IMpress May 2024

Europe’s Market Marvels:

A Tale of Triumphs, Challenges, and Anticipation

During the second world war, England appeared to be an invincible fortress. An island with its own unique and matured population, boasting a variety of cool cultural and landscape characteristics. Narrow, rough roads, fish & chips, pubs, and the Premier League. Nowhere else in the world combines such diverse elements. Next to magnificent Gregorian buildings, you’ll find rundown Victorian houses with 16 chimneys each. It’s a mix of different styles and quirks that might seem strange to us Europeans, but it’s incredibly captivating and inspiring nonetheless.

Like England’s strength during the war, it still has a big impact on the European waste paper market. Being a country that has always been good at selling things abroad, the English know how to take full advantage of the market’s changes and trends. Weekly price adjustments are demanded during months of increase, with no hesitation to encourage overbidding. Frustrating for Dutch traders and German mills. Perhaps there’s still much for us to learn.

At the moment, the UK is also a catalyst for the price hikes in the European, and perhaps even Asian markets. A Dutch saying says: you don’t get front-row seats for a dime. This is precisely what is happening in the UK. A price war can quickly erupt from Britannia… The English effortlessly play off various international buyers, often becoming price setters. Of course, there’s also a downside; when prices fall, the English are quicker to leave tons standing. They anticipate that too…

While Great Britain is no longer part of the EU, it still holds significant influence over many industries on the European mainland. Why they exited remains a mystery, as they remain part of our population, and not much has really changed. Perhaps just an increase in bureaucracy, very characteristic of our development in recent years.

Europe is governed from the commission, with a rather generalistic view of the waste industry. In that regard, the English may be glad they’re no longer part of the union. Nevertheless, we are true Europeans and stand alongside my colleagues from other countries. We’ll just have to deal with it.

Happy reading!

Economic Kaleidoscope: Exploring Europe’s Market Diversity

EUROPE:  BULK GRADES

Looking at the prices, you might think that the European industry is doing great. Endless demand and rising prices. We believe that the recent increases are a sign of improvement, but are not there yet when it comes to recovery.

We started April with cardboard prices ranging from EUR 140-145 per ton, but soon enough, prices soared to EUR 150-155 on the German markets. Fear of empty inventories and the impact of numerous holidays in Germany, accelerated the price hike. Led by UK imports, the price seemed to have no ceiling.

Apart from corrugated cardboard demand, mixed paper and board found eager buyers as well. As mentioned in our previous newsletter, market prices clearly surpassed contract prices, making it even harder for the last group of tons to find their way to the buyer.

We expect this negative difference in both cardboard and mixed paper to persist into May, with the markets stabilizing towards the end of May and this difference being compensated for in June. Not a good trend for the market.

For Germany and the Benelux, there’s another anticipated increase of EUR 10-15 per ton for cardboard. This would result in a market price of EUR 160-170 per ton delivered to the factory mill. Additionally, “spot” prices above this level will be negotiated to keep index prices in check. There have been offers for tons delivered to the factory in Germany at EUR 180-185, but as far as we know, no actual orders have been placed yet.

It’s a concerning matter for the industry that increase in prices of new products finished product are being directly passed on to raw materials. This is especially bad news for smaller independent factories, which are a substantial part of our sales. Better demand for finished products should provide some relief. This way it’s going to be tough for everyone to survive.

Regarding deinking qualities, we see a similar, perhaps even steeper curve. Where deinking was sold between EUR 130-140 per ton at the beginning of March, there’s now very little tonnage available below EUR 185-190.

In April, deinking prices in Germany ranged between EUR 180 and 200, and it’s expected that another EUR 20-25 per ton will be added in May. The number of distribution channels is relatively limited, but demand remains high. Magazine and newspaper prices (as far as they still exist as single loads) will rise along with deinking prices.

Kraft qualities such as fruit boxes, tobacco, and kraftliner 2 also saw strong demand in Germany and France. The demand for recycling kraftliner and white top recycling kraftliner (manufacturers: Jass, ProPapier, Varel, and DS Smith) seems to be clearly increasing. English fruitboxes fetched prices of up to EUR 250 per ton. Prices will rise slightly in May, but the momentum is slowing down. The differentiation between European and English fruitboxes are strange.

