Trends at the end of 2020 were confirmed and continued in the first quarter of 2021. The market experienced strong pressure from paper mill customers, who introduced significant price increases for the low grades in response to still-low collections of cardboard. The market has been rebalancing itself in May, but the question is for how long.
In the export market, the current quarter’s freight increases have prevented Asian buyers from being competitive and from adjusting to the French or wider European market. However, they still managed to source enough material from other markets and have fairly comfortable stocks. Only Indonesia is retaining a strong presence and is following the French market.
The deinking market has also undergone significant increases, thereby strangling newsprint and newspaper manufacturers who have been unable to pass on these higher levels in the prices of their reels.
The rise in the virgin pulp price has prompted some paper manufacturers to buy more recycled blanks, temporarily increasing the price of certain blanks.
At present, exports have come to a virtual halt, with few orders as well as few available ships and containers; in response, paper makers have corrected prices downwards by some Euro 15 per tonne. As a result, cardboard is remaining on the European market and inflating the stocks of paper manufacturers, with some already planning to apply a further price cut in June. Everything will depend on the scale of any recovery in May and on exports.
Regarding the outlook for the rest of the year, we anticipate an economic boom by this summer - a recovery that will bring not only an increase in collection volumes but also even more orders for our customers who will continue to produce for China. This remains a year of significant price tension.