Impress January 2024

Forging Ahead: A Recap of 2023 and Glimpses into 2024 – IMtrade’s Year-End Market Overview

Firstly: all team members at IMtrade wish you a “Happy New Year.” May the year bring you what you desire. IMtrade is ready to be a reliable trading partner. On to 2025 😊

The year flew by. It started reasonably well but then had its ups and downs. We found it to be a volatile experience. Supply and demand were significantly misaligned at certain times this year. There were months when no international market showed real demand for paper, and other months when market prices and contract prices were considerably apart. Hopefully, we’ll see a slightly more positive outlook in 2024.

At the eleventh hour, we received a Christmas gift from the shipping companies. As a relatively small exporter, we haven’t been heavily affected by the measures taken by “the big 5” to cover some of the extra costs due to the threat in the Red Sea, but we do feel it (if we accept the costs). We always marvel at the amount of surcharges and increases, as well as the creativity in naming these increases: Transit Disruption Surcharge (TDS) and Emergency Contingency Surcharge (ECS). For companies that have never made so much profit in 2021 and 2022, this is another fine piece of marketing. Although the shipping companies have no control over the situation in the Red Sea and likely face revenue losses, this is not the way to intervene. Be reasonable and transparent about the exact costs, and you’ll find support. The Dutch word of the year is “graaiflatie” (grabbing + inflation in Dutch) excessive profit-making in a changing situation. Well done.

Let’s end on a positive note. We are aiming for a great 2024 and hope that our suppliers, customers, colleagues, and other stakeholders will look ahead with us!

EUROPE

Bulk Grades: December’s Dance of Paper: A Symphony of Market Moves, Factory Silhouettes, and Solidus Solutions’ Farewell Waltz into 2024

After a productive month in November, it was Smurfit and Saica that took action to bring down the prices of the bulk grades. December is a month when the “Christmas orders” have already been produced, and factories are gearing up for the new year. While some liner producers complain about a lack of orders, it seems to be picking up for other products. What can be noted is that at Smurfit’s Hoya plant, both the corrugated cardboard and solid board machines are almost idle for the first time in nearly a week. Orders are not readily available.

In addition to market prices, in Germany, many contracts are based on indices. In December, the difference between these prices was 10-15 EUR per ton. Contract prices historically tend to be higher towards the end and beginning of the year, with more room for higher “free” market prices in the summer. For the year 2024, the German industry seems to have adopted a slightly more conservative approach regarding index prices, probably because the overall price level of market prices was significantly lower this year, and a full order book cannot be assumed. In 2023, the ratio was 60/40 (Index vs. Market Prices), and it is likely to decrease to 50/50 in 2024.

Solidus Solutions BV has announced the closure of its Hoogkerk factory. The producer of graphic board and solid board is affected by the consolidating market and can likely handle the demand with one less factory. Hoogkerk, formerly known as ‘De Halm’, is located in the middle of the village Hoogkerk and has had a significant impact on the community. It is regrettable that the factory is closing, and another production location in the Netherlands, especially in Groningen (Our home province), is shutting down. We hope that Solidus, with these steps, regains momentum and can modernize its remaining three locations, continuing to purchase recovered paper for a long time.

The price level of the Bulk grades in January in Europe is challenging to predict. Germany will likely see a slight decrease (-5), and other markets are waiting to see the impact of the announced increase in container rates. Spanish, Italian, and French producers have already mentioned -20 to -30 for cardboard, anticipating limited or moderate exports to Asia. We expect that the container issue will be resolved quickly and that any increases will be absorbed by buyers or an agreement will be reached with shipping companies. To be continued.

Higher Grades: Harmonizing the Markets of SOP, Multidruck, Scanboard, and Woodfree White

SOP (‘Akten’) was in decent demand. The price level ranged from 170 to 190 EUR per ton delivered to the factory, depending on the quality. January has traditionally been a strong month for SOP in terms of supply, but in recent years, this trend has been more balanced. The quantities seem to be collected more evenly throughout the year (with decreasing amounts), and therefore, paper mills cannot immediately ease into the new year. We expect a reasonably stable price for January. Observing cautiously, if it turns out that there is sufficient material, mills may attempt to lower prices in February. We are waiting to see…

Multidruck was traded at a stable price compared to November, but the pressure was still on. Demand was scarce, but ultimately, a significant portion of the material was delivered in December. The expectation is that the price of multidruck will continue its flat trajectory in January.