HIGHER GRADES

In general, April saw a widespread increase in the higher grades.

• SOP: +20
• Multigrade / Multidruck: +10-15
• Woodfree white: +10-20
• CEK (Scanboard): +20-30

In April, it was clear that tissue mills would offset the price decrease of SOP. A further increase in the price for this grade is expected. Although it’s not entirely clear what will happen, we anticipate a new increase of at least EUR 10 per ton. This would put the price for SOP in a range of EUR 175-215 per ton delivered to the mill, depending on the quality delivered.

From March to April, the demand for CEK (Scanboard) had already clearly improved, resulting in a strong increase of EUR 20-25 per ton. We expect the same price increase for May . While Smurfit has long paid a significantly higher price than others, they are now being overtaken by other buyers mainly using the raw material for white top testliner and grey duplex. Smurfit will need to take a clear step for May, or the tons will disappear into the competitors’ pulpers.

Multidruck and Multigrade were clearly in higher demand in March and April. Although we only have a handful of larger buyers, there seems to be some room for price increases in May. However, there is a question mark about whether the industry can bear all these price increases. The demand for white coated cardboard grades is still fragile, and the overall low demand leads to poor production efficiency. Changing grammage or whiteness leads to more second-grade or transitional rolls.

We’ll wait and see what happens with prices from June onwards. If production needs to be driven at all costs (a characteristic of listed companies), then prices for the higher grades will continue to rise. Woodfree white 3.18 was at a level of 700+ in mid-2022. We won’t reach that peak, but a price above EUR 600 per ton is highly possible.

Asia’s Market Mirage: Seeking Balance in Economic Trends

SUBTYPES

Oh Asia, where art thou? For the past 2 months, prices seem to lag behind domestic European and American prices. Every week without historical-scale purchases will result in more expensive support purchases. The cautious attitude of Asian buyers seems like a bad trend. When will the buying frenzy from Asia start?

The price level of OCC was around 180 USD/mt CNF in India and 175 USD/mt CNF in Southeast Asia in early April but rose along with price hikes in the European continent. Nevertheless, export prices still lagged behind internal European prices.

Something must be done to attract sufficient quantity from Europe. With local prices rising, a price level of USD 220 and higher per mt will need to be paid in India, for example. This applies to tons from northern ports such as Le Havre, Antwerp, Rotterdam, and Hamburg. This will be a major challenge.

What could help export in the coming weeks is an improvement in freight rates to India, Pakistan and the Far East. In March, for example, most shipping lines were asking for a price of USD 1400-1500 per 40ft container to Mundra, but now the price seems to be dropping to USD 1050-1200 per 40ft. The decline also indicates that exports, in general, are suffering from the improvement in internal demand in Europe. Additionally, an improvement in the EUR/USD exchange rate could further aid the situation. We’re eagerly watching prices in the coming months.

Other grades are not really finding their way to Asia. A bit of hard mix and 80/20 OCC is being shipped, but the large volumes remain on the European mainland.

HIGHER GRADES

There was an improved demand for higher grades such as SOP, Multigrade, Polycups, and other woodfree grades in general. However, it seems that these grades are mainly being purchased from other continents.

The demand for kraft grades from India remains consistently high. Fruitboxes, Tabacco, SMK, and other virgin kraft grades easily find buyers. Buyers of fruitboxes and tabacco must compete against European buyers, hence the price level has clearly risen in recent weeks. We now see prices for fruit boxes ranging from 265-280 USD/mt CNF India, and these prices are expected to rise further to outcompete the competition. We’ll have to wait and see what the buyers in India are willing to spend.

OTHER NEWS

We had a successful OP (Altpapiertag), thank you everyone!

Upcoming Birthdays of the IMTrade team members, to be celebrated with joy and laughter:

  – Jos Streefkerk’s special day will be on May 17th.

  – Bjorn Enemark has his turn on May 31st.

Farewell wishes will be bid to Joost Baron as he will leave the IMTrade family. His departure is marked with a farewell (and best wishes) party on May 8th.

Looking ahead, the team eagerly anticipates on an upcoming gathering:

Starting up our engines, we planned a thrilling motorbike ride on June 6th, ready to hit the open road together.

Thank you for reading, and see you in June for the next edition of IMpress.