The Price of Progress
Paper Challenges Across Europe and Asia
During World War II, press freedom (still a big concern in our world today) was taken away by the occupier. Newspapers were subject to censorship during that time, being one of the primary sources of information alongside radio. On February 10, 1941, the first edition of “Het Parool” was published. It was a Dutch resistance newspaper, which is still in print and distributed nationally to this day.
After the war, newspapers remained a widely used form of media until the late 1950s when television started gaining more popularity. Despite TV news being more immediate, newspapers remained a popular medium until the end of the 20th century. This was evidenced by the construction of numerous paper mills for newspaper production in the 1990s and early 2000s. Examples include Stora Enso Sachsenpapier in 1993, UPM Haindl Schwedt in 1993, Norske Skog Golbey in 1998, and UPM Kymmene Rheinpapier in 2001. Currently, only one of these machines still produces newspaper paper, and now Rheinpapier is listed for closure. Conversion of the factory may be a possibility, but lower demand for packaging paper and high investment costs are factors that have to be taken into consideration before starting such an operation. UPM itself has no interest in packaging paper and may even sell the factory. The newspaper and magazine paper industries are rapidly declining.
Now, back to the news. Our southern neighbors now control large part of our media outlets, both in print and online. ‘Mediahuis’ and ‘Persgroep’ have acquired various newsrooms in the Netherlands. News is recycled and exploited for all its worth. Nevertheless, very effective for our industry. News items in the AD (Algemeen Dagblad) appear unchanged the next day in the ‘Dagblad van het Noorden’, the local newspaper of Groningen, and vice versa. Whereas we used to laugh at the Belgians, now they give us a taste of our own medicine and write whatever they want about the Dutch. Well played 😉
In a world where news isn’t always truthful, you have to be highly alert to filter out the true story from the reporting. Terrorists attacking terrorists, the Americans say it was ISIS-K, while Russia counters with a report that it’s actually the Ukrainians. It’s difficult to read the news without bias. Meanwhile, we live in our own media bubble. Even if you don’t want to, you’re being confronted with nonsense news every day. Social media – or rather, anti-social media – influences future generations, and the truth is getting clouded more and more. Let’s go back to the newspaper!
Disclaimer: Predictions in this newsletter don’t always reflect reality. We’re not fortune-tellers and also gather a lot of information from the internet. However, in addition to making market reports and predictions we sometimes like to give our opinion on subjects that touch our industry and in this case even every individual on our big blue planet.
Enjoy reading!
Europe: Bulk Grades
The Inkwell Never Really Runs Dry
Turmoil is returning to the European market (or has it never left?). Supply and demand have been diverging over the past few weeks. Factories are purchasing on the grey market at significantly higher prices than the market prices and preferably outside their own sourcing regions. Last month, we already saw increased pressure on buyers to quickly secure their tonnages for March, and that trend continues.
The past month has seen a slight recovery in the liner and board markets. Talks about price increases were on the agenda again. Initially, paper mills wanted to raise prices by EUR 40-80 per ton, but ultimately, an amount at the lower end of this range was accepted. Independent factories have been able to accept additional margins faster and are not tied to the negotiations conducted by their corrugators. Further increases may be demanded if the improvement in demand for liner and board continues.
Mid-March, it became clear once again that in the coming months pressure on mixed paper will continue to increase. Collected volume of this quality is declining and will not recover. Household mixed paper is often sorted or processed loose by the cardboard industry. Furthermore, this grade is often sold under contract and therefore cannot have a resolving effect in case of overall rising demand. It is expected that the demand for mixed paper will continue to increase. In March, prices above EUR 110 (ex works) were sporadically noted. Factories fearing the coming months seem to have adopted an active buying attitude, which directly has a stimulating effect on the market. Spot prices in March already exceeded index prices for mixed paper in part, and this is likely to be the case in April and May. Due to the demand for mixed paper, similar products such as grey duplex and cardboard 80/20 also clearly increased.
We all have a love-hate relationship with cardboard OCC. The price of the – by far – most traded waste paper grade in the world has been fairly stable lately. Prices between EUR 100-120 per ton delivered to the factory were standard in recent months. In our view, this range seems to be broken in April. The demand for liners is increasing, and as a result, the price of cardboard is also rising. In Germany, between EUR 110-125 per ton delivered was paid in March, and we now expect a clear increase in cardboard 1.04 and 1.05. In the peak, a price of plus EUR 150 may be reached, especially when papermills buy a “spot lot” outside their own sourcing area. The restless time at months end causes a “don’t sell strategy” in the last week of march, further increasing pressure on the market. Only suppliers advantage from this situation.
