PSI Fall Conference: Global Perspectives

In the truly global marketplace that follows the trading of recovered fiber, mill buying practices vary around the world, according to Bill Moore of Moore & Associates, Atlanta, who spoke on the International Panel at the PSI Fall Conference held recently in Arizona.

Across the globe, mill buying is an extremely complex job that requires knowledge of all facets of industry, including inventory management, transportation, as well as dealing with volatile pricing and a fragmented supplier base, Moore said. In fact, mill buying can be more like sales than purchasing at times. “Even in soft markets, mill buyers have to go out and court the industry,” he said.

Even with these similarities in mind, mill buying approaches differ from country to country, Moore said. The industry in the United States enjoys one of the most relatively harmonious relationships between mill buyers and sellers, he said. The U.S. market relies largely on contract tonnage and on published pricing, he added. The relationship between seller and mill buyer can be somewhat weaker in Europe, Moore said. European pricing can be more opaque, he added, leading to a wide range of prices in grades of paper. There are also more regulations to deal with in Europe, Moore said, as well as a higher level of competition from companies that rely on recovered fiber as a biofuel stock.

The thousands of miles that can separate Asian mill buyers from their suppliers can leave them somewhat disassociated, Moore said. Mill buying approaches differ even further within individual countries. For instance, India itself has almost no direct buying—instead relying on a complex system of agents, Moore added. Moore described Chinese mills as “masters of long inventory,” and said it’s not unusual for a Chinese mill to have 100 days of worth of inventory and supply.

Vietnam is one country in Asia emerging as a serious contender in the recovered fiber industry, according to Jeffery Dilley of Exsero Ltd., who addressed the country’s emergence on the panel.

Dilley described an investment wave in Vietnam that is bolstering the pulp and paper industries, fueled by population density and strong economic activity.

Compared to 2006, capacity in the pulp industry has increased 6.7 percent, consumption has increased by 11.86 percent and consumption has seen an 18 percent increase, Dilley said.

The country is importing 12.36 percent more paper than it was last year, he added. Vietnam is also exporting 12 percent more.

Since the country is experiencing rapid industrialization, the forecast for its paper industry remains strong. Dilley said the capacity of Vietnam’s paper industry will double by 2010.

PSI, a national chapter of the Institute of Scrap Recycling Industries Inc. (ISRI), held its 46^th Annual Fall Conference Nov. 14-16 in Scottsdale, Ariz. More information is available at www.paperstockindustries.org.