Czech Republic. Major changes occurred in the recovered fiber sector during the second quarter. In April, a dramatic increase in mill production led to an upturn in demand for all recovered paper, particularly bulk grades. Further large increases followed in May and June, with prices increasing on a weekly basis in the latter month.
Since the beginning of this yeear, Czech market prices for mixed grades and board have risen by 60 percent and those for newspaper and magazines by 40 percent. Nevertheless, prices are still lower than those available on the German market and so there has been a rise in exports. Further increases are anticipated in both demand and prices.
France. The second quarter has shown an increase in corrugated paper production while newsprint output has remained broadly below last year’s level. An analysis of the deinking situation is difficult since there are rumors of a production push in the Scandinavian countries, whose mill operators also own deinking facilities elsewhere in Europe.
Demand for recovered paper has remained strong on the back of order pressure from Asia, and prices took off in June as a result of a number of converging factors including an anticipation of increased purchasing notably in The Netherlands and Germany, thereby destabilizing the overseas export market which is having to support higher freight rates, the fluctuating exchange rates between the US dollar and the Euro and the last June increase on both deinking and board material.
Negative repercussions are expected in the coming months and the recovered paper sector is hoping that the mills will be shrewd with their buying prices as any sudden price reduction could well push up the prices again should the market take off, even shortly.
Germany. The second quarter began with a shift in the lower and middle grade markets, and ended with collection remaining limited but ongoing increases in demand. April brought increased demand for supermarket corrugated paper and board but only limited availability while the main export buyers were Eastern Europe, Italy, Austria and Asia.
A similar situation emerged for sorted mixed paper and board, while there was also an upturn in orders and prices for sorted graphic paper for deinking. Higher grades witnessed stable volumes and prices. Demand and prices improved still further in May. Paper mills were complaining of low stocks and limited availability, particularly with regard to sorted mixed paper and board, supermarket corrugated paper and board, and, increasingly, sorted graphic paper for deinking. Asia's recovered paper buyers have had little alternative but to buy European material given the limited availability of U.S. exports and the commissioning of secondary pulp-consuming capacity in the region.
In a bid to stem the flow of recovered paper exports, German mills increased their prices in June to levels similar to those obtained for Far East business and special quantities.
Italy. A difficult start to the year saw falling prices for deinking material and magazines, and a precarious stability in many lower grades. However, May began with a price explosion on the back of major export business to the Far East. Market conditions for lower grades remain healthy although prices have dropped back from their peak levels. Little is expected to change until July at the earliest.
Nearly all paper stock plants are short of raw material and mill stocks are also low.
The Netherlands. Prices for mixed paper and OCC in particular have begun to increase since the spring in response to continuing heavy demand from the Far East. Dutch mills were slow to react because they believed Far East demand would be dampened by higher freight rates and a weaker U.S. dollar against the Euro. Partly due to holidays, mill stocks began to fall rapidly in April. Commodity grade increases in May failed to stem the flow of exports and mills were forced to pay premiums of up to 50 percent on their published prices in order to obtain supplies. The mills faced up to reality in June and duly matched export prices, resulting in OCC increases.
Higher grade prices have mirrored this upward trend while mills have been announcing price increases for their finished goods.
Spain. A fall-off in merchant stocks over the last couple of months has coincided with good demand for all grades, most notably brown and deinking material. Lower grades have been enjoying strong demand, leading to strong price increases in June.
The deinking market has seen high levels of demand and price increases in May and June. Meanwhile, demand for substitute grades has been normal over the last two to three months. There was a small price increase in June while inventories are at their usual level for the time of year.
Packaging mills are reporting healthy order books. Stocks of finished goods remain high but there has been a significant reduction in the recovered paper inventory. Good orders are also reported for duplex board and stocks of finished product are described as normal. Here too, there has been a reduction, albeit slight, in stocks of recovered paper.
Tissue mills are running with normal order books while stocks of both finished goods and recovered paper are close to the norm for this time of year. In the printing and writing sector, stocks of recovered paper are normal to just below average for the time of year.
Meanwhile, finished product orders and stocks are at normal levels.
Turkey. Economic indicators have been more positive in the second quarter of 2002. The inflation rate has continued its steady decline and the Turkish Lira returned to normal levels against foreign currencies during May. These positive developments impacted on all sectors, including the paper industry. New paper production has been growing while stock levels have been in decline; recovered paper stocks at the mills and merchants' depots have been below average.
Despite a high domestic collection rate, volumes are insufficient - particularly in the middle grades due to low new paper consumption. OCC demand is high but stocks are low, and so there has been a requirement to import from neighboring countries such as Greece and Israel. Demand for mixed grades is stable and stocks are sufficient without having to be bolstered by imports. By contrast, demand for news grades has resulted in low stocks and a steady flow of imports.
Higher grade stocks and demand are at normal levels and, once again, there has been no need to import. Given the current level of middle grade collections, demand for imported material is expected to increase.
United Kingdom. Demand grew strongly in the second quarter and the high prices paid by export customers, particularly for OCC, prompted UK mills to increase their prices by around 50 percent. Despite these increases, material has continued to flow out of the country and many domestic mills are importing - mainly from the near Continent - in order to balance requirements. This situation is expected to persist well into the third quarter given that most UK mills are running with good order books and that export buyers are continuing to place forward orders. Middle grades are enjoying healthy demand with most witnessing price increases of around 10 percent. The failure of one of the UK's major compliance schemes to discharge its 2001 packaging waste obligations has caused great concern and has led to a protracted debate as to its viability.
United States. The second quarter started slowly but exploded into life during May. Lower grade prices were changing on a daily basis early in the month and deinking/higher grades later followed suit. This upward trend continued into June. The mixed paper market was boosted initially by export sales, notably to China and India. However, there has since been growth in demand from domestic mills as they attempt to replace OCC and news.
A lack of supply of news grades has prompted higher prices despite complaints from mills that they cannot get price increases on their finished products. The strongest market conditions have been reserved for OCC, with prices rising by $70 per ton since April. This upward movement was sparked initially by export demand but domestic requirements also began to increase in late April.
Strong domestic and export demand continued for the remainder of the second quarter. There has been a more steady export and domestic demand for deinking grades, with price increases for coated book, sorted white ledger and sorted office waste limited to $15-20 since April.
Pulp substitute prices have been pulled along by the recovering pulp market, with increases of $15-20 since early April. Soft white shavings have enjoyed particularly strong export demand and a $30 price increase since the beginning of April.