European and US OCC price falls give buying in China a boost
Price falls plus an increase in supply from post-holiday N. America and Europe have boosted recovered paper (RCP) buying activities in China.
Chinese customers have increased the purchasing of European old corrugated containers (OCC), following a price drop of $7/tonne to $245-248/tonne.
When European OCC (1.05) prices fell below $250/tonne, Chinese buyers, particularly recycled containerboard mills in southern China, started to stock pile.
Sellers ascribed the erosion to the depreciation of the euro against the greenback.
US OCC prices have dropped $2/tonne to $270-272/tonne in the main ports of China and S.E Asia.
The grade, imported from the east coast of the US, is selling in India (Nhava Sheva port) at levels $10/tonne higher than in China. Imports into India from the US west coast, due to the differences in shipping costs, run $20/tonne more.
Prices for most grades besides OCC have remained stable.
US old newspapers (ONP) are selling at $253-255/tonne, mixed paper $240-243/tonne, sorted office paper (SOP) $355-360/tonne and new double-lined kraft $335-340/tonne.
European ONP is reaching $250-252/tonne, while European mixed papers and boards (sorted) are going for $238-240/tonne.
Japanese RCP prices are also stable, with OCC reaching $262-264/tonne, ONP for $273-275/tonne, and mixed paper for $253-255/tonne.
Slow demand from China has been instrumental in keeping RCP prices from increasing over the past two months when supplies from the USA and Europe were declining.
With RCP prices still relatively high, falling paper and board prices in the Chinese market because of overcapacity have prompted most buyers there to reign in their RCP purchasing.
Only major Chinese producers, such as APP China, Nine Dragons Paper (Holdings) and Lee & Man Paper Manufacturing, have kept buying normal tonnage to feed their new machines.
In the USA, RCP grades sold to domestic mills has seen an average price reduction of $18/ton (equivalent to $20/tonne), with OCC falling $5-10/ton, ONP and mixed paper stable, and high grades (such as SOP and pulp substitutes) falling $25-40/ton.
Asian buyers know of the price erosion in the US market, but have not yet felt its influence. Sellers in the region said demand is expected to keep rising in China, and they are reluctant to cut prices.
Many Chinese paper and board mills have received government notices reminding them to renew their permits for RCP imports, which have to be renewed annually. When these permits are renewed, the authorities will review the RCP volume that the applicant has imported this year and base the quota for 2012 on the figure. To get the maximum amount allowed in next year's quota, many producers have said they will try to increase their import tonnage before submitting their application to the authorities.
Most Chinese mills seem to have kept low inventories, so stepping up their ordering activities to get good quotas is expected to bolster RCP demand and shore up prices.
Posted Date: 16th Sep 2011