The market environment for graphic papers in Mexico has changed drastically in recent weeks amid reports of more import volumes coming from Asia. With the new tonnages arriving at lower prices, the perception of paper scarcity that had driven prices higher in recent months has come to an end and prices have started to move down.
Asian prices “hard to beat”
“Freight costs in Asia dropped a lot, so these tonnages are arriving in Mexico at very competitive levels. This will pressure a lot of European suppliers that still have to deal with higher production costs and pulp prices at historically high levels,” a source said.
According to that source, freight rates from Europe to Mexico will need to go down if paper producers from that region aim to remain competitive.
Even if Europeans cut [their] margins, it will be hard to beat Asian prices at this moment.
Several sources stated that inventories in Mexico have increased and that buyers are well-supplied for now.
“The desperation that we saw months ago in order to ensure graphic paper volumes is over. Good volumes arrived, and we have the presence of material from Asia now. With the perception that prices can go down, all buyers stopped purchasing and are taking a wait-and-see approach, hoping levels go down,” a contact said.
One supplier outside of Asia indicated that his demand was still good due to delays on shipments from Asia, but he expected those issues to resolve soon.
There have been reports that full vessels – each containing more than 30,000 tonnes of paper – have arrived in Mexico, and a third ship was said to be arriving soon.
“Now that there is a lot of UWF [uncoated woodfree paper] supply in reels, the market will just have to convert this volume,” that market participant said.
On the other hand, European mills already implemented a price increase between September and October.
Increases are definitively cost-driven. The main factor is the existing energy cost situation.
“Asian paper is arriving in Latin America due to the low domestic demand in Asia and high mill inventories. Freight prices are also dropping heavily in comparison to a few weeks ago,” another source said, adding that European producers have been more affected by high energy costs than Asian suppliers.
Take an in-depth look at how the energy crisis in Europe is impacting paper and board industry in our viewpoint analysis by Philipp Jaki here.
Large price differences between Asian and European suppliers
In this environment, Fastmarkets’ price survey detected that minimum prices for imported coated woodfree (CWF) paper in reels dramatically dropped by $300 per tonne in a two-month period, moving to $1,200-1,500 per tonne in October from $1,500-1,550 per tonne in August. The wide range reflects the price difference between Asian and European suppliers. Prices are still 17.4% higher year on year, however.
Prices for CWF in sheets stood at $1,250-1,550 per tonne, 16.7% higher year on year.
UWF paper prices also started to descend. UWF in reels traded at $1,380-1,500 per tonne in October, with minimum prices diving by $120 per tonne over the past two months. Still, prices are up by 21% compared with October 2021. Prices for UWF in sheets stood at $1,400-1,600 per tonne, 44.9% higher in the annual comparison.
Prices for lightweight coated (LWC) paper have remained unaffected by the influx of Asian supply, holding unchanged this month at $1,500-1,600 per tonne. Still, that price has surged by 79.2% year on year.
This article was first published in PPI Latin America, the industry’s most trusted pulp and paper market news and prices for Latin America. Join paper industry executives, buyers, industry suppliers and financial institutions around the world and keep up to date on the latest market prices and information. Speak to our team to find out more and subscribe to our newsletters.
