Impress February 2024

IMpress February: Between Invoices and Ocean Waves

How do you get in touch with a shipping company if you have a complaint or want to dispute an invoice? Well, these days, you don’t. We have to engage in discussions about the additional charges that have been “improperly” imposed through a portal, or we receive no feedback on our defense points. It’s like having a monologue. Soon, shipping companies might even adopt AI, and then there will be no human touch left in the matter. In the Netherlands, we have a saying that directly translates to this situation: falling between ship and shore. It translates as being stuck between different bad options.

As mentioned in the previous newsletter, excessive additional costs are being charged, with which (and I believe many other shippers) we disagree and therefore refuse to pay. There are even examples of shipping companies charging extra for the longer route, even though the respective ships have taken the Suez route. Do you still understand?

 

Europe: Bulk Grades

Shipping Storms: Navigating the Industry Disruption

The European paper industry struggled to show positive numbers in the past year. It looks like the race will continue this way. A pole position start is not the case. We can even state that only a few managed to make some profit. Paper factories are capital-intensive and can quickly ‘’burn’’ money in a time of economic adversity. In these times of great change in the world, the stakes are getting higher and higher.

Historically, January has always been a strong month in terms of collected recovered paper for recycling, but this year, it came to our attention that there are a lot of complaints about low collected volumes. The breathing space caused by the export slowdown due to the Red Sea issue ensured that the European industry was well supplied in January, at least. It remains to be seen what a stronger export demand will do to the pressure on the European industry.

Regarding the German market, we saw a relatively stable to slightly declining trend in prices. Market prices for cardboard in the German market ranged between EUR 100-107 per ton delivered to the factory, while “euwid” prices fluctuated between EUR 115-125 per ton. The gap between market and index prices is currently about EUR 15 per ton, which we consider a reasonably normal difference. Mixed paper was sold to factories in Germany for EUR 85-97.50 per ton. Mixed paper is becoming more “cardboard-rich,” and that’s why the difference between 1.02 and 1.04 is relatively small. Household collected mixed paper (which now contains only 35-45% “white” paper) is mostly transported separately and is often traded on a contract basis. We see that prices are EUR 5-10 higher than “normal” mixed paper.

Saica announced or spread in late December that cardboard and mixed paper prices would see a significant drop. The proposed reduction of EUR 20-30 per ton was not implemented, partly due to increased demand from exports in the second week of January. While top prices in the French and Spanish industries were slightly reduced, overall prices remained stable. In France, cardboard prices ranged between EUR 100 and 110 per ton.

A lot of business is occurring in Italy. The Belgian VPK Group is rapidly expanding its assets and business in the Italian paper market. First, they acquired Zetacarton, and now they started a joint venture with the corrugated packaging company IEMME. This plant is responsible for the production of corrugated sheets and packaging, and digitally printed packaging. Employing 100 people, it is located near the city of Gambolo close to Milan. Their 2023 operations were good for sales revenues up to 40 million euros. (Source: EUWID)

When we move on to the Italian manufacturer of cardboard with their business in France, Reno de Medici (RDM), we see that they are not able to get the Blendecques mill running at full capacity. This situation is, of course, an effect of the heavy flooding of the area in November and December. (Source: EUWID)

In the meantime, the Germans had their success in starting up PM 2 in Myszków, Poland. In collaboration with Voith, upgrades were made to the plant. To meet the growing demand for a more sustainable line of production and efficiency, Schumacher Packaging decided to modernize the plant. The rebuild, along with the upgrades, doubles the production capacity to 1,000 tpd. PM2 now has a reduced usage of fibre, reduced energy consumption, and generates less waste on a lower freshwater consumption. (Source: EUWID)

Our east-sided neighbours are continuously busy expanding their business but not in the quickest of ways. In 2017, the construction of a new location was announced by Hamburger Containerboard which is part of the Prinzhorn Group. Two options for placement were chosen, Spremberg and Kütahya. This decision is now made into developing business at both locations. The necessary ground in Turkey is acquired, but the development will not be finished before 2025.

Higher Grades

With some difficulty, the European market received shipments of office paper (SOP), and the prices ranged from EUR 165-190 per ton delivered to the factory. In Germany, Metsa Tissue was hesitant to place orders, and WEPA was busy producing various other types of tissue. Besides Europe, there were occasional orders sent to Mexico and the Far East. We expect the prices for office papers to go down slightly in February.