Scanboard 3.11 and 3.12 (EN643) remained challenging to sell at the desired price level. However, we feel that there is more balance in the market. The scanboard price may see a slight decline in the top ranges.

The price of woodfree white 3.16/3.18 decreased from November to December by 10-15 EUR per ton. This was mainly due to poor order positions from white top testliner producers and the presence of relatively cheap imported material. Uncoated woodfree white was traded between 510-580 EUR per ton delivered to the factory, and coated or mixed woodfree white changed hands around 465 – 510 EUR per ton delivered. Due to ongoing pressure from America (where the declining dollar is pushing euro prices down further) and the wait-and-see attitude of testliner mills, the price of 3.16/3.18 may continue to decline slightly in January.

ASIA

Bulk Grades: India’s Tapestry of Challenges and Triumphs

In early December, it was time for India’s largest paper fair: Paperex. Three halls filled with interesting booths showcasing the expertise of paper mills, traders, equipment and machinery suppliers, and agents. Imtrade was present for numerous discussions, primarily with Indian paper mills.

Overall, the sentiment in India is not positive. In the second decade of this century, many relatively small factories experienced a period of growth, expanding their capacity. This was particularly notable in the Morbi region and the Vapi/Surat regions, where numerous liner machines were introduced to the network. The demand for cardboard, particularly in packaging for ceramics and online consumer products, rose significantly. However, in the post-COVID era, there is lower demand for ceramics and stagnant online sales. Additionally, the thriving trade of rolls for re-pulping to China in recent years still exists but is not profitable and are mainly used as factory fillers.

There is a noticeable division in India between those actively engaged in improvements and factories adopting a wait-and-see approach. There is still a need for significant advancements in capacity and quality in India. In terms of efficiency, Indian factories lag behind other major Asian markets. With stricter international regulations on the processing of recycled paper and its residues on the horizon, substantial investments are required in the coming years. Progress is being made, but there is still much to be done in India.

Regarding prices of cardboard, the rates were 140-150 USD per ton CNF for OCC 95/5 and 145-155 USD for 98/2. Predicting January prices is challenging due to pressure from imposed increases by shipping companies. Furthermore, it remains uncertain whether all “old” orders, closed at the prior discussed prices, will be fulfilled. India mainly imported from Southern European countries, which have been affected by avoiding the Suez route. Therefore, we anticipate a potentially stronger demand for cardboard and mixed paper from India. It remains to be seen whether the offered and requested prices will intersect.

In Q4 of this year, Vietnam displayed notable activity in the demand for European cardboard. The country, which has not yet required pre-inspections or certificates, has taken over part of the production from China and is increasingly establishing itself as a leading import market for recovered paper. In December, the price for OCC 95/5 was approximately 140 USD per ton CNF, and now there are discussions of prices ranging between 150-155 USD per ton.

The price gap between European and American cardboard remained historically high in December but may narrow slightly now due to price hikes by shipping companies.

Higher Grades: SOP Exports, Polycup Demand, and Scanboard Trends

Generally, not much news on the front of higher grades. SOP exports to India remained a point of discussion. European traders offered the grade for 200+ USD per ton CNF but struggled to find buyers in India or Indonesia. Indian factories were seeking a price between 175-185 USD CNF. The closed quantities were limited in December, and likely to be so in January as well.

Polycup grades were reasonably demanded in India, but the quality standards are high. Requirements include 100% wood-free, no printing on the fiber, no gray material, and more. Good prices are being paid, but the associated risk is substantial. Terms like “polycup AAA” and “polycup A-quality” are mentioned during negotiations.

Scanboard grades continue to move, but under the pressure of prices, the volumes are decreasing. Scanboard without PE (Polyethylene) was priced around 175-185 USD per ton CNF in India, while Scanboard with PE (and aluminum) was around 140-145 USD. The price level needs to rise somewhat if larger volumes are to be purchased.

Other News

Our Joost Baron had his birthday on new year’s day and is followed by Mortaza Ariaie the 18th of January.