IMpress June 2023

Benelux: Asian market is taking a nap, Benelux needs to step up.

Based on the few orders to Indonesia we can conclude that the Asian market went into sleeping mode, which certainly has its effect on the prices in the Benelux area (what are they up to?). Where prices were at 115-120 EURO FAS at the beginning of the month they now have dropped to a low as 95-100 EURO FAS for EOCC. There is no more transshipment (i.e., transferring cardboard from trailers to containers) from Germany to the Netherlands and further EURO or export. Luckily, this has prevented an earlier drop in prices in the Benelux and Germany as most of the surplus tonnage was absorbed.

As a result of the Asian market taking a nap, we can now see that a lot is being sent from the Benelux to neighbouring countries. Fortunately, we see modest currency exchange rate fluctuation, thus not exerting significant additional pressure on prices, so at least that’s a stable factor.

In May we saw paper mills not producing at 100%, several testliner, solid board and tissue mills shut down their production for one or more weeks. Our expectation is that this will also happen in June. One of the causes is of course a slight dip in the economy, logically resulting in lower consumption. On the other hand, the decline in recovered paper since the beginning of this year is also disappointing (chicken and egg situation), resulting in a stable supply-demand situation. We expect that prices will remain stable in June, and we might even see a slight increase in pricing towards the end of this month. When this increase would occur it’s all due to the jump in EUWID prices in Germany.

German paper market: punching through prices, demand moving south

Germany: Spotlots have characterized the German market until now. Even Mondi Poland was active in western Germany at relatively good prices. Some factories have only slightly increased their prices, leading to a shift in demand towards the south.

It is expected that the German paper industry will keep prices stable, although it should be noted that high spot prices are no longer being paid. The normal price for cardboard will be around 105-115 € per MT DAP. With summer months approaching, it is expected that overall supply will be weak whereas demand will strengthen. The “Sommerloch”, as Germans call this phenomenon, can have a great influence on the overall balance in the wastepaper market.

The demand for prime paper such as testliner and fluting is still relatively low, and prices are decreasing slightly, making it important for the factories not to pay more for waste paper. The demand for packaging paper seems to be picking up slightly, but this trend is clearly not yet visible everywhere.

Rest of Europe: In Poland, cardboard prices clearly increased in May. An additional amount of 20 euros per ton was paid. Prices have past their peak, so is said.

French factories had to adjust prices due to persistent German demand whereas overall weak export demand has improved the overall situation for Spanish and Italian mills.

Indian Market Meltdown: Prices Plunge, Complaints Surge!

Prices in India are under pressure. We all know the tactic of the Indians, not buying until the price drops… but now it’s worse, not buying even when the prices have dropped as low as counteroffers. This really characterizes the current state of the Indian market. Many claims, a lot of complaints about prices, and a lot of complaints about money (monetary issues). Some factories are asking shippers (including us) for extended credit because liquidity is becoming a real issue. It is expected that the Indian market will decline further. Prices are currently around 130-135 USD CNF but are anticipated to shift further downward. There is talk of a tonnage being “dumped” at a significantly lower price than 130. Although the Indian market endures hit after hit, they always seem to find their way back again!

Overall, the sentiment in Asia is bleak. China, the major engine of the region, is facing difficulties. Not much is being revealed about China, but overall we can say, the global power is struggling economically at the moment (as is the rest of the world). Due to high unemployment rates among young people, and a weak real estate market we can say it is getting into an economic downturn. The influence China has on the Asian market is not to be underestimated.

Middle and higher grades:  sloppy demand, unsteady sales

In general, it is a poor market. SOP (sorted office papers (‘Akten’ for our German friends)) are not selling, and the better grades are declining due to pressure on pulp (cellulose). Export is not an alternative for these grades, so everything depends on European sales.

Scanboard (CEK) remains an issue, as demand is sloppy, and sales are inconsistent. Large stock can be seen in various warehouses.

A further drop in the overall middle to higher grades is foreseen. Multidruck, printers waste, SOP, you name them, they’ll all get hit. Recovery will only come through if the board industry is able to rake in some additional orders.

While the paper market is taking it slow, we decided to take IT up a notch.

 At IMtrade we not only work hard but we also engage in sports and try to push boundaries occasionally. Daan and Joost took part in the Amstel Gold Race and cycled an amount of 375 km with a staggering climb with a total of 4030 meters in altitude (hopefully the export graphs will take that as an inspiration). Als the other members of the IMTrade crew didn’t copy Asia’s sleeping mode and participated in a Footbal tournament!

Luckily, we also have a good reason for some company outings because In June we have a couple of birthday boys- and ‘girls. First, it’s Gytis turn on the 9^th of June followed by Marieke the 12^th and last but not least Peter Paul. To start the month with a nice event we will be present the 3^rd of June at the FNOI party and to top it off we will also be present at the FNOI General Assembly on June 26^th.