Quarterly Report – September 2020

The second quarter of FY20/21 saw the recycling industry at the centre of the global Coronavirus outbreak pandemic. The UK industry remained modestly optimistic while localised movement restrictions continued to impact demand, C&I collection volumes, and recycling rates.

Prices have recently seen more volatility with sharp increases again due to the lack of RP generation and general COVID-induced supply concerns. Mixed Paper pricing has remained relatively stable and a high price delta at the peak of OCC prices helped to maintain demand for Mixed Paper, particularly from Europe. It will be interesting to see the impact once OCC exports stop loading in Europe for China, especially with grade substitution into other markets.

Covid-19 has accelerated the trend for online retail which will increase demand for packaging and switch the recovered paper volumes from commercial to domestic streams. New paper packaging production capacity in Europe will bring optimism of more sustained demand for OCC and Mixed Paper from UK sources. The tissue sector experienced some improvements in demand as the UK eased slowly out of lockdown with businesses getting back to work supporting the away-from-home market. High grade material into Europe remains problematic, mills are sufficiently stocked and are not consuming as much as previously. UPM announced the sale of the Shotton newsprint mill in Deeside, UK. The sale process could take up to 2yrs to complete so will not have any immediate impact on the recovered paper market. This announcement follows other sale and conversion projects in Europe as demand for graphical paper continues its downward trend. Quality will keep material moving and must remain the area of focus for all UK waste management companies and recyclers alike

As far as export markets were concerned, they face uncertainty due to variable demand, Government regulatory changes, and structural shifts in key end markets. The impact from the Coronavirus has been felt in the recovered paper market across Asia. There is still good demand in SE Asian countries, but this could be countered by China’s imminent exit from the market and complete ban of recovered paper imports in 2021. Confusion and delay over the new Indonesian import registration scheme has been causing real alarm for sellers and buyers alike. Demand and orders are strong whilst lack of clarity over the registration process itself could jeopardise shipments from early October 2020. Turkey has announced it is looking to reduce quotas for imported recovered paper and plastics from 80% to 50% of total demand. The reasons muted include helping to stimulate local collection infrastructure, support domestic business, and kick-start the circular economy