IMpress November 2023

Human vs. AI, Market Dynamics, and Global Perspectives 

Will the recovered paper trade eventually be taken over by computers? Over the past few years, there have been several attempts to launch portals, marketplaces, paper exchange platforms, and similar initiatives. However, these efforts ultimately did not produce the desired results. But are we now on the brink of a market change?

In the past year, there have been emerging companies that seek to dominate the market using big data and artificial intelligence (AI). Data is becoming more transparent and accessible, computers are getting smarter, and maybe our traditional market needs a fresh boost. Is it about to happen?

At Imtrade, we are fully in favor of embracing new technology. We are striving for continuous development both internally and externally. Examples of this include automated order processing, contract management, and computerized document handling. On the other hand, we believe that the essence of the trade remains a people-oriented business. Engaging in discussions with the German buyer, shouting at your Indian agent, and having friendly chats with your Italian connections. This aspect continues to be what unites our industry; let no AI come between it. We prioritize personal interaction!

Challenges and Opportunities in the Benelux Paper Industry

Bulkgrades:

Benelux was once again among the first to capitalize on rising prices in the Far East. Much material was shipped from Germany to the Benelux for transshipment in containers, primarily to Thailand and Vietnam and Malaysia.

Dutch cardboard contracts were filled with German tons. The strong demand from the Far East also made it clear that the “collected quantity” this month is once again disappointing. Economic activity still seems sluggish, as evidenced by the collapse of several retailers in the Benelux, including Big Bazar and BCC (relatively large retailers), both declared bankrupt with probably no chance of a restart.

In Germany, factories seem to be preparing themselves to avoid both raw material price increases and the paper industry’s inability to increase prime paper price. Production stops were therefore scheduled for October. Ultimately, these steps don’t seem to have helped much in the case of waste paper. The surplus amounts of waste paper have been snatched up by export markets, and the prime paper price, under market pressure, does not seem to be developing positively. It is important for all stakeholders that the paper processing industry is doing well. This benefits the discussions. 

Furthermore, we observed weak demand for deinking from East and South Germany. Many tons ended up with Stora or Kappa via the Netherlands. Leipa Schwedt does not seem to have a strong order position, which resulted in a lack of deinking paper sales. UPM has indicated that it will close multiple factories. Is Rheinpapier, a factory put into operation in 2004, now also on the chopping block?

Higher prices are expected in the German market for mixed paper and cardboard paper next month. While cardboard traded at the factory gate between 105-117 euros per ton in October, it seems the price will start with a 12….. (and what number will follow) . Quick action will be needed to attract available tons. Mixed paper will cost around 100-105 euros per ton at the factory gate. It’s bad news for the industry, but it’s hard to influence a global market.

In our opinion, the demand for waste paper in Germany and the Benelux will rise. The amount of household collected paper is low, and inventories are not overflowing. Sorted deinking is likely to be traded at around 140-145 in November, and magazines and pre-consumer deinking will probably change hands for between 170-180 euros per ton at the factory gate.

In Eastern Europe, the market seems to be in better balance. Cardboard and mixed paper appear to be on a stable path. Southern Europe, dependent on exports, seems to be following a slightly different route. Prices may rise due to a decrease in exports, but perhaps they will rebound in the coming weeks.

It also seems to be a time of business sales or offers thereof. Several companies in the Dutch and German markets are up for sale, including typical recyclers and wholesalers. Unfortunately, the timing is not entirely favorable; higher interest rate results in a lower acquisition price that often does not match the entrepreneur’s expectations. We’ll see what the future holds.

Higher Grades 

The summer slump in office paper types seems to have extended into fall. Demand for sorted office paper has been historically low in recent months, and now the supply also appears to be historically low. In Germany and the Netherlands, no inventories are ready, and it is expected that demand will pick up in the coming weeks.

Metsa Tissue has already indicated a desire for stable prices, but it remains to be seen whether they miss the mark with this strategy. For scanboard types (known as “cek” in German), there seems to be a glimmer of hope. Several thousand tons were exported in recent months, allowing recyclers to return to a more “normal” inventory position. Dumping is no longer the order of the day.

Uncoated woodfree paper still appears to be under pressure among the better grades. Tons imported from the US are being brought in at prices below European rates, causing further price pressure. We anticipate a slight negative price adjustment for coated white 3.16 and uncoated white 3.18 for November.

Multidruck/CBS seems to be experiencing slightly increased demand. The low economic activity is also resulting in less waste from the printing industry. Multi could become a sought-after type in November. Could a price increase be on the horizon?

Asia: Insights from Bharat’s Impact

Subtypes

Bharat, formerly known as India, was the driving force behind the price increase in Europe at the end of September and the beginning of October. American imports became more expensive, leading the Indians to focus on Europe once again.

In mid-October, the peak price for cardboard was reached: USD 155 per metric ton for OCC 95/5 from Europe. Since then, demand has weakened due to reduced domestic sales, resulting in a lower “asking price” for European cardboard. Currently, the price for 95/5 hovers around 140 USD per ton CNF India main ports.

While a correction was expected, we have doubts about whether the decline will continue. American tons are offered at a price that is 35-40 USD per ton higher than their European counterpart. Therefore, there is no alternative for an active Indian market. Just as the Indian market reacts quickly to a decline, Europeans will also seek an increase as demand for cardboard rebounds.

We expect a rebound to USD 150 per ton for 95/5 in the coming weeks. Kraft grades will continue to be in demand, with the USA being the main reason. Greek tons are often used as a benchmark by the Indians. If there is no demand, it is challenging to sell them, but when demand is present, the price for Greek tons is often used as a comparison. We no longer fall for this tactic.

Thailand and Vietnam were initially somewhat hesitant to increase prices, but ultimately, they have surpassed the Indian market in terms of demand. Large contracts have been signed from Europe for the supply of cardboard to both countries. The cost advantage of transporting to India also contributed to this. For example, a price below USD 200 per container was recorded from Rotterdam. Shipping from Rotterdam to Ho Chi Minh is cheaper than driving with a tautliner to Roermond. That’s not healthy.

There have been reports of increased activity from the former major exporter ACN. Shipments for their own factories as well as for third parties were recorded. Due to the large number of orders placed, the appetite seems to have been satisfied somewhat, but we expect – like India – a return to the previous level of mid-October.

As for Indonesia, there is little news. There is some demand, but it doesn’t play a leading role in imports from Europe.

Higher Grades

SOP to India is being traded at around 200-230 USD per ton. There is demand, but it’s not flying off the shelves. 

Scanboard remains an interesting grade for the Indians. Both board mills and tissue mills have been including this grade in their purchases for a few years. Now that the inventory in Europe has dried up, there could be an increasing demand for this grade. In early 2022, India surprised the European market with very attractive prices.

Pulp seems to be on a slight rebound. It is still being offered at relatively low prices, but dumping is truly a thing of the past. This appears to be leading to an improvement in demand for white grades (pulp substitutes) like HWS and SWS, which could result in a shift in demand from the USA to India instead of Europe. It remains to be seen whether this trend continues.