With fewer newspapers and magazines to be recovered and additional paper mill capacity coming online, the ripple effects of these supply and demand situations led to high recovered fibre prices in late 2016.
Presenters at the RISI Fifth Annual China International Recycled Fiber Conference, held in Zhuhai, China, in early December 2016, pointed to many reasons for the recent surge in pricing, some on the supply side and others pertaining to demand.
Kevin Jiang, a project analyst with United States-based RISI, commented that the old corrugated containers (OCC) grade in China experienced a rapid price hike in the fourth quarter of 2015, hitting $215 per tonne in November. “This was abnormal,” said Jiang, who cited the bankruptcy of Korean shipping company Hanjin as one of the reasons for the price hike, since sidelined containers “pinched supply.”
Jiang commented that OCC prices did not rise as sharply in Europe or North America. “We think [the price increase] was irrational and cannot be explained by supply and demand,” said Jiang.
Regarding demand, Jiang said China was on track to import 5% less recovered fibre in 2016 compared to the year before, although other Asian nations including India, Thailand and Vietnam will have increased their scrap paper imports in 2016. Although China collected some 47 million tonnes of scrap paper in 2016, Jiang said the nation was “still far from self-sufficient in recovered paper.”
Bill Moore of United States-based Moore & Associates noted the production of newsprint and other printing and writing grades continues to decline in many parts of the world, making the recovery of those grades more difficult for recyclers.
In the United States, newsprint capacity has fallen from 6.5 million tonnes in 1995 to just 1.9 million tonnes in 2015. “You can’t recover what you’re not making,” said Moore.
In the first half of 2016, as measured by value in U.S. dollars, China had imported 8.8% less recovered fibre from the U.S., joined by Malaysia and South Korea as nations who imported less scrap paper from America. On the other side of the equation, India imported 17% more recovered fibre (measured by value) from the U.S., and it was joined by Mexico, Taiwan, Thailand, Indonesia, Vietnam and Japan as nations that imported more scrap paper from the U.S.
Mixed paper remains a major export grade, said Moore, as there is “little new demand for mixed paper” from North American mills.
The RISI Fifth Annual China International Recycled Fiber Conference was 8-9 December in Zhuhai, China.