Europac warns against oversupply and falling prices on European RCP market


In a statement, Europac warns all stakeholders in the European paper industry against a sharp decline in RCP prices as the export market in China has closed its doors for mixed paper. Excess supply is already becoming a problem and long-term solutions will be needed.

Recovered paper has seen two price cuts in January and February this year, for a total of €45 per tonne, writes Europac. The fall in prices caused by an oversupply in paper, since Chinese mills have sharply reduced their RCP purchases in Europe due to new legistlastion and restricted import quota.

In 2017 China cut licences to import RCP by 2 million t per year, over 7% of the total volume of RCP imports. This year so far, the cut amounts to 30%, writes Europac. As a result of restricted import opportunities, the Chinese paper mills go for higher fibre yield and therefore prefer American material due to its higher virgin fibre content.

Europac also explains that the financial risk of exporting recovered paper to China is huge since the Chinese government has set a contamination cap of 0.5% (compared to 1.5% in Europe). This "introduces a level of arbitrariness into the decision on whether the goods are valid, and the cost of returning them in case of non-compliance has to be assumed by the exporter," Europac writes.

With the new legislation, the Chinese government aims to create a better balance between economic development, public health and environmental protection. It is also a declared goal to increase the domestic rate of paper recovery, which has increased by 48% since 2009, as a way of reducing imports.

Cercle National du Recyclage: RCP goes to landfill, is incinerated

Europac also attached a statement from Cercle National du Recyclage. The French association believes the market to be "seriously affected" and "close to saturation point". Europe is having to deal with an excess of material that it cannot consume, leading to a fall in prices, the association writes.

Furthermore Cercle National du Recyclage revealed some facts on the RCP development:

As of 11 January, the stocks of factories and recovery companies in the whole of Europe are full.

As of 2 January in England the waste paper is incinerated, but the incineration plants are close to saturation point, so RCP has to be sent to landfills. In France, only the best quality waste paper is still being sent out, although this will have to be stopped due to the excess of other materials.

For brown grades, the factories are at full capacity, but the paper from selective collection will be broken down into improved quality ordinary industrial waste. Only the best quality waste paper will find an outlet.

Stocks are therefore at a high, and it is difficult for the market players to place their volumes in paper mills, Cercle National du Recyclage writes.

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