Quarterly Report – July 2019

China’s recovered paper import licences fell from 6 million tonnes in the first quarter to 2.5 million in the second, making it absolutely clear to many recyclers that there was no chance of a backward turn in Chinese policy.

Many suppliers who had been waiting to see if Chinese demand would increase with the new round of import permits for the second quarter decided to hurry up with their sales as they had lost any confidence in a potential improvement in prices or demand. Export options to other Asian countries are scarce and at cheap prices.

As a result, local offers of recovered paper suddenly increased even further when compared to the first quarter, with demand remaining stable and poor. Meanwhile, Spanish paper mills not only maintained their import volumes but actually increased them by 10% during the first four first months of the year to 484,339 tonnes. Volumes were coming mainly from France owing to lower prices and corporate interests, including Spanish investments in the collection industries in France and Portugal.

Prices for the deinking grades have been falling every month but are still above export values. Demand is extremely poor, clearly showing a lack of capacity to consume all the volumes collected locally. Having dropped in April but then kept stable, OCC prices have remained under huge pressure owing to excess supply. International Paper stopped its machine in July for technical reasons, thereby exacerbating the lack of local demand and consumption capacity. Prices have decreased by around 30% in July to reach their lowest level since 1992, and even lower in some cases. Prices for the medium white grades have kept rather stable, with supply and demand in reasonable balance.