As we have previously highlighted, the global recovered fibre market has been transforming in the last two to three years as new outlets are sought for material that, in many previous instances, would have headed to China.
At a BIR Paper Division webinar on October 14 moderated by its General Delegate, Sébastien Ricard of France-based Paprec, participants provided a status report on the market supply/demand balance as well as an insight into technical innovations that could provide a further boost to the industry.
Following China’s announcement that it would be striving for zero solid waste imports by the end of this year – although there are hints that some grades may be reclassified and consequently allowed back into China at some stage – the country’s annual overseas purchases of recovered fibre have dwindled from between 26 million and 29 million tonnes in the three years to 2017 to just 19 million tonnes in 2018 and 11 million tonnes in 2019, with a total of 5 million tonnes projected for 2020, according to divisional Past President Ranjit Singh Baxi of UK-based J&H Sales International.
As a supplier to China for nearly 20 years, the loss of China as a market is a sad day for us here at Highlander, especially as we had worked very hard the last few years to meet their stringent quality and moisture requirements and were one of the few approved sites in Scotland that passed every quality inspection performed by the Chinese Inspection authorities.
This staged reduction in imports over a period of three years had been beneficial to the recycling sector, argued Mr Baxi, because “it has allowed the industry to try to reposition itself in newer markets, finding newer outlets”. BIR Paper Division President Jean-Luc Petithuguenin, also of Paprec, agreed that markets had made great strides towards offsetting the loss of orders from China, including through new capacities in Europe as well as through fibre exports being dispatched to a broader range of countries and in larger quantities.
The UK will hopefully also have its own capacity increases in the next 2-3 years with a proposed conversion of an old newsprint machine at Shotton Paper, which while not providing a panacea apropos the overriding need for export markets, this will without a doubt help a little.
Turkey remained a promising market, it was noted by several speakers, despite its recent decision to limit paper recyclers’ fibre imports to a maximum of 50% of their production capacity, as compared to 80% previously. Mr Baxi predicted that other countries would adopt similar measures to protect domestic industries/collection programmes and to reduce import bills.
At Highlander, we believe in normal circumstances that the European mills would play a reasonable part in our fibre markets solutions going forward, however, with the ever-looming prospect of a no-deal Brexit and nightmare scenarios of truck parks in Kent, supply chains may be disrupted here to the point that European sales may be counterproductive.
For his part, divisional Vice President Francisco Donoso of Spain-based Alba Servicios Verdes still considered that the steep reduction in Chinese recovered fibre orders was having a significant, negative effect on business. He also complained of huge recovered fibre price volatility, attributing this to panic among some mills afraid either of running out of material or of paying more money than necessary for their supplies.
The keyword for us here is volatility. This is the best description of the markets over the last 12 months and depending on what happens with COVID-19, possibly the next 12 months also. There are murmurings of China possibly reclassifying grades such as Over issue news and New Corrugated cuttings (pre-consumer grades) as a raw material instead of a solid waste, which again will help the market situation a little.
“We still have a lot of volatility in front of us,” contended divisional Vice President Martin Leander of Stena Metall International AB of Sweden. However, he also expressed excitement at the “many possibilities” opening up for the paper sector. Some of the latest research aimed at developing new market outlets for the paper was outlined by the BIR Paper Division’s guest speakers Gilles Lénon, Managing Director of the Centre Technique du Papier (CTP) in France and Fabienne Vercelli, CTP’s Director of Customers Relations.
Their focus was on two emerging technologies with potential in the packaging sector – chromatogeny, involving the chemical modification of a cellulosic compound to create a water-repellent barrier and MFC wet lamination whereby a layer of micro-fibrillated cellulose is applied to a paper/board surface to act as a barrier against oil, contaminants and oxygen. Using the paper cup market as an example, Ms Vercelli pointed out that both technologies “were able to reach all specifications in terms of recyclability and biodegradability”. In all its research, she emphasised, CTP sought to ensure that its technologies required no changes to be made to existing recycling processes. Having noted that CTP worked closely with papermakers, Ms Vercelli confirmed that a chromatogeny-based machine had already been built and that a second was under discussion.
We welcome any such developments and again these can only help with the sustainability of packaging in the long term although, while this may help recover more packaging from the waste stream for recycling if we do not have sufficient markets to sell the material onto, such developments could have a detrimental effect on prices and the overall market position for waste paper.
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