At the beginning of this year, we wrote about the difference between index and market prices in Germany (EUWID vs. Market). Traders and recyclers seem to have sold more on index contracts without procurement being linked. This leads to over-pricing on the market. In January and February, the gap between index and market prices was still considerable, but that gap has been closed in March and will be a negative value in April (market > index). This will ultimately ensure that the index prices will rise strongly again, and in the month that the market prices drop, delivered price end up too high. Now that paper mills can actually use extra margin, this is actually a bad development. We expect that demand for cardboard to decrease in early May and that we will return to “calmer” waters.
(source: IMTrade, 2024)
In France, after a relatively calm period, sources last week stated that “surplus” prices were paid. In early March, hefty export prices were already reported from Paris, but there was no response from the French recovered paper processing industry. However, a shortage seems to have arisen. And of course a reaction was therefore necessary.
We noticed a significantly improved demand for kraft grades in March. Both fruit boxes, flower boxes, and tobacco boxes were in higher demand. This trend is driven by a bounce-back in the recycling kraftliner market. Rising pulp prices and strong internal demand for “virgin kraftliner” in America improve the sales opportunities for paper grades in Europe. Prices of GBP 155 delivered to factory (ex-works) from Great Britain are already being paid. Will the increasing demand continue?
Deinking grades have clearly been on the rise in recent months. We saw an increase of EUR 10-15 per ton in March for 1.11 and 1.06 and expect the price to see a similar development. Despite many factories in Europe indicating that they will not continue (UPM and Stora Finland, Leipa PM1 Schwedt), there seems to be sufficient and ongoing demand.
Higher Grades:
Recovered Paper Hits a Speed Bump
We’d describe the market for higher-grade types as “sluggish.” There’s some demand for white types, office paper, and better packaging cardboard like CEK and sulphate, but it’s not abundant.
Office paper found its way to factories but faced challenges. Metsa tissue lowered the price by plus EUR 5 per ton in March. In its Kreuzau factory there was production but only with limited the use of recovered office paper. Furthermore, German buyers seem interested in volume but aren’t paying good prices. For April, we expect a clear price increase for SOP in Germany. As mentioned in our previous newsletter, we didn’t find the reduction a wise choice; ultimately, they’re paying the price now.
So, what’s next? The demand for office qualities will increase in the coming months, especially due to the rising demand for deinking grades. Furthermore, there will be a threat of export of these types from Turkey and Central America. It remains to be seen if all mouths can be fed in the coming months. We expect that the price of colored office paper (bunte Akten in German, SOP in English) may break the EUR 200 mark in the summer months. It will be a game for factories to manage demand and supply well.
Multigrade and printer waste, as noted in the previous newsletter in early March, were experiencing a slight comeback. Here and there extra volumes were even requested, which hadn’t happened in a long time. Is this an announcement of an improving market for these qualities? One of the reasons for the shift in demand was the disappearance of part of the “multigrade” from the UK. This type between multigrade and printer waste was in higher demand in the UK, leaving Europe with no choice but to look elsewhere. There were clearly complaints about the reliability of the English, who vanished from the market as quickly as they appeared when the market turned.
Multigrade was traded between EUR 210 – 250 per ton DAP in March, with an outlier at EUR 260. It is expected that an additional EUR 15-20 per ton will be needed to attract volume. The same applies to printer waste, which is processed by tissue and liner factories as a substitute, due to increased demand for deinking and SOP.
Woodfree white 3.18 and 3.16 continued to drift. There was some increased demand here and there, but the number of buyers for these types is relatively limited. Rising pulp prices will influence the price of white types in the coming month, although the demand for white top testliner is still not at its peak.
ASIA Bulk Grades:
Will Paper Tigers Turn Green Dragons?
All quiet on the east-front … Asia seems to have chosen the WWW strategy. Watch-Wait-Wonder… waiting for prices to normalize in some way. It remains to be seen whether this strategy will have a positive effect, or if the “need” to buy falls exactly at the wrong time.
In the ports of Antwerp and Rotterdam, prices between EUR 107 – 120 per ton FAS for cardboard 90/10 were paid in March. Destination mainly the Far East and not India. At the moment, we hear EUR 132-137 FAS for April, which means an increase of EUR 10-15. The cautious or even disapproving attitude of Asian buyers means that no large volumes are being concluded. At EUR 130 FAS, you already need a price well above USD 170 in Thailand and Vietnam. This is not always well received.