As for multidruck and printing waste, January saw a slightly better market compared to December, but it’s still not a great situation. The biggest buyers for wood-free paper are currently the white top testliner factories, but these products aren’t doing very well at this moment. The demand for testliners remains challenging, and selling white coated cardboard is even tougher. Multidruck was selling at around EUR 200-240 per ton delivered from the factory, and printing waste was priced EUR 30-40 per ton lower. Concerning multidruck and printing waste we don’t anticipate any changes in February.

Selling trimmings was relatively straightforward, but there were complaints about rejections, especially from Spanish buyers who had issues with paper that seemed foggy. This created problems, especially when delivering these paper types over long distances to Spain. Dealing with rejections can get expensive quickly.

The demand for white coated and uncoated woodfree paper without wood content seemed to increase a bit in January. The price competition from imports from the US has eased a bit. The price for uncoated white paper showed a wide range, ranging from EUR 510 to 590 per ton delivered. We’ll have to wait and see if rising sea container rates will affect the price of American white paper in Europe.

Asian Shipping Challenges: Exploring Options in a Complex Global Trade Landscape

Bulk & Higher Grades

Asian buyers are feeling the pressure due to shipping problems over the past 4 weeks. Not nearly enough recovered paper tons have been shipped. Besides the fact that orders from before the red sea problem have not been delivered, it was very challenging to negotiate new orders because the shippers were uncertain about the container rates they would pay.

Last week, there seemed to be more movement in the market regarding cardboard prices. Asian buyers were willing to spend extra money, even though there isn’t much room for an increase in the price of new paper. Overall, this is seen as a negative development for the industry.

In India, the price of 95/5 cardboard rose to the new level of USD 175-180 per ton CNF last week, with the condition that old orders are also shipped. Some larger shippers have indicated that they will deliver all older orders at the agreed-upon price. Imtrade also kept its commitments for most old orders. January has not been a good month for any exporter, and it’s one to quickly forget. Ultimately, no one is to blame for the situation, and we have to deal with it.

Meanwhile, Asian countries have accepted the new higher shipping rates. Many products, especially from China, are ready to be shipped to Europe for the upcoming summer season. Items like clothing, summer goods, and other seasonal products must arrive on time to maintain their value, especially with the approaching Chinese New Year, which adds more pressure to the situation. This has put increased stress on European shipping.

However, the challenge of container shortages remains a significant concern right now. Due to several instances of ships departing with limited or no cargo (blank sailings), shipping companies will have limited capacity in February and March. As a result, we anticipate tough shipping conditions continue for the next two months, with shipping companies having more control over operations. This could lead to even more price increases.

We will closely monitor the situation over the next 1.5 months. It’s important to note that the global economy is currently sluggish, which will naturally affect global trade. These observations are supported by data from the port of Rotterdam, which reported a 6% decrease in total tonnage handled in 2023 and a 10% drop in the number of ships visiting the port.

For February, we think these two scenarios are the potential outcome:

Option 1: Container availability for the Far East for waste is limited in February. The bookings that already have been placed will be shipped, but new bookings will be harder to obtain. This results in mounting tensions in February, as Europeans always tend to gamble a bit with their tons. To be able to ship, higher prices will have to be negotiated in Asia or these tons will have to be sold at a discount in Europe. One thing is a sure outcome: pressure will certainly come to the market, and prices in Europe will further come under stress. With the current situation in Asia, it is not expected that factories, which are already struggling to make money, will pay an even higher price in these uncertain times.

Option 2:If collected volumes in February, which are historically lower than January, fall back a little more, and export will step in, than the hunt for the scarce tons of cardboard and mixed paper will start. Prices in Europe will have to rise under pressure of exports.

We are curious to see how things will unfold. Both Option 1 and Option 2 present challenges, highlighting the industry’s complexity. With mounting pressure and uncertainty, the future of European shipping remains uncertain. We’ll keep a close eye on developments in the coming weeks to better understand how this situation will play out.

Vragen?

Joost staat voor je klaar. Je kunt contact opnemen via baron@imtrade.nl of via
  +31 6 53470798

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