Global recovered fiber trade: Three changes to watch in 2023

China’s search for virgin fiber, Asia’s cooling demand for OCC and post-pandemic RCP supply

We asked Hannah Zhao, Director of Fiber at Fastmarkets, about the reasons behind the three key changes we are seeing in global recovered fiber trade and how post-pandemic trends could impact recovered paper supply. Watch the interview or read the summary below.

Is there a shift from recycled fiber to virgin fiber in China?

There is some sort of a shift from recycled fiber to virgin fiber in China. This trend is mainly caused by the sharp decline in Chinese recovered paper imports, since its ban on importing recovered paper in 2021.

This recycled fiber shortage forced some of the Chinese paper producers to look for alternative fiber, virgin fiber, including wood pulp and non-wood pulp. It will likely be a mid- or long-term trend. Because virgin fiber in general is of higher quality, by putting more virgin fiber into the fiber furnish mix, the Chinese paper producers can improve the quality of their finished paper and board products.

Are the recent price drops for OCC caused by Asia’s cooling demand?

In the last few months, old corrugated container (OCC) prices dropped dramatically across the world.

The fundamental reason for this is the slowing Chinese demand, which saw recovered pulp import drop by 7.8% year over year in the first 8 months of this year.

The sluggish Chinese demand slowed the fiber demand from the non-China Asian region, including Southeast Asia and India, whose recovered paper imports fell by about 9.0% in the same period. Both Chinese domestic OCC prices and Asian import OCC prices plunged.

Most, if not all, of the recovered paper exporters, like North America, Europe, Australia and Japan, have suffered the softness of the Asian markets and saw OCC price decline as well. Cooling domestic demand in North America and Europe has also contributed to the price slump.

Have post-pandemic trends affected recovered paper supply?

What we’re seeing now in the markets is the opposite of what happened in 2020 and 2021. Post-pandemic, the growth of ecommerce has slowed down as people are going out to stores to do their shopping and spending more on services instead of goods.

In terms of recovered paper supply, this means that there is a shift of OCC and mixed paper from the residential stream to the commercial sector. Recovered paper from the residential stream tends to have a higher risk of contamination and inconsistency when compared to commercial streams, so this post-pandemic trend will greatly help with recycling efficiency and is positive for overall recovered paper supply.

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