Recovered fibre packers and sellers say they spent much of 2013 adjusting to China’s Operation Green Fence by matching some grades with the narrower Chinese market and finding new homes within Europe for other grades.
Adjustments in 2014 also took the form of upgrading materials, according to Andreas Hudson of online trading platform The Environment Exchange (www.t2.co.uk), based in Edinburgh, Scotland. “Within the first four months [of Green Fence], most of the providers of recovered paper had already increased their standards or cleaned up their material, because they simply had to,” says Hudson.
This was particularly important for material recovery facility (MRF) operators in the U.K. and other places where commingled collection is more common, says Hudson.
Once these adjustments had been made, the flow of tonnage to mills in China continued, he adds. “Within six months of Green Fence, there was no effect on the export volume of recovered paper to China at all. We have exported the same or even more volume as before China built the Green Fence,” states Hudson.
A packer and broker based in the Netherlands, however, says he has continued to witness his own company and others treat European mills as their destinations of choice since the Green Fence initiative was introduced.
“A lot of suppliers are still afraid to sell their tonnage in export with the Green Fence controls in effect on the China side,” he comments. He agrees that packers have adjusted “to increase their product quality,” but after doing so they prefer to sell to domestic mills.
“What we see is a change in the northern part of Europe as businesses put more into the sorting of the collected paper to improve quality,” Hudson continues. “They know and understand that the market is different from before.”
The Dutch recycler says the preference to keep material onshore has become particularly widespread in the U.K., where “zero tolerance checks” have been performed on shipments bound for China.
Beyond the export match-making, the Netherlands-based recycler refers to the market in late 2013 as “boring,” with supply and demand in balance, inventories at relatively low levels and with little spot buying occurring.
He also describes pricing in Europe as of early December as “very stable,” with many mills expected to maintain their schedules through the holidays, thus providing a floor on the market.
Merchants and packers who sell to the newsprint sector are concerned about rumors circulating involvinga merger between Stora Enso and UPM. As of press time, any such merger remains much discussed by analysts with no comments from executives of the two companies.
On the fibre generation side, prospects for a resurgence in industrial production remain muted. September industrial production index figures compiled by Eurostat were dubbed weaker than expected by many financial analysts, with index numbers dropping (on a seasonally adjusted basis) from August.
After the EU snapped out of an 18-month recession, statistically, in early 2013, the trading region has not been able to sustain its momentum beyond that promising spring season.
“In September 2013 compared with August 2013, production of durable consumer goods fell by 2.6% in the euro area and by 1.6% in the EU28,” noted Eurostat when announcing the September figures.
“Among the member states for which data are available, industrial production fell in ’12 and rose in ’13,” added Eurostat. However, some of the national decreases were significant, including in Portugal (-11.2%), Luxembourg (-4.1%), Croatia (-3.3%) and the Czech Republic (-3.3%).