As spring turned to summer, recovered fibre traders in Europe faced concerns not only about the regional economy but also a container shipping price hike.
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 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.
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 tonnes of recovered fiber from North America and nearly 2.4 million tonnes from Europe. Those figures exceed the pre-economic crisis levels of the first quarter of 2007.
In June, Chinese containerboard manufacturer Lee & Man released its fiscal year results and reported a revenue increase of nearly 5% compared to the year before, but with profits down by nearly 27%.
“The substantial increase in waste paper, coal and other raw materials prices has boosted our operating costs and eroded the net margin per tonne,” stated CEO Raymond Lee in a news release accompanying the results. Lee & Man’s newest production lines, with a combined annual design capacity of 900,000 tonnes of containerboard, began running in late 2011.
Industry conditions in the Middle East also were discussed at the BIR session, where 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.
Kaul noted that a lack of forests makes mills in the Persian Gulf region “almost totally” dependent on recovered fibre. He said that even if collection rates rise, more imported scrap paper will be needed since WARAQ and other paper makers in the region are adding capacity. “There is going to be a deficit of fibre 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% across segments,” he commented. He predicted that the scrap paper requirements of India’s mills will be at 16 million tonnes by 2025.
