During the recently concluded meeting of the Bureau of International Recycling, various speakers spoke of the strong improvement in exports of recovered fiber to Asia. According to Gerry West, Severnside Paper, a UK-based paper stock operation, “Many mills in Europe appeared unwilling to sit down with their recovered paper suppliers and arrive at a joint strategy which offered the latter a reasonable profit and return on capital.
He noted that, for the most part, recovered paper merchants were running with low inventories, partly due to the traditional reduction in collection activity during the summer months. Mills had ‘volunteered’ recovered paper price increases of typically 10-15 Euros per metric tons in early September although some were expected to try to claw back these increases this month, he suggested.
In a review of the Asian market, Paper Division Vice-President Ranjit Baxi of J&H Sales International Ltd in the Far East pointed out that Asia already accounted for more than a third of global recovered fiber consumption and that further major import growth was anticipated over the next three or four years, notably in China and India. Having stressed the need for exporters to these countries to maintain high standards of material quality, Baxi said he “failed to understand” why recovered paper prices were barely stable or even falling at a time of increasing demand. Under the continuing strong influence of exchange rate fluctuations and freight rates, Baxi expected prices to remain ‘volatile’ over the next few years.
In this same context, Paper Divisional President Dominique Maguin of Soulier in France hoped that ‘internationalization’ of the trade would help produce more ‘realistic’ raw material prices. He also urged BIR members around the world to be ‘vigilant’ with respect to ‘legislative and protectionist excesses’ that could undermine the recovered paper business.
Michael Moulton, managing director of US-based risk management group WM Trading, indicated that North American recovered paper markets had been relatively stable over the previous three months at prices some $ 10-15 per metric ton above historical averages. New production capacity in Asia and the state of the US economy would play ‘huge’ roles in determining market developments in 2004.
Moulton also suggested that, within a few years, 40 to 50 percent of RAA’s tons will be hedged financially’ in order to mitigate the effects of recovered paper price volatility and to ‘liberate management to focus on operations’.
In his update of European Recovered Paper Association activities, General Delegate Thomas Braun of BVSE in Germany noted the ‘good level of openness’ evident in meetings with the Confederation of European Paper Industries (CEPI) although the two organizations still differed on many issues surrounding traceability, such as bale labeling. Braun also highlighted CEPI estimates that Europe’s overall pulp, paper and board capacity would grow by 5 million metric tons within the next few years.