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| Paper and metal markets ‘steady for now' |
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http://www.sbdailynews.com
2011-08-16 |
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Paper and metals sectors are watching the volatility in world stockmarkets with some trepidation but with no immediate signs of price falls.
On the metals side, traders have reported some falls in the value of used aluminium cans and are also signalling the potential for small reductions in the light iron price. Yet, overall prices for August are expected to remain generally unchanged.
At the same time, prices in the waste paper sector remain generally firm although the only price rises for August are in the value of used newspapers and magazines at a time when supplies are generally down.
Overall, mills and merchants point to fair demand in Europe and China with the standard low arisings in summer compensating for any decline in order volumes: the reduced arisings are helping to keep prices firm. Cheaper freight rates have also helped the market and may have also helped with the ex-works price.
However, going forward there is something of a consensus that prices may fade in September. One exporter said: “China's inflation is rising to about 6.5% and orders for finished product are harder to come by. And, we have seen more production in China this year already with new machines starting up.”
Autumn watch
Traditionally the first eight months of the year are the busiest in terms of papermaking in China and as a consequence the “boom” in production seen so far this year is unsurprising. The main question now is as to how the autumn period plays out in China with the likelihood of lower demand from Europe and elsewhere for finished products. Much will depend on the strength of demand from European mills which are usually busier in the September-October period ahead of Christmas.
One exporter said: “We are seeing prices reduce marginally because there is significant over capacity in China which is keeping linerboard prices low and so putting pressure on the price of raw materials. We are watching the situation carefully and don't want to see a painful return to October 2008.”
SAICA
In the UK the picture is complicated by the development of the SAICA board mill near Manchester which will go into production at the end of the year. While the mill has secured large supplies through the acquisition of the Futur and Cutts recycling businesses, the tonnage heading for the mill will be lost from either the export market or from supplies to UK users such as Smurfit Kappa and DS Smith.
Consequently, the new mill is expected to contribute to firm prices although the Spanish-owned mill will wish to keep cost of its raw material low.
Newsprint
Recycled newsprint manufacturers – Aylesford Newsprint, Palm Paper and UPM Shotton – are fighting hard for tonnage in a market where prices for their raw material is rising and some used material is being imported. One buyer commented: “We are seeing some of the highest prices we have paid since 1995 and we didn't see much of a blip last winter either as a result of the bad weather reducing supplies.”
One expert told letsrecycle.com that local authority contracts were strengthening in value and consequently the price paid for commingled material to feed materials recycling facilities was reaching as much as £50 a tonne. UPM runs a modern MRF at its Shotton mill in North Wales and is keen to secure tonnages to feed this.
Newsprint manufacturers are also said to be looking ahead to 2012 with the expectation that sales of papers will boom ahead of and during the Olympic Games.
Office grades
On the office grades, there had been some expectation that the start-up of a new printing and writings machine near Shanghai by Nine Dragons would see more demand for woodfree material demanded from the UK but this has not proved to be the case. However, prices for office grades are under a little pressure with best white grades seeing a reduction because of a fall in pulp prices. |
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