The downward price trend on the German recovered paper market continued in October and even accelerated in November with considerableprice cuts for mixed paper and supermarket paper and board of €15-20/t in most cases this month. Stable to slightly declining prices were usually reported for sorted graphic paper for deinking and for the medium and higher grades.
The analysis of prices reported by recovered paper suppliers and consumers for October shows a price reduction of €13.00/t for mixed paper and board (1.02) compared with September. Quotes for supermarket paper and board (1.04) fell by €16.00/t and used corrugated kraft II (4.03) became €15.00/t cheaper.
By contrast, the price of sorted graphic paper for deinking (1.11) softened by just €5.50/t.
For medium and ordinary grades, prices were basically flat in October. Coloured letters (2.06) cost exactly the same as in September. A slight decrease of €1.00/t was reported for multi printing (3.10).
White newsprint/magazine paper (3.14/3.15) ticked €2.00/t lower. Buyers were paying €3.00/t less for white woodfree uncoated shavings (3.18.01) in October.
In the current month of November, many market participants report extensive downtime in the paper industry. The temporary stoppages are primarily a response to the weak order intake at paper mills, but occasionally technical problems had also resulted in extended maintenance shutdowns. The situation in the industry is still described as weak and pressure is growing, in part due to the continued downtrend in new paper prices.
As a result, paper mills are not accepting much recovered paper. Even contractually agreed acceptance volumes are often being trimmed, EUWID was told. In a few cases, the deliveries were reportedly reduced by half.
Waste management firms export more to avoid inventory building
With paper mills accepting less material, the recovered paper inventories held by waste management companies are growing. But the situation here can vary from company to company. While some waste management and recycling firms say their yards are ”quite full”, others have relatively low inventories in part because they employ discounts to find takers for excess material.
There are also regional differences in the market depending on how easily export markets can be accessed. In the South and East of Germany, inventory levels tend to be somewhat higher than in the West and especially compared with the North.
Assessments of collection volumes are mixed. A few market participants still describe arisings as ”incredibly weak”, particularly in comparison to the relatively high volumes usually seen at this time of year. Others, though, report that volumes are picking up again – both from commercial and industrial generators as well as municipal collections.
Across the board respondents were agreed, however, that the accumulation of volumes is nowhere near as dramatic as it has been during past crises, for instance at the end of 2022. There is currently no need to rent additional storage facilities or to send paper to waste-to-energy (wte) facilities. And given the current lack of available incineration capacity and high gate fees, wte plants would not be a real alternative in any case, many players noted.
Accordingly, Far East exports are increasingly being used as an outlet to relieve pressure in the market. There has been an uptick in volumes sent to Asia, especially from northern and western Germany. But as Asian buyers are also hoping for prices to decline further, demand from that market is not yet especially strong, players say. Export price levels are thus expected to decrease in line with those on the German market.
In total, the price cut for mixed paper (1.02) and supermarket paper and board (1.04) in November is estimated to be €20 per tonne on average. In contrast to previous months, prices for both grades are reported to be falling at roughly the same pace. In a few instances, the mark-down for grade 1.02 was projected to be slightly smaller.
Once again, there is significantly less pressure on the graphic recovered paper grades and on the medium and higher grades. For sorted graphic paper for deinking (1.11), insiders are once again expecting only minimal price reductions in November. However, now that the price gap to mixed paper has widened again considerably, a significant price reduction is possible in December, EUWID was told.
For the medium and high grades, market participants expect prices to be slightly trimmed at most, as was the case in recent months. There are even scattered reports of slight price increases, for grades such as multi printing.
Uneasy outlook for coming months
The near-term outlook for the recovered paper market is still downbeat. Since many paper mills have already announced downtime over the Christmas and New Year’s holidays, which will coincide with a likely surge in arisings, prices for ordinary grades are poised to fall further.
However, such a downtrend could be partly offset by stronger exports as well as limited logistics capacities for transporting recovered paper. Moreover, paper industry players urge restraint when it comes to further mark-downs for recovered paper, so as not to intensify the downward pressure on finished paper prices.
The general outlook for the market also remains gloomy. In light of the overall macroeconomic trend, which is even more uncertain following the recent US elections and the collapse of Germany’s governing coalition, most market participants are rather pessimistic about the coming months. The paper industry is therefore seeing no signs of an improvement in the order situation.
The only glimmer of hope is the Easter business, which might lead to more orders from the end of February, according to one respondent. Until then, however, the market would have to rely strongly on exports, he added.
