Since January, the European market is seeing more and more demand, especially in the brown grades. The demand for OCC is unbelievable. We started with prices in January well over €130-€135 free mill delivered per ton. And we already have stock marks in March of around €195 per ton and the expectation for April, May and June is that we will still stay at these levels, and maybe prices will increase again because there is so much demand.
I think this situation will continue into the summer. The collection rate is very low. There are a lot of people active in tenders right now. Mills are still competing with suppliers to get the material.
The gap of exporting to the Far East FAS (free along ship) price for OCC is between €166 or €170 free port delivered. When we look at the European mill prices there is a gap of €15-€20. It is the same as the mixed paper prices. Free mill is between €165 and €170. We looked at mixed paper prices European port and they are around €140. It is a gap of €25 or €35 per ton. It changes the whole system and it changes supply. We are also very strong in exports to the Far East. We are only 40 kilos away from Rotterdam. With these huge price differences it is not possible to produce so much in the export because with these price differences, we have to work for a margin of €2 or €3 or €4 per ton, so we can’t afford to sell it for €20 less.
It is very hard to make any money. We have strong competition and competition from our own mills. The newsprint mills have difficulties following these prices. The mixed paper price is almost the same as the deinking price, so people stop sorting. They shut down the sorting lines.
The tissue mills are in a very bad position. For the last three months, the office spec and office papers prices keep decreasing, so the price of office paper is almost the same as the price of mixed paper.
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John van den Heuvel of Peute Papier Recycling can be contacted at john@peute.nl