IMpress September 2023

Unveiling Potential: Navigating the Complex Path of the Paper Industry

Europe – Other Grades: Cautious Optimism and Market Dynamics: A Snapshot of the Paper industry

As is often the case after periods of rest, individuals return with revitalised force! Sporting a sun-kissed face  and recharged vitality, there arises a surge in discourse and some pondering about the forthcoming developments in the market over the next month(s). 

While the paper market isn’t flourishing, faint glimmers of recovery persist. The order registers of liner producers boast of slightly improved occupancy, and there’s a faint amelioration across other paper categories. Nonetheless, the durability of this upward trend remains uncertain. The “B-choice” materials (comprising transition rolls, rolls marred by damage or technical flaws) continue to pose formidable challenges in their sale, underscoring the relatively constrained market demand. These rolls tend to find a more receptive market when supply and demand achieve equilibrium. One can only hope for the continuity of this recuperation.

In the Benelux region, the start of the month ushered in a subdued market atmosphere for “bulk” varieties. Owing to a minor price descent in Germany, a substantial portion of brown categories once again found themselves earmarked for export. The resonance of Germany’s role as a “pressure relief valve,” frequently resorting to Benelux tons, echoes in the price oscillations within the lowlands. These fluctuations exhibit a broader amplitude than those observed in Germany’s neighbouring territories. Presently, active speculation and testing are underway to gauge the cardboard price trajectory for September. Several suppliers are securing a range of 110 to 115 euros per ton EXW for 95/5 cardboard for September. This would denote a notable upswing of 10-15 euros per ton. In the realm of mixed paper, prices rest within the bracket of 70-75 euros (exw). Should cardboard prices ascend, mixed paper prices will likely follow suit. While a more diversified market landscape for deinking attributes seems to be emerging, the intricacies of deinking qualities continue to pose challenges. It’s essential to recognize that deinking, too, adheres to a cyclical pattern, with demand poised for revival.

The German market, which seemed to embark on a clear downward trajectory towards the end of July and early August, didn’t persist in that trajectory in recent weeks. Euwid contracts, priced 10-15 euros per ton above the market rate in August, remained unfulfilled in entirety, leading to an inability on the part of contract partners to meet the stipulated quantities. Through procurement of surplus tons from the market, these suppliers managed to eventually honour the commitments. The heightened demand observed in recent weeks has concurrently propelled the free monthly cardboard prices upwards. Our records have also captured requests for additional cardboard from the central and southern regions of Germany. Given the escalation in the volume of requests, suppliers anticipate a marginal price elevation.

Remarkably, assessing the waste paper market’s dynamics has proven to be a formidable challenge. The languid pace and tranquillity that have characterised the market over the preceding months have taken us by surprise. Typically, our industry experiences more pronounced activity.

Dealing with deinking varieties remains an ongoing challenge, a trend pervasive across almost the entirety of Europe. While the supply of these types appears to be dwindling, the volumes of sales exhibit modest increments. Nevertheless, a harmonious equilibrium within the market remains elusive. Oversupply continues to linger, some of which remains parked at loading points or eventually finds its way into alternative attributes. It’s anticipated that by mid-September, a sense of stability will be attained, paving the way for an enhanced market scenario for these particular types.

Subcategories within Eastern Europe appear destined to follow the trajectory of the broader European landscape. Movement remained minimal in the past months, yet recent indications suggest a faint uptick in the market’s momentum. This augurs an intriguing scenario for the paper industry in the region, albeit one that presents challenges in transferring the escalated waste paper prices to end consumers. The course of this progression remains uncertain.

Europe

Higher grades: Navigating the Turbulence and Transformation in the Evolving Industry Landscape

The narrative remains somewhat tinged with melancholy, and over the past months, we’ve been grappling to usher in substantial positive developments. The heavily traded categories, including multidruck, coloured writing (SOP), CEK/Colored Duplex (Scanboard), and uncoated wood-free varieties, continue to be enmeshed in a challenging environment.

Multidruck and the unprinted segments continue to languish in low demand, an outcome of underwhelming sales of white top liners. The demand for multidruck has been witnessing successive monthly declines. In Germany, commendable attributes are currently fetching prices ranging between 200 – 240 euros per ton. Even at these reduced and comparatively modest prices, the task of selling remains a formidable endeavour.

Beyond the underwhelming demand, the consolidation of the types list also plays a pivotal role in this narrative. The dwindling count of authentic waste paper categories, stemming from a decline in specialised factories, has repercussions. For specific printed waste paper types, multidruck serves as the most apt outlet, leading to their integration with multidruck. The paucity of alternatives, such as export avenues or Spain, compounds this challenge.

