Jean-Luc Petithuguenin (Bureau of International Recycling and the French Group Paprec) comments on the situation prevailing on the European markets for recovered paper & board.
After a year of transition in 2022, the difficulties faced by our sector were confirmed in 2023 as demand from buyers and also collection volumes were lower throughout the period. The final quarter also brought its own share of difficulties, particularly the onset of the crisis impacting the Suez Canal.
For the lower grades, conditions in the European market barely changed in the latter part of last year. Activity levels remained average for packaging and stocks of recovered paper and board, as well as of paper used for packaging, continued to be high. Only the French and Spanish markets were asking for volumes, facing somewhat renewed competition from overseas trading until December. The German, Benelux and Italian markets remained at decidedly average levels.
Overseas trading was flourishing in the final quarter of 2024 until the attacks began on commercial vessels approaching the Suez Canal. In response, shipping companies stopped their vessels in safe waters or rerouted them the longer way around the south of Africa. The immediate consequence was that these same companies announced drastic increases in logistics costs. Following a period of panic when the most unlikely prices were being offered, negotiations returned to more reasonable levels in January. However, the market from Europe suffered a decrease despite higher selling prices from the destination point.
In the first quarter of 2024, collections have continued to be no better than average and few tonnes are available. The medium grades market has moved, but only a little, and the performance of leading market Germany is moderate at best.
The paper market continues to show few signs of activity, even if newsprint sales prices are holding up better than testliner. Declines or otherwise in office paper prices are dependent on the presence of buyers for Asia, and particularly for India. The remaining grades are putting on a moderate showing as activity levels have been average for our customers. Stocks of some grades have increased slightly.
Conditions are difficult in the high grades market as weak demand and falling prices are part of daily life. Collection volumes are quite low but the market faces strong competition from pulp, making our substitutes hard to sell. No improvement is anticipated in the early part of 2024 and patience will be required.
This new year has begun with quite a few unknowns. What will happen with the Suez Canal? Or with the Israel/Palestine conflict? And what about Russia and Ukraine? We are clearly seeing the strong impact of geopolitical shocks on the raw materials markets. Will activity levels improve for our European customers? Nothing could be less certain at the moment as reel price cuts were announced in January on the back of a lack of sales. Asia, where economies seem to be in difficulty, will still act as the essential market regulator in 2024.
This will also be a year in which some of our customers may experience financial difficulties and so it will be necessary to monitor developments carefully. Other issues to follow in France will include extended producer responsibility and cross-border waste shipment laws.
The consequences of decisions taken in the coming months and years could shake up the sector and even have the potential to be devastating.
Meanwhile, our sector continues with its established roles of collecting and preparing materials before sending them to market. Inventories are not high in our facilities and so good days could lie ahead even if demand were to improve only a little.
The paper and board recycling sector is particularly exciting but necessitates increasing levels of professionalism. So much the better as the best companies will be the ones able to adapt to these ever more demanding requirements.