trader refers to recovered fibre generation in Europe as being low, without a notable increase in the autumn compared with the summer.

At the Paper Recycling Conference, held in Chicago in mid-October, presenter Hannah Zhao of U.S.-based information firm RISI, offered additional insight into how the changing nature of the paper industry would affect recovered fibre markets for the rest of 2012 and into 2013.

According to Zhao, the growing sectors within the global paper industry are containerboard and tissue. Mills producing products for these sectors will require more raw material, while mills in the newsprint and printing and writing sectors will continue to exhibit reduced demand.

Fellow presenter Tobias Crabtree of Standard & Poor’s, New York, also pointed to the discrepancy between the healthy (containerboard and tissue) and unhealthy (newsprint and printing and writing/coated free sheet) sectors.

Crabtree said S&P has an “unfavorable” outlook for the coated free sheet and newsprint sectors in the U.S. For coated paper, he said two of the largest producers in North America, New Page and Verso Paper, are under significant financial pressure, with New Page in bankruptcy protection and Verso “highly leveraged.”

For recovered fibre grades such as old corrugated containers (OCC) desired by containerboard mills or for the office paper grades desired by tissue mills, obtaining additional tons of recovered fibre will be more challenging and more expensive, Zhou said, as it will require delving more deeply into the waste stream.

Sponsors

Current Issue

Follow us on Twitter
Follow us on LinkedIn
x