Quarterly Report – September/October 2019

Continued uncertainties and the escalating trade war between the US & China are having a dominating effect on global economies. Over 35 of the major advanced economies of the world are showing early signs of recession with many of them registering a visible downturn in their manufacturing output to levels last seen 7 years ago.   

PMI index also continues to fall significantly below the 50 mark, with the Eurozone PMI index being at 45.7 in September – again last seen in 2012. Levels of 50 and less reflect Economic contraction whilst over 50 represents expansion or growth. WTO is also continually revising its forecast for growth of world trade to reflect the early signs of recession.

Weakening export volumes to China are also reflected in the rapidly decreasing container volumes being shipped to China. Coming from levels of 2.6 million TEU pre-2016, we are today projecting to around 1 million TEU for 2019, decreasing to about 400,000 TEU for 2020 and less than 80,000 TEU for 2021.
A total of 10.2 million tons of import licenses were issued by the end of the quarter and are projected to end the year with about 12.5 million tons of licenses.

With decreased export volumes, prices for European OCC started the quarter at around US$ 105+ and hovered around these levels for the third quarter fluctuating between US$ 95 to 110.

Steady demand continued for all the other grades but in much smaller volumes.

Domestic fibre prices in China for OCC were at levels of US$ 285 to 315, Mixed Paper at US$ 270 to 295 and ONP at US$ 460 to 485.

Mixed Papers continued to be shipped to other markets, namely India, Indonesia, Vietnam & Thailand.

Also exports for 95/5 and 90/10 OCC continued to these markets with prices declining during the quarter.

Traders are looking forward to opening up of new market demands following the completion of Chinese import cycle for the year 2019 during  November.  

Ranjit Baxi - Ranjit Baxi (India)

Ranjit Baxi

J&H Sales International Ltd (GBR)

Quarterly Report – September/October 2019