The recent report from the Bureau of International Recycling finds conflicting signals about the short-term markets for recovered fiber in Europe. The following is an excerpt from the quarterly BIR Report.
Baltic countries: The market is behaving strangely. Apart from an excess of mixed or multi-grade material, stocks are low, and yet prices have declined. Collection of most grades continues, but local factors have prevented the recovery of news and inserts in the volumes that might be expected.
Czech Republic: Sales during the third quarter have been stable with little change in prices, except for a reduction of 10-15 percent for newsprint. The market has been in balance and stocks have not increased. There has been a good demand for magazines for export to Germany.
Finland: Stability continues to be the case. Mill demand has been good despite production downtime likely to occur in coming months. Supplies of recovered paper are running well and after a seasonal decline collection has started to return to normal. In general, collection has developed more slowly than in recent years.
In view of the healthy state of domestic demand exports continue at a low level.
France: At the end of last month demand remained stable, and particularly firm for newsprint. Board producers were neutral about demand for their products.
Paper production hardly slowed during the third quarter. In the two traditional holiday months, July output was at the normal seasonal level while in August there was a decline of 25 percent from the level of the same month last year. There was no change in last month - and no stocks of new products or recovered paper to disturb the domestic market that continued to be supported by strong Asian demand.
Germany: Although September saw a seasonal increase in availability, the reduced pace of the economy led to a lower volume than at the same time last year. While in other respects the market was in balance, particularly high demand for sorted mixed grades and deinking material resulted in a shortfall and higher export prices. As deinking material was attracting particular interest on both the home and export markets, mixed grades were sorted more intensively.
Earlier in the quarter availability was affected by the holiday season, but also by the economic climate which was further reflected in reduced consumption. Demand for sorted mixed and deinking papers was good, but fell for other bulk grades. Mid grades were in good demand, and lower availability brought a slight increase in prices. The declining pulp market did not affect prices of high grades and demand was stable.
The pace of export activity quickened, mainly because of attractive freight rates and stable or even increasing prices in the United States. Overall, supply and demand were in balance.
Italy: Stocks have been dwindling and those of sorted mixed, corrugated and supermarket material are low, whether at mills or recovery plants. Demand for these grades exceeds supply and prices have risen by about 10 percent.
This does not mean, however, that the market is improving, merely that inventories of all grades are sinking. In fact order intake by producers of packaging board is poor and selling prices hardly short of disastrous. Any sudden upturn in recovered paper prices would likely force mills to halt output for a period to avoid incurring big losses.
Among mid and higher grades, demand for woodfree whites is good and prices are tending to rise, even though they do not equal those obtainable on the French and German markets.
Prices of deinking grades have improved, and exports to Germany and Austria are increasing.
The Netherlands: Staggered summer holidays, decreased demand and a downturn in the economy have led to a shortage of recovered paper. Collections are extremely low, merchant stocks minimal, and consumers in need of material. Although Dutch mills have taken downtime, prices have been stable.
Demand from the Far East, notably China, remained strong throughout the summer, aided by lower freight rates. But since the tragic events of September 11 in the United States, merchants have been reluctant to ship to the Far East in view of possible surcharges of up to $600 per 400-foot container.
Market insiders had expected prices to rise in October, but it is now extremely difficult to predict what the future will bring.
Spain: Prices have been stable during the last two months, reflecting low generation rather than steady demand. Availability of bulk grades has not decreased, and mill stocks are at mid to high levels; at mid level in recovery plants. Prices have not moved since July, and as generation increases in the fourth quarter some changes cannot be ruled out.
All stocks of deinking grades are very low and as demand is good mills are importing from France and the UK.
Despite the fall in the price of primary pulp, demand for pulp substitutes remains strong and prices improved slightly during the quarter. Generation is low and very little material is in stock.
Mill order intake lacks strength and the price of reels has fallen a little.
Turkey: Economic stagnation has resulted in reduced collection and as mills have lacked orders demand for all grades has been weak. However, the order position of fluting and linerboard mills has developed a little and with the help of seasonal factors a slight increase in demand for old corrugated and mixed grades is expected. High currency exchange rates are inflating import prices which are likely to increase further in view of low stock levels and the shortage of domestic material.
Declining newspaper circulation has caused a considerable reduction in availability of news and inserts. At the same time, use of this grade as wrapping material has risen and thus prices have increased. Mill stocks are at a reasonable level and it is forecast that intake will increase in the near future.
Demand for high grades has been stable and mill stocks have fallen slightly. It is probable that demand will improve but in the short term no change in prices is expected.
United Kingdom: Domestic consumption in the third quarter fell by about 7 percent, for mill order intake was weak and a number of plants had to take downtime. However, demand for most grades was high, led by strong exports to both the Far East and near continent at prices generally higher than domestic levels. Low deep-sea freight rates provided their own stimulus, and the ability of merchant-processors to issue Export Packaging Recovery Notes on overseas shipments provided additional income.