The market for OCC slowed during the first quarter, a period in which prices fell approximately 10%. Even though the Chinese government released new import licences, the country’s demand for European OCC is weak mainly because the liner production rate is lower in the second quarter. There is more material available in Europe and so prices were under pressure in the first quarter.
The situation is similar for the deinking grades, with a surplus of available material because the graphics industry is slower than expected; prices of these grades dropped around 5% in the first quarter. In contrast, the tissue segment has enjoyed stable demand, and therefore prices for deinking grades are more stable in Scandinavia than in Central Europe.
In Sweden, a new waste regulation is about to be implemented whereby producers of packaging material will be forced to take an even bigger responsibility for their material. The base line will now be collection from households rather than via bring systems at collection points. Costs will be dramatically higher and questions are being raised as to whether anyone can put material on the Swedish market given the huge economic impact that the new system will have.
The OCC market in Europe, including that in Scandinavia, is instantly affected by Asian buying trends. OCC has been exported from Sweden and Poland to Asian markets other than China. The general expectation is that Chinese demand will remain weak in the current quarter and further price reductions are likely in our home markets. The market for deinking grades is more positive and slightly higher prices can be expected this quarter, especially for woodfree material.
Stena Recycling (SWE)