Quarterly Report – April 2020

The first quarter of 2020 saw the recycling industry at the centre of the global Coronavirus pandemic.

UK industry remains fairly buoyant despite the fact that restrictions are continuing to impact production, collection volumes and recycling rates. Demand for recyclates has actually increased owing to restrictions on businesses and the enforced lockdown causing lower volumes to be produced. Mixed paper pricing has remained relatively stable. Packaging demand is strong and increasing owing to the “Amazon factor” as more households order groceries and other items online.

Along with packaging, the tissue sector has also experienced significant increases in demand, linked to growing medical needs as well as consumer panic-buying. As a result, specific infeed grades have risen. High-grade material into Europe remains problematic; mills are sufficiently stocked and are not consuming as much as previously. There is also little distinction now between pricing of white grades.

The pandemic is causing European haulage issues with port checks and border restrictions likely to have a severe impact on sales flows and to delay overall logistics.

Quality will keep material moving and must remain the area of focus for all UK waste management companies and recyclers alike. The future of the fibre industry will depend on investments in this sector to make recycled material cleaner than before.  

In the already-vulnerable export sphere, the Coronavirus impact has been felt in the recovered paper markets across Asia, with disruptions to the supply chain and rising prices for recovered paper imports. COVID-19 has significantly impacted general imports and exports, leading to vessel omissions and container shortages.

It is reported that Chinese mills are at around 50% production and gradually returning to “normal”, but they are not yet running at full capacity. Projections of a void in packaging supply within China in the wake of COVID-19 motivated mills in other Asian countries to step up recovered paper purchases. However, a number of countries are in a state of enforced lockdown, thus limiting such possibilities.

As a result of a severe shortage of containers and limited capacity, shipping lines have been increasing freight rates for recovered paper cargoes globally. And owing to a shortage in Europe caused by collection disruptions and an increase in demand for packaging, OCC and mixed paper prices are increasing.