Quarterly Report – April 2020

The paper industry situation changed completely during the first quarter of this year owing to the COVID-19 pandemic.

The surplus resulting from Comieco’s increased recovered paper collections in 2019 had created serious problems with stocks but this now seems to have disappeared. Paper mills which had been accepting material at zero or even negative prices are now thought to be breaking into their stocks. As a consequence, there is a strong impetus towards exports within Europe and to Asia. Overseas shipments of recovered paper must adhere to quality standards and are normally well accepted. The sole problems have surrounded transport complications and container availability. 

The reasons behind these changes are simple: the second half of the first quarter and the first half of the second one have always been good for paper mill orders; and the Italian government has ordered a stop to the bulk of domestic industrial production to help stem the spread of the virus.

Given that around two-thirds of Italy’s recovered paper collections are from industrial sources, only small quantities of these materials have been amassed in recent weeks. In the meantime, domestic paper mills have consumed a large proportion of their stocks at a time when availability of fresh material is scarce. It is unclear when industry will resume its activities and to what extent.

The immediate impact has been an explosion in ex-works prices to Euro 35-40 per tonne for mixed, around Euro 80-90 for OCC and the same for deinking, with OCC cuttings higher still at some Euro 100. Also higher grades have experienced similar increases. This situation is confirmed by developments at municipal auctions: the ones in late December were nearly deserted and resulted in miserable prices close to zero or even below whereas the most recent, in early April, were well subscribed and achieved prices to the consumer even higher than the levels expressed above.

Giampiero Magnaghi - Giampiero Magnaghi (Italy)

Giampiero Magnaghi


Quarterly Report – April 2020