EPRC: Exports Exert Price Influence

A great deal of recovered fiber collected in Europe stays within the European Union, but the new export market in China is nonetheless critical in determining fiber pricing in Europe.

According to Dr. Maarten Kleiweg de Zwaan of the Dutch recycling federation FNOI, 85 percent of the 55.6 million metric tons of scrap paper collected in Europe in 2006 remained there to be consumed by European mills. “All we hear is China, China, China, but 85 percent of the material stays on the European continent,” he commented.

Kleiweg noted, thought, that the percentage exported is growing, which benefits recovered paper shippers when it comes to receiving the best price. “We don’t have to go cap in hand to the [domestic] mills anymore, because we have another market,” he stated.

The added global demand has been coupled with added collection in Europe, Kleiweg noted, resulting in pricing that has risen, but not dramatically. “OCC [old corrugated container] prices have increased since 2000 only slightly [above] inflation,” he remarked.

Because of Europe’s increased collection—much of it government-mandated-- Kleiweg speculated that “if that [additional] 15 percent wasn’t exported, our prices would be right through the floor.”

The exported fiber pricing is also influential, said Kleiweg. “Somehow, that 15 percent [exported] determines the price. Why? I don’t know.”

Dutch recovered fiber broker Cees van Berkel of C.V.B. EcoLogistics BV, noted that collectors of fiber in Europe “are much more visited now” by brokers and exporters seeking material, particularly for mills in China.

Van Berkel expressed concern that the view of paper recyclers in Europe that global demand is endless could lead to future problems. Packers “are so much in competition with each other that they are taking any risk to get material—enormous risks,” he commented.

If recyclers are paying for fiber that is stored for speculative purposes, “that’s a very bad development in our trade,” van Berkel remarked.

Beyond supply and demand, van Berkel pointed to sentiment within the market as being a key pricing factor. “Prices of recovered paper are mainly emotional,” van Berkel contended. He expressed concern that a perceived tightness of fiber supply “is mostly overdone,” which could lead to falling prices when the overriding sentiment changes.

The 2007 European Paper Recycling Conference, organized by the Recycling Today Media Group, was held in at the Hilton Amsterdam Oct. 3-5.