The resurgence in sales of coloured duplex/CEK (Scan board) witnessed a fleeting revival at the close of July, only to regress into a challenging context once more. The prospect of recovery seems increasingly remote. Given that the export market demonstrates substantially lower prices than those prevalent in Europe, this category appears susceptible to even steeper price descents. Managing stock write-offs and recalibrating contractual arrangements for these types loom as critical considerations. The trajectory of coloured duplex has transitioned from a “golden boy” status to that of a “problem child.”

Wood-free coated/uncoated and white sulphate cardboard continue to witness transactions, although the endeavour to secure an adequate market share remains an ongoing pursuit. Moreover, demand for these varieties remains inherently unpredictable. The relatively elevated cost of these types necessitates a just-in-time delivery strategy, ensuring that peaks in demand are often transient. Adopting an engaged approach proves pivotal in skillfully navigating the market’s fluxes.

In light of prevailing uncertainties within the supply chain and a commitment to bolster the viability of its Graphic Paper division, Sappi Europe has declared its decision to maintain existing prices for its woodfree coated paper grades throughout the remainder of 2023. (Source: EUWID Paper)

Rumours continue to circulate around the Italian packaging and tissue conglomerate Pro-Gest, with particular focus on the company’s corrugated case material mill in Mantua. Reports have surfaced indicating visits from several prospective buyers to the site, which is presently undergoing downtime. Such developments hint at a potential sales negotiation in progress. However, Pro-Gest has officially refuted the ongoing sales talks. (Source: EUWID Paper)

Norwegian papermaker Norske Skog has unveiled plans to recommence operations at the mothballed PM 5 within its Saugbrugs mill in Norway by mid-September. (Source: EUWID Paper)

Mondi has allocated €16 million for the expansion of its barrier packaging portfolio. The facility in Solec, Poland, will be equipped with advanced technology to produce a new packaging range named “Functional Barrier Paper Ultimate.” Large-scale production is anticipated to kick off in the first quarter of 2024. This strategic investment empowers Mondi to offer a comprehensive in-house solution, encompassing production, coating, printing, and the final conversion into the packaging end product. (Source: EUWID Paper)

Asia – Other Grades: Global Dynamics of Paper Trade: Evolving Demands, Challenges, and Prospects in Distinct Markets

Robust internal demand emanating from North America has instigated a significant decline in the tonnage shipped from the United States and Canada to Asia. Consequently, Vietnam, Thailand, and to a certain extent, India, have recalibrated their focus towards the European market. Demand and prices have consequently witnessed an upswing over the past month. An incremental increase of around 10 USD per tonne has been observed from mid-July to early August, a trend that has persisted with occasional interruptions. As of now, EOCC 95/5 is trading in the range of 140-145 USD per tonne CNF at the primary ports in India.

Other Asian markets are not under pressure to contribute extensively, yet they reap the benefits of a more favourable USD/EURO exchange rate and considerably reduced freight rates. The cost of booking containers from Southern Europe to Port Klang, Haiphong, or Ho Chi Minh now rests within the range of 150-250 USD per container, exclusive of port fees. The cost of a container from Barcelona to Haiphong now surpasses that from Barcelona to the paper mill in Valladolid. This shift likely presents challenges for Spanish paper mills.

The relationship between India and Europe exhibits an intermittent nature. On certain occasions, it seems as though all factory buyers are engaged in a fervent search in Nagpur, while on other days, their enthusiasm wanes. Navigating dealings with Indian factories consistently proves intricate; however, it’s worth acknowledging that the market has garnered considerable benefits from this segment in recent years. Indian entities remain open to exploring “off-grades” and exhibit resilience even in the face of smaller batches. The relatively modest size of Indian paper mills translates into advantages in terms of shipment volumes they anticipate. Their adaptability and flexibility stand out. Despite the current challenges faced by the Indian industry, procurement efforts endure. Anticipated shifts in demand are on the horizon as quantities from North America become more accessible by the end of September.

Pakistan endeavours to participate at the global level, yet the political landscape and resultant economic conditions present obstacles.

In China, the industry seems to be taking a pause to recalibrate. A marginal dip in Chinese demand carries substantial implications for other markets. Liner grades in China are procured at prices below USD 300 per tonne CNF. One might question whether any profitability can be extracted from such transactions.

Higher Grades – Vibrant Currents in Asia’s Paper Market: The Role of Pulp and the Resilience of SOP

Across Asia, the pursuit of higher-grade varieties unfolds with caution. Pulp continues to retain its standing as a viable (and economical) alternative, thereby contributing to price declines and sporadic demand for premium waste paper types.

There’s a perceptible sense that coloured writing (SOP) is experiencing slightly improved demand. The pronounced price downturn witnessed in Asia during the initial months of the year has been particularly accentuated compared to the European context. In India, SOP is currently trading within the range of approximately 190 – 225 USD.

News Update

Last but certainly not least, we have Richard de Vries’ birthday celebration approaching on the 10th of September!