Global recovered fibre markets

Commenting in the BIR World Mirror Quarterly Report (October-December, 2016), published in mid January, Ranjit Baxi of UK-based J&H Sales International Ltd confirms that Global economies are continuing to grow at a rather slow pace, with Europe achieving just over 1.2% while the Chinese economy is still maintaining its projected growth of 6.5% and India’s GDP is rising at a rate of 7.5%. 

Even so, overall demand levels for recovered fibre appeared to firm in the final three months of 2016 when compared to the previous three quarters, pointing towards increasing global demand for fibre. Volatility in the currency market continues, with a weakening of the US dollar and the Euro continuing its softening trend following the Brexit vote in the UK.

The Hanjin Shipping bankruptcy, the realigning of shipping alliances and continued consolidation has significantly affected both availability of containers and shipping space, resulting in sea freight rate increases and delays to shipments of fibre during last year’s final quarter. Exporters are likely to be faced with increasing freight rates going into 2017. 

Export prices of recovered fibre firmed during the fourth quarter, benefitting both from increasing demand and weakening currencies. Following the holidays in the third quarter, collection levels also increased and so enabled more fibre to be exported. 

Beyond China, other Asian markets such as India, Indonesia and Vietnam continued to gradually increase their import volumes, with a steady upturn in prices. Export volumes to these markets are likely to continue to grow in 2017. 

In the same publication, Simon Ellin, of the The Recycling Association, reviews Q4 trading in the UK. “The final quarter of last year was a period of relative price stability but turbulent events were taking place in the background with acute shipping and container shortages in the UK leading to well over a doubling of deep-sea freight rates. 

“For the brown/bulk grades, the run-up to Christmas is traditionally a busy time characterised historically by a weaker market. On this occasion, however, prices remained fairly stable overall when comparing averages month by month across the quarter. But as mentioned, this price stability does not reflect possibly the biggest shipping container crisis the UK has ever witnessed. If the shipping companies are to be believed, this is the consequence of a shortage of vessels arriving in the UK owing to Chinese holidays and bad weather, allied to less capacity and ports holding containers following Hanjin Shipping’s entry into administration. Despite overcapacity in deep-sea shipping supply, the UK has witnessed vessel and container shortages that have led inevitably to shipping cost increases. Several large UK players struggled to move material even having paid the higher rates. 

“Allied to strong Chinese demand, a lack of material on the water, agreement of import licences, a relatively weak pound and poor generation, all this has led remarkably to relative overall price stability (with some weekly fluctuations). OCC demand remained strong while demand for mixed continued to be healthy. This is in total contrast to the same period in 2015 when moisture and quality issues led to a sharp drop-off in Chinese demand. European demand for mixed has been particularly strong. What this shows is that, owing to technological advances in papermaking, demand for high-quality mixed has become very good indeed, though quality remains the key issue. Quality material has been proven to be sustainable and premium prices can be obtained and the Recycling Association’s Quality First campaign aims to position the UK as the market leader for such quality.”

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