Nini Krever of Traders International Corp., Palm Beach Gardens, Fla., moderated the session, which included panelists Steve Sutta of the Sutta Company, Oakland, Calif., and Esko Uutela of EU Consulting, Stamberg, Germany.
Krever began the session by noting that 19 U.S. paper mills shut down during 2002, a sharp increase from the average four per year in the 1990s. These closures have helped contribute to a 3.96 percent increase in U.S. exports in the last year, Krever said. She also noted that Asian paper mills are moving toward setting up established import markets.
Sutta noted that eight years ago, the Asian “tigers,” comprised primarily of Japan, Taiwan and Korea, drove demand. However, demand from China has eclipsed demand from the other Asian countries, particularly for bulk grades.
He added that the mixed paper grade is the most popular in China because the country’s cheap labor enables sorting of the grade at a relatively low cost. In contrast, overhead costs in the U.S. are rising, he said.
In terms of longer-term trends, Sutta sees increasing pressure to lower furnish costs in response to worldwide manufacturing overcapacity. The secondary paper market is also threatened by the quality standards of paper recovered from single-stream methods, he said. “Single stream is a problem. I don’t care how you do it.”
Sutta concluded that these factors will lead to greater consolidation among wastepaper packers; pressure to reduce collection and processing costs; and greater pricing volatility resulting from the “spot buying techniques” employed by Chinese markets.
Uutela said that global consumption grew by 35 percent in the decade of the 1990s, though he expects global growth to slow down by approximately 3 percent before 2005. He expects to see strong growth in Eastern European markets and very strong growth in China and the Near and Middle East.
World recovered fiber consumption numbered 160 million tons in 2002, with consumption likely to reach 185 million tons in 2005, Uutela said.
China will account for 40 percent to 50 percent of the news demand for recovered fiber, he added, while Europe will also represent a major region for new investments. However, Uutela said the North American market will be characterized by recovered fiber capacity closures rather than new growth.
Uutela forecasts that OCC and mixed grades will account for 60 percent of the growing recovered paper requirements.
In terms of growing Chinese recovered fiber demand, Uutela said 2.3 million tons – the highest import tonnage recorded – was in the first quarter of 2003. He added that North America accounts for two-thirds of Chinese imports.
As far as European markets are concerned, Uutela said that Spain is the country’s primary net importer of recovered fiber. Germany, the U.K. and the Benelux are Europe’s primary net exports; however, German net exports fell by 1 million tons between 2000 and 2002.
The Paper Recycling Conference and Trade Show took place in late June at the Hyatt Regency Chicago in downtown Chicago. The 2004 Paper Recycling Conference & Trade Show will take place in Atlanta at the Renaissance Waverly June 27-29.