Quarterly Report – January 2021

What a year was 2020! Definitely not like any other as a direct result of the healthcare and economic consequences of the COVID-19 pandemic which forced the world to adapt and change.

It was also an unusual and hectic year for the secondary raw materials we produce. You may recall that, 12 months ago, the paper and board industry was suffering the nightmarish combination of oversupply, high stocks and flat demand. Then came the first lockdown and everything changed. Demand surged as paper mills tried to stockpile as much as possible when faced with both high demand and fears of lower collection rates. Prices duly increased, collection rates decreased, stocks disappeared and the market arrived at a balance.

We have continued to experience a few market corrections but prices have been stable thanks to e-retail and packaging.

The economies of South East Asia have recovered earlier than in Europe; sales into this region have eased the oversupplied European market. Freight is a tricky part of the equation but conditions should ease during the first quarter of 2021.

The newspaper industry is not experiencing the same positive dynamics as the packaging sector. The various COVID-related lockdowns have been catalysts for an even greater transition towards digital, with print media now facing a crisis that is affecting the prices paid for the higher grades of recovered paper, which correlate closely to the currently low price of pulp.

In France, no offer has been received as yet for UPM’s Chapelle mill which stopped production last year. The same applies in Bordeaux where SAPB is looking for an investor. Meanwhile, Norske Golbey has announced the good news that it will produce cardboard from one of its two mills by 2023. New capacities coming on stream across Europe - including in France, Germany, Italy and Turkey - will amount to almost 4 million tons of annual additional output potential over the next three years.

It has been a good start to 2021 and many experts agree this will be a positive year for raw materials. However, we must still adapt to new international regulations and additional constraints which, in some ways, could provide a competitive advantage. But the main question that remains is how the COVID-related healthcare situation will evolve and how it will affect the economy.

Jean-Luc Petithuguenin - Jean-Luc Petithuguenin (France)

Jean-Luc Petithuguenin

Paprec (FRA)

Quarterly Report – January 2021