IMpress July 2024

Europe’s Football Frenzy and Paper Market Dynamics

Europe is currently captivated with the European Football Championship in Germany. Fans and national flags dominate the city streets where matches are held, creating a vibrant atmosphere for collective celebration.

Teams like Austria, Switzerland, and Romania are proving formidable challengers to the traditional favourites. After Italy’s unexpected defeat this week, tension is running high as other teams face their round of 16 matches. Matches like Netherlands vs. Romania and England vs. Slovakia may seem straightforward on paper, but the current dynamics offer no certainty. Let’s see how events unfold and hope for exciting, high-quality matches.

The Dutch legion has made its mark as well. German neighbourhoods are turning orange, with crowds swaying to the beats of “left to right”! Rob Kemps, “de Snollebollekes,” has become a global sensation. Despite the excitements in the stands, the Dutch team has yet to make a significant impact on the field. “Oranje” is far from securing a spot in the quarterfinals. Let’s hope the lion roars soon!

While attention in Europe shifts to football this month, we are reminded that the world continues to spin. The conflicts in Ukraine and Gaza, the US presidential elections, and upcoming elections in France are all ongoing matters that will continue to shape our year ahead.

Let’s keep our hope up for the best! Happy reading.

The Pulse of Europe’s July Paper Market

EUROPE: BULK GRADES

The European market remains dynamic this month. After four months of upward trends, a slight decline is noticeable. As previously mentioned, the price hikes were more a reaction to fears of supply shortages than a reflection of economic trends. European industries have not seen improved margins in recent months but have instead faced margin erosion. Raw material prices have outpaced those of new paper, and this trend now appears to be reversing.

By late May, it became clear that prices for cardboard and mixed paper in Europe would see a modest increase. Due to holidays and logistical challenges, buyers struggled to fill gaps from April. Buyer activity picked up noticeably towards the end of May. While cardboard prices hovered around EUR 170-175 per ton delivered in May, they rose by EUR 10-15 per ton in June. Grade 1.04 cardboard traded between EUR 175-195 in June, with higher prices mainly for smaller contracts. Mixed paper remained in demand in June for EUR 160-180 per ton delivered to the factory.
For July, we anticipate a correction in cardboard prices ranging from EUR 5-20 per ton, depending on June’s starting prices. Market peaks will likely flatten, with a minor downward correction in lower segments due to stable raw material flows from regions like England and the Netherlands to Germany. Cardboard prices are expected to range between EUR 165-180. Despite this natural downturn, we foresee increased demand in the coming months, supported by rising index prices that may diverge from actual market prices. EUWID’s index prices are expected to increase by EUR 8-10 per ton in July, reaching EUR 185-195 per ton, providing a buffer against further declines.

Mixed paper continues to be in demand, particularly the lighter household varieties. With decreasing volumes of magazines, newspapers, and office paper in household collections, paper is increasingly cellulose-rich. Producers needing short fibers or higher paperboard content are competing more for urban-collected paper streams. Demand for lighter mixed paper qualities is expected to increase further in the coming years, potentially surpassing cardboard prices. In July, prices for mixed paper are expected to remain stable, with a premium for lighter grades, ranging from EUR 150-190 per ton delivered to the factory.

Deinking qualities remain in motion, driven by demand from various industries including tissue, graphic paper, and solid board producers. June saw further price increases, with deinking fetching EUR 220-240 per ton delivered for sorted office paper and EUR 240-270 per ton for magazines and newspapers. Stable pricing is forecasted for July as demand from the graphic paper sector softens.

While demand for kraft varieties showed slight improvements in certain areas, a peak in demand was not evident. Fruit box prices ranged from EUR 250-290 per ton delivered, while tobacco boxes fetched EUR 260-290 per ton. Limited exports to Asia due to high CIF prices from the US and reduced DLK imports have stabilized the European kraft market.

EUROPES: HIGHER GRADES

Higher grade materials in Europe saw modest improvements in demand. Increased interest in coloured paper (SOP) and multi-print varieties was noted.

German industries drove prices up for coloured paper, driven not only by tissue production but also by demand from graphic paper producers. Dark-coloured SOP ranged from EUR 200-230 per ton delivered, while light-coloured SOP fetched EUR 220-265 per ton, suggesting these grades could serve as alternatives to lighter deinking qualities. Light-coloured SOP is increasingly used to enhance the whiteness of certain mechanical prime paper grades, filling the gap left by declining magazine volumes.

Demand for multi-print and printing waste exceeded supply, despite overall low volumes. Closures of printing houses, market shrinkage, and digitalization accelerated waste reduction. With historically lower summer printing volumes, prices for multi-print ranged from EUR 250-300 per ton delivered, with some contracts exceeding EUR 300 per ton.

Sales of wood-free white papers such as uncoated (3.18), coated (3.16), and writing paper (3.05) were steady but not spectacular. White test liner producers continued to face weak demand, while demand for coated duplex board tapered off after a brief resurgence earlier in the year. Prices for these grades were EUR 520-560, EUR 475-520, and EUR 360-425 per ton delivered, respectively, with limited volumes imported from the US.

Market Resilience: Asia’s Stance Amid Changing Global Paper Prices

ASIA – BULK GRADES

Asian markets continue to be cautious of recent price increases in Europe and the US. Economic pressures in China and India have restrained any upward movement in finished product prices. China reported an economic slowdown, a development that could significantly impact global trade in the coming months and years.

Southeast Asia saw prices stabilize at USD 200-210 per ton CNF, while India showed reluctance to pay more than USD 205 per ton CNF for 90/10 cardboard. Although prices are not expected to rise, there is a slight uptick in interest from Asia. Asian buyers are weathering the supply gaps from Europe and the US and anticipating a more favourable market with declining European prices.
Mixed paper and BBC are sought after in India but are primarily sourced from Southern European markets, the Middle East, and smaller markets. Reduced exports from England, once a major exporter to Asia, are driven by stronger domestic demand, lower collection volumes, and better prices on the European mainland. Stricter checks on mixed paper in English ports have also limited shipments. BBC is priced between USD 180-190 per ton CNF for India, while mixed paper ranges from USD 160-185 per ton depending on quality.

European kraft varieties are in demand in Asia, but the sharp price increase has not been fully passed on to buyers. Fruit box prices range from USD 270-300, while American DLK hovers around USD 290-320 per ton delivered to India. A price increase is anticipated as summer volumes for these grades decline.

ASIA: HIGHER GRADES

Little news to report on higher grades. Low volumes of SOP and multi-print are shipped to India and Malaysia, with prices remaining stable at USD 215-240 per ton CNF.

India shows increased demand for pulp, although current prices do not encourage significant shipments. The coming months will clarify market developments.

OTHER NEWS

In a significant announcement, DS Smith has recently declared an increase in test liner prices, impacting the containerboard market as reported by Euwid-paper.com. This decision comes at a pivotal moment in the industry, where pricing and supply dynamics are under pressure.

While this shift captures industry attention, there are also noteworthy celebrations this month. On July 24th, we commemorate Rick Heim’s birthday, followed by the celebrations of Daan van Fessem and Joyce de Lange on July 30th.