Following a calm and quiet month with only minor price changes in August, recovered paper prices started to move again in September. Contacts reported a mixed bag of changes, both up and down, for sorted mixed papers and board (1.02), mainly small increases but also lower prices in some instances for old corrugated paper and board (1.04) and stable or slightly higher prices for sorted graphic paper for deinking (1.11).
Domestic paper mill demand is low despite the price increase
As in previous months, the development was first and foremost ascribed to buyers’ efforts to keep the gap between domestic and export prices from getting too wide. Market fundamentals in Germany alone would not have provided sufficient grounds for higher prices as, according to market insiders, demand from domestic paper mills continued to be lackluster as they were still struggling with overcapacity, low demand and high pressure on prices for their products.
After all, the PIX Index for 1.02 came in at Euro 87.13/tonne in September, which was Euro 4.98/tonne higher than the previous month, while the figure for 1.04 rose by Euro 4.08/tonne month on month to Euro 101.83/tonne. The PIX Index for 1.11 inched up from Euro 126.56/tonne in August to Euro 128.45/tonne in September.
“Demand from southeast Asia was still there, but it was rather weak in early September, and domestic buyers were reluctant to offer higher prices. Then some buyers in India suddenly raised their prices by $10/tonne, and although demand was still weak, domestic buyers followed the move. It looks like they don’t want to miss the boat in cases prices rise a bit further globally,” a market insider explained. Others shared similar information. “The main driver of what happened was the high price difference between the export and the domestic market,” one of them said. “This price difference already forced some small paper mills to increase prices in August and, in the end, big players followed the move at the beginning of September,” he added.
New recovered paper price increase has a short lived impact
However, the September hikes did only little to narrow the gap between domestic and export prices, as the latter accelerated by some Euro 5-10/tonne in the course of the month, bringing the difference back to August levels.
Apart from the price increases, there were no big news from the German market in September. According to contacts, domestic demand was still low as paper mills continued to be haunted by weak demand and high pressure on prices as a result of the high overcapacity in the sector and the generally weak business environment.
As a result, inventories at paper mills remained high. Stocks in the waste management sector were low, though. Market insiders ascribed this to both good export demand and low collection volumes. “Even after the end of the main vacation period, collection volumes continued to be low. It’s difficult to find a reasonable explanation for that. Maybe people are just consuming less than they used to do,” a contact noted.
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