Struggles Ahead for Paper Stock Markets

During the Bureau of International Recycling’s Paper Division meeting, speakers addressed the challenging market for recovered paper. While there are signs of an improvement, the sense was that any recovery would be slow.

Ranjit Baxi with J & H Sales International, president of BIR’s Paper Division, said that while there are signs of a recovery, the upturn is set to be slow and a number of challenges continue to confront the paper recycling sector.
“Rising unemployment is adversely affecting expenditure and therefore consumption, while low recovered paper collection volumes represent “a problem we are all currently facing”, he said. Indeed, a succession of market reports revealed the scale of the drop in collection tonnages, which, in Europe and the United States is estimated at between 10-15 percent.

On a more positive note, China continues to increase its imports of recovered fiber following a decline in orders around the start of this year. According to Baxi, China bought in some 18.6 million metric tons over the first eight months of 2009, with the United States providing 7.654 million metric tons and Europe around 6.5 million metric tons.

If Chinese imports continue at this rate for the remainder of the year, Moore added, they will total around 27.9 million metric tons for 2009 as a whole - an increase of about 15 percent over the 24.15 million metric tons of 2008.
Bill Moore from Moore & Associates showed that China’s recovered paper imports slumped in January this year, but quickly recovered to an all-time monthly peak in April. By 2014, Moore estimates that China could be a net importer of around 35 million metric tons of recovered paper.

Another guest speaker, Trilochen Singh of RKS International Sales GmbH & Co. KG in Germany, predicted that import demand from China would rise to 37 million metric tons by 2012, while requirements in India would jump to 20 million metric tons by 2020 in response to increased sophistication of paper manufacturing equipment.
Rising sea freight rates was another challenge to the recovered paper sector, Baxi noted.

Peter Hall, managing director for the United Kingdom and Ireland of container line American President Lines, warned that a continuation of “unsustainably low” freight rates would lead potentially to shipping line failures, a degradation of service levels and, in the longer term, to a lack of re-investment within the container shipping industry.

In her report on European Recovered Paper Association activities, Merja Helander of Finland-based Paperinkeräys Oy confirmed that the European paper recycling rate has reached 66.6 percent. The key question now, she said, is how high the recycling rate can feasibly go. “It can’t go up forever,” she added.