Paper stock markets throughout Europe are suffering from many of the same problems afflicting domestic paper stock dealers. Although there are some pockets of strength, most countries are reporting sluggish markets at best, with only modest signs of a turnaround in the near future.
The following is a country-by-country report presented by the Bureau of International Recycling, an international association of recycling companies.
Baltic countries - Prices of lower grades have dropped significantly and those of higher qualities to a lesser extent. Recovery and consumption have been broadly stable with improvements in some cases, and mills are operating satisfactorily. The plant at Klaipeda in Lithuania is raising output, and in the southern part of Estonia the new board mill at Polva, owned by Lindegaardof Norway, has started production.
Czech Republic - Both recovery and consumption have been running about 10% below the levels of the last quarter last year. The paper industry maintains no stocks and thus depends on continuity of supply. Prices of bulk grades have declined by an average of 20%, with board and mixed papers especially affected. Exports have benefited from somewhat higher prices -particularly for newspapers and magazines.
No further pressure on prices is expected during the second quarter that is viewed with just a little optimism.
Finland - Although demand for recovered paper has been good and prices stable, there are some signs of weakening with reduced order intake by certain mills and pressure for price reductions. Stocks are low.
Recovery of old news and inserts is still growing, partly as a result of producer responsibility measures, and a small surplus is being exported. The volume of OCC recovered has declined a little.
The Finnish Environment Institute has taken the first steps in controlling shipment of so-called waste within, into and out of the European Union. Exporting to non-OECD countries has become extremely difficult, with complex licensing requirements. In the worst case, shipments to countries such as Russia, Latvia, the Ukraine and Belarus may be halted, with considerable damage to small exporting companies. Exports to EU destinations also require licenses, but the procedure is relatively simple. Imports and exports are currently at a low level.
France - After a drop in prices in January, the market for OCC and mixed papers was stable throughout February and March with good demand from French mills. Purchasers in Asia were carefully observing economic trends in the United States in assessing their needs for the months ahead.
Sorted graphic paper for deinking is not exported, but home demand is still good at lower prices since January and merchants have no stock. There are no stocks of finished product at the mills.
Despite declining pulp prices, demand for substitute grades is still strong and there are no stocks. February and March saw better prices for qualities such as listings and white envelope cuttings. The outlook for this sector of the market looks stable for the immediate future, but weakness can be expected in the bulk grades.
Germany - Demand for lower grades from South-east Asia has recently improved and mixed papers can at present be sold without restriction on quantity. Although prices are lower than on the domestic market, at least some stock reduction is possible.
Trading volume in Europe during March has been at a normal level and prices fairly stable. Sorted graphic paper for deinking is in considerable demand, but office papers are in oversupply resulting in declining prices.
In February, limited purchasing by domestic mills gave merchants no chance to reduce their stocks. Availability was high and there were no additional export orders to ease the surplus of sorted mixed paper and board and supermarket material. Prices were unchanged.
The year began with a seasonal high in recovered paper collections, and mill demand increased only very slowly. Prices of all qualities suffered, but especially mid and better grades following the release of considerable quantities of office papers to the market.
The Netherlands - The outlook is uncertain and further small price reductions on the domestic market cannot be ruled out. Growth depends on increased demand from the Far East, which is in question, especially in view of falling prices in the United States. Currently, the export situation is still weak, with the market in Indonesia - a traditional Dutch outlet - remaining fragile. Prices are around 10% below domestic levels.
In January Dutch prices fell by 25% to 30% in line with those in Germany, and have since remained relatively stable. The value of pulp substitutes has continued to decline in tandem with lower pulp prices.
Spain - While the market could be better, there is less pessimism in evidence than at the end of 2000. Recovery levels have been lower than expected, and in certain cases demand exceeds supply. In general, mills are running well and have orders in reserve. Prices of new tissue and packaging products are practically unchanged while those of board are very slightly lower.
A shutdown for technical reasons at the biggest consumer of corrugated material resulted in lower demand during the first two months of the year, but the situation was returning to normal in March. Despite a domestic price reduction in January, low grades imported from Germany and France cost less than Spanish material. Further price cuts aren’t expected in the short term. Processors' stocks of board-making grades range from medium to high, while mill stocks are at mid level.
Demand for overissue news and magazines are good following price cuts in January and February. Stocks began the year at a high level and have since been decreasing gradually. Generation is not very high and prices could improve during the next two months. Some quantities of overissue news, magazines and woody trims are being exported to the Far East at improved prices.
Prices of top grades have followed the declining value of pulp, but demand has begun to firm and no further decreases are expected.
Switzerland - With the exception of deinking qualities, prices of bulk grades are under slight pressure while those of medium and high grades have weakened. Unprinted news and magazine papers are in very good demand at prices close to white wood free levels.
Collection has returned to a high level after a slight reduction in January and February owing to school holidays during the skiing season. The downturn led to greater than expected imports of deinking grades.
Mills are operating at full capacity, although orders for packaging materials have slowed. Last year, imports of recovered paper once again exceeded exports.
Turkey - Demand and prices are still on a downward trend and domestic recovery has declined by 15%. Mills have been complaining of a shortage of orders and high stocks. The outcome is a sequence of production cutbacks that has of course significantly reduced consumption of recovered paper. Output at Kartonsan, the biggest consumer of recovered fiber, has been halted because of a strike.
Modern Karton, the major fluting mill, entered into a barter deal with a German company for 6,000 metric tons of new product in exchange for recovered paper.
Lower import prices, especially for OCC and supermarket material, caused two domestic price reductions in a month. In February a change in government fiscal policy resulted in devaluation of the Turkish currency by about 20%, bringing home prices below those of imports.
The outlook is not bright, and imports of both new and recovered paper will be halted unless their cost can be reduced.
United Kingdom - The first quarter has seen successive price reductions for all grades, bringing the UK into line with most continental levels. After starting the year at a low point, export demand - especially from the Far East - improved towards the end of the period. Closure of the East Lancs mill has affected merchants in northern England, and for the first time in many months some stock building of KLS is in progress.
Mill order books in the packaging sector appear to have been better than expected, but producers of fine papers are still under pressure and the future of the Bonside mill has yet to be settled.