These prices seem even more difficult to achieve for India. With an identical FAS price, USD 205-210 CNF India must be requested at the moment. In general, it can now be said that Indians are paying around 185 –195 USD CNF for cardboard 95/5. So, quite a distance. When will it be a good entry point for Indians, or can enough be bought from other markets? Furthermore, in India, there are holidays, elections are being held, internal collection fluctuates greatly, and the industry does not have a good order position. Maybe it’s not time to enter at all, but just time to wait until money can be made again.
India is in the race for kraft-containing qualities. Historically, the smaller and less technically up-to-date factories in India need kraft fiber to produce a good product. Furthermore, kraft paper types seem to be sold in India – more than in other countries. It looks like the Indian likes a good piece of paper!
Kipas Turkey seemed to be re-entering the market at the beginning of March. Traders and collectors were asking a lot of questions. Initially, prices of EUR 120 per ton CNF, Izmir and Iskenderun were offered for cardboard, but that quickly proved to be too low. As far as we’re concerned, there were no further negotiations, but maybe deals were made from the ports in Southern Europe.
Higher Grades:
Bridging the Gap Between Global Recovered Paper Supply and Asian Demand
SOP and Multigrade are in demand, but the price levels in Asia lag behind those in local markets in America and Europe. Some shipments are indeed being sent to the East, but the quantities still fall far behind the volumes shipped in the same period last year and in 2022.
Demand for specialty grades such as scanboard, scanfoil, and polycups appears to be picking up in India. The country also holds a strong position in terms of intermediate grades. Material that does not fully meet specifications is still processed by inventive papermakers at Indian factories. The size of the factory also plays a role here. Small factories are much more flexible and can experiment more to ensure consistent production.
Woodfree white, sulphate (SBS), and other unprinted grades are only shipped to Asia from other Asian countries and smaller markets. In principle, the price difference with Europe, as with SOP and Multigrade, is too large, deterring suppliers and traders from using these channels.
OTHER NEWS:
Showdown for DS Smith (Mondi and International Paper)
There’s a potential bidding war brewing around the British cardboard giant DS Smith, a sector peer of the Belgian VPK Group. Both a British and an American entity are eyeing DS Smith.
It seemed a done deal this month, the merger of the British cardboard giants DS Smith and Mondi. After weeks of talks, the two struck a deal where Mondi would acquire DS Smith for £5.14 billion (€6 billion) in shares. DS Smith shareholders would receive a 33 percent premium on top of the group’s closing price on February 7th. That’s just before Mondi’s interest became public. But now it turns out that the American International Paper is also eyeing DS Smith. After a leak in the British media, DS Smith confirmed that it is in talks with the Americans about an all-share bid. This values DS Smith at £5.72 billion (€6.7 billion) and represents a 48 percent premium over the closing price on February 7th. (Source: de Tijd, March 27)
PPWR: Packaging Waste Regulation Update
The Council presidency and the representatives of the European Parliament have reached a provisional political agreement on a proposal for a regulation on packaging and packaging waste. The aim is to tackle the increase in packaging waste generated in the EU, while harmonizing the internal market for packaging and boosting the circular economy. The proposal considers the full life-cycle of packaging. It establishes requirements to ensure that packaging is safe and sustainable, by requiring that all packaging is recyclable and that the presence of substances of concern is minimized. It also lays down labeling harmonization requirements to improve consumer information. In line with the waste hierarchy, the proposal aims to significantly reduce the generation of packaging waste by setting binding re-use targets, restricting certain types of single-use packaging, and requiring economic operators to minimize the packaging used.
Finland’s Industrial Strikes Extend
Finland’s industrial, logistics, and electrical workers have agreed to extend strikes in protest against planned labor market reforms to a fourth week, the head of the trade union association SAK said on Wednesday.
The workers have been on strike since March 11, targeting exports, imports, and cargo transportation. “The strikes will continue from Monday morning onwards for a week,” SAK President Jarkko Eloranta told Reuters. “We are trying to negotiate and compromise with the government, but unfortunately there has been no response to these efforts.” Several of Finland’s largest companies have said the strikes, which are disrupting ports and the rail system, are negatively affecting their operations. Metsa Group and Stora Enso have announced shutdowns until further notice. (Source: Reuters)
Altpapiertag BVSE
Last but not least we’d like to invite everyone to come to Altpapiertag BVSE. There is much to discuss about our beloved industry. Hope to see you there!
Nederlands 
English 
Deutsch