Prices for some OCC imports dip in SEA and Taiwan but China-based mills offer silver lining

China-affiliated producers bought small volumes of US OCC imports but uncertainty still looms over a price rebound

Limited availability of recovered paper (RCP) imports and weak demand have continued to hit the paper and board market in Southeast Asia (SEA) and Taiwan over the two weeks to Thursday May 18.

Sellers nonetheless picked up a few positive signs when some China-affiliated producers bought imports of mainly US-origin old corrugated container (OCC), despite small volumes.

Customers from Thailand, Vietnam and Malaysia snapped up the US premium brown grade, double-sorted OCC (DS OCC 12). It will be used for production of recycled pulp and recycled containerboard products at their plants in the region. Most other regional buyers paid less for the grade.

Massive amounts of downtime at packaging mills across Asia – from South Korea, Taiwan and SEA to India – have been taken due to the market downturn.

In Vietnam, a major board producer indicated that, although no machine has been shut down at its mill there, production on all its units has slowed to an average operating rate of 70%.

The client has been slashing tonnages of OCC imports for a few months, down from several tens of thousands of tonnes per month previously to less than 10,000 tonnes per month recently.

Regional producers also said that they could rely on low-priced local collection to replenish their depleted OCC stocks. Prices for local OCC in Vietnam and Thailand are much cheaper than imports of the material.

India rebound

Certain suppliers have pinned their hopes on a possible rebound in India, because the monsoon period in parts of the country is imminent and will lead to a reduction in domestic collection.

But other vendors are less sanguine, pointing to the pileups of containers loaded with RCP cargoes at Indian ports because buyers are reluctant to fetch them, possibly due to their disputes with sellers and with the intention to void the deals. Such practices are not uncommon in the area, often resulting in orders being cancelled and cargoes being diverted to SEA.

According to sister publication PPI Pulp & Paper Week, total RCP exports from the US to India came in at 684,417 tonnes during the first quarter, down by 28% from the previous quarter and a year-on-year drop of 36.8%.

A big chunk of the first-quarter Indian intake was mixed paper, the imports of which are under strict scrutiny in other Asian countries.

India also imported less OCC volumes in the first quarter, amounting to 323,032 tonnes, compared with 705,836 tonnes in Thailand and 358,026 tonnes in Vietnam.

India was previously the biggest importer of US RCP, following China’s ban on imports of the material in 2021. That prohibition led to a jump in exports of recycled pulp and packaging materials used as recycled pulp from India to China, but the surge has wound down since last year.

OCC levels down

The price of benchmark US OCC 11 in SEA and Taiwan has been flat over the past two weeks, despite soft demand in the region. European OCC 95/5 is down by $5 per tonne.

Suppliers pointed out that most buyers in SEA have been pushing for a further drop of $5 per tonne this week, but vendors are resisting.

A Tokyo-based trader said that Vietnamese buyers had been pushing for a price drop for Japanese OCC, looking at buying the grade at below $150 per tonne.

“Japanese suppliers have declined to cave in to pressure from overseas buyers. They have chosen to keep the tonnage at home, even that means renting warehouses somewhere else to store the stocks. They know domestic mills will eventually get the volume,” the trader said.

This article was taken from PPI Asia, the industry’s most trusted pulp and paper market news and prices for Asia. Speak to our team to find out more and subscribe to our newsletters.

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