The lack of collections over several weeks owing to commerical closures as well as some industrial shutdowns was more than sufficient to stress the market deeply. Paper mills were fearful of a lack of supply and there emerged an auction-style process of paying the most in order to obtain the largest volume.
Volumes were small because collections were low; recyclers were able to empty their yards, selling at much better prices than a few months earlier. However, new paper demand was actually lower during the second quarter and so, as soon as collections resumed even in part, demand was insufficient and prices fell again.
The current global scenario is similar to that prior to March: lower collection volumes are exceeding an overall mill consumption which has declined even more, not least because China has reduced its overseas purchases. The market outlook is even worse because China will totally close its borders from September. Several paper mills are reducing machine speeds in response to a lack of orders. Overall, therefore, there is a smaller volume in a less balanced market.
White grades have remained in good demand thanks to healthy tissue production but buyers could not afford the top prices during the second quarter. Increased working from home could bring about a general reduction in the volume of office papers available for collection from the offices themselves where high volumes have traditionally been concentrated. Instead, increased quantities will be produced across many homes and could become mixed with other grades, thus leading to an overall reduction in white paper collection volumes.
ALBA Servicios Verdes S.L. (ESP)