Quarterly Report – April 2020

Coronavirus has inflicted tremendous pain, uncertainty and pressure on the world’s second-largest economy China. Industrial production, investment, consumer spending and employment levels all took a steep dive at the start of the year, badly affected by COVID-19. All hopes of a recovery in its economy after the Chinese New Year were shattered by the virus.

Pain, suffering and the death toll continued to increase at an alarming rate, both in China and gradually in other Asian and European countries by the end of the first quarter. The spread of the virus elsewhere has led to a big drop in demand for China’s exports, with orders being cancelled, leading to a major shock to Chinese GDP which fell by over 6.5% in the opening quarter compared to the first three months of 2019. 

With lockdowns extending globally, a steep drop of up to 35-40% is being seen in collection rates, resulting in a shortage of recovered fibre globally and firmer prices.

Sea freights continued to rise during the first quarter, with some increasing by over 200% from around US$ 800 to US$ 2500 as vessel capacity was withdrawn due to reduced cargo volumes at the start of the period. Obtaining container space continued to be a major hurdle to maintaining export levels.

China’s fibre imports in 2019 were around 10.3 million tonnes compared to over 17 million tonnes in 2018; its import volumes are anticipated to be around 5 million tonnes in 2020, dropping to zero in 2021.

Prices for its domestic OCC continued to increase during the first quarter from US$ 300 per tonne in January to around US$ 350-plus whereas European OCC opened the quarter at US$ 100-plus and ended in March at US$ 145-plus, with shipping space still at a premium. US OCC rose during the quarter from US$ 135-plus to around US$ 180.

In China, domestic prices for mixed paper were at some US$ 300-plus per tonne during the opening three months of 2020. China also bought other grades during the quarter - mainly ONP for which prices increased from US$ 110 to US$ 145 per tonne by the end of the period whereas SOP continued to be in steady demand at US$ 210-220.

Steady demand continued from other markets - namely India, Vietnam and Indonesia - at similar price levels. Shipments of mixed paper to Mundra remained a problem owing to congestion issues and stricter quality controls at the port. Shipments to India’s other ports and inland container depots continued over the quarter.

Markets are all preparing for fibre imports at higher prices following the drop in collection volumes during the second quarter. Looking further ahead, everyone is waiting to see how the global markets will stabilise with the easing of lockdowns and the resumption of normal trade channels, with increased availability of container space at much-reduced freight rates compared to the high levels of the first quarter.


Ranjit Baxi - Ranjit Baxi (India)

Ranjit Baxi

J&H Sales International Ltd (GBR)

Quarterly Report – April 2020