Higher freight rates owing to BAF/CAF variations, container shortage problems and a volatile US dollar have combined to make life difficult for recovered paper exporters confronted with firm-to-strong order files. In Europe, shipping lines have announced the possibility of another freight increase in April or May.

Demand from China and other leading markets in Asia is set to strengthen in the coming months given the announcement of major new capacity developments. Last year, Chinese imports of recovered paper climbed almost 3 million tonnes to around 22.6 million tonnes, with the USA supplying 44% of the total and Europe 32%. Demand from other Asian countries - including India, Thailand, Indonesia and Vietnam - has also continued to grow.

US exporters have been hit by continuing container shortage problems while their counterparts in the UK suffered a shortage of vessel space following a crane collapse at Southampton which took several weeks to remedy. These problems in the USA, as well as increased availability of fibre, led to a slight weakening in prices. Between the middle and the end of March, US OCC export prices fell around US$ 5 per tonne while European OCC prices slid a similar amount. OCC export prices out of Japan and Australia were also adjusted downwards.

Once again, the UK confirmed its role as Europe's leading exporter of recovered paper in 2007. Its shipments leapt almost 18% to 4.658 million tonnes, with China taking 2.47 million tonnes of this total. Demand remained strong in the first quarter of 2008 and export prices have moved some Euro 13-20 per tonne ahead of UK mill levels.

As a result, domestic mill stocks have dropped to critically low levels in some instances.

Export volumes also surged in other European countries: for example, overseas shipments from Sweden leapt 57% to 254 000 tonnes last year. Total domestic consumption of recovered paper dipped 2% to 1.993 million tonnes in 2007 despite a 5% increase for ONP. Recovered paper collections in Sweden climbed 4.5% last year to 1.6 million tonnes.

Staying in northern Europe, recovered paper collections in Finland totalled around 800 000 tonnes last year, equivalent to a rate of around 70%. Domestic recovered paper prices were stable during the first quarter of this year while demand for news & pams and the middle grades was particularly healthy. Recovered paper stocks are low both at merchants’ facilities and at the mills.

Among the Baltic Countries, collection volumes have grown around 5% during the first three months of this year and recycling companies/merchants have been able to trade all available volumes. Prices of OCC and mixed papers increased around Euro 5-10 per tonne during January and February.

In Germany, February brought the traditional increase in recovered paper collection volumes such that paper mills’ demands were comfortably met. From January to February, price increases of around Euro 15 per tonne were implemented on the lower grades and on the kraft qualities. Paper mill stocks are currently high.

Further south, exporters in Italy have reported a drop in shipments to Indonesia owing to higher transportation costs. However, China absorbed the tonnages which became available as a result. With a number of new production lines scheduled to come on stream in China during the course of the current year, the international demand outlook for recovered fibre appears highly positive.

As for Spain, reasonably high stock levels at the domestic mills in early-2008 meant consumers were not forced increase prices to rebuild their inventories. Following major price increases in the Asian export markets, the result was the largest-ever differential between domestic and export prices of up to Euro 20-25 per tonne. The gap for the deinking grades was not as wide as that for the bulk grades. Mill stocks have since fallen, but recent price increases in a generally steady domestic market have been limited to Euro 5-10 per tonne.

Heading east to the Czech Republic, there exists a permanent oversupply of almost all the main grades of recovered paper, with the partial exception of OCC. However, exports have increased at an annual rate of 20% to account for this surplus. Domestic collections and purchases are exceeding 700 000 tonnes and exports 300 000 tonnes. And in Turkey,

recovered paper prices increased again during the first quarter of 2008 - notably for OCC - even though the slow-down of the economy has adversely affected the paper sector. The country seems likely to start importing OCC this year.

Acknowledgement

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