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Prices for old corrugated container (OCC) imports have continued to creep up, in a rebound that started a fortnight ago in Asia.
Leading the pack of buyers driving up prices are China-affiliated board and recycled pulp mills in Southeast Asia (SEA), who have been willing to pay top dollar for high-quality US and European brown grades. Those producers got tonnage to feed new recycled pulp lines in Thailand, Malaysia, and Batam, Indonesia.
Other customers in SEA and in Taiwan also snatched up volumes. Additionally, Indian buyers joined the fray. They chased tonnages, bidding up prices seemingly by the day.
Two weeks ago, there was a spike of $20-25/tonne for US brown grades and $15-30/tonne for European OCC.
At that time, the increases had brought US double-sorted OCC (DS OCC 12) levels to $145-170/tonne, US OCC 11 to $140-160/tonne and European OCC (95/5) to $135-145/tonne in SEA markets not requiring pre-shipment inspections at country of origins, like Thailand, Vietnam, and the Philippines. Levels were the same in Taiwan.
Indonesia and Malaysia, which require pre-shipment inspections, saw prices that were $5-15/tonne higher.
Intending to make full use of the tailwind, suppliers have continued to seek hikes over the past two weeks, offering US DS OCC at $175-180/tonne in Taiwan and $180-200/tonne in SEA and India.
Sellers have also cut volumes on offer, citing dropping collections and low stock pressure, as they are working on the backlog from the huge orders received during the past month.
Skeptical of that reasoning, buyers are pushing back.
Customers have growing concerns over delays, as shipping companies are cancelling vessels due to a slump in the ocean freight market, and major recovered paper (RCP) export ports, including Oakland in California and Liverpool in the UK, are facing strikes.
Clients report they have been hit by delays of both US and European RCP cargoes of up to 30 days and are worried that the problem is likely to deepen in the coming months.
Mills in Taiwan and Vietnam are under pressure to have RCP cargoes delivered before the Lunar New Year holiday in January.
Meanwhile, clients in Indonesia and Malaysia are also under duress to stock up on RCP in the run-up to the Ramadan month of April.
With no sign of relief in China’s economic downturn, Asian buyers believe the OCC spike is not sustainable.
Recycled pulp and packaging materials manufactured at China-affiliated mills in SEA are for the Chinese market, which is in a slump.
In the meantime, other manufacturers in the region, India and Taiwan are seeing sluggish export business of their products to China with no trace of recovery in sight. Many of them have cut production on machines that produce recycled pulp and finished products for export to China.
Sellers acknowledge that buyers have capitalized on unprecedentedly low prices last month to restock.
Both suppliers and buyers believe the current price surge may end soon; however, sellers reckon that present prices will remain at historic lows, fluctuating on a narrow range on the back of shrinking collections in the USA, Europe, and Japan.
Assessed prices for DS OCC 12 have climbed from $145-160/tonne a fortnight ago to $165-175/tonne in Taiwan, an increase of $15-20/tonne.
The premium US brown grade is fetching $170-190/tonne in non-pre-inspection countries in SEA, with China-based mills paying towards the top end.
Customers in India, Indonesia, and Malaysia have been paying $180-205/tonne for the grade.
A major China-affiliated plant in SEA has reportedly raised its counteroffer for the grade from $180/tonne to $185/tonne against the $200/tonne offer from sellers this week. Talks are still underway.
Prices for benchmark US OCC 11 have been assessed at $160-180/tonne in Taiwan and in non-pre-inspection SEA, up $20/tonne.
European OCC 95/5 has seen rises of $15-20/tonne, clocking in at $150-165/tonne.
Japanese OCC has crept up $5-10/tonne to $165-175/tonne, with most tonnage sold in Taiwan and Vietnam. Availability is restricted.
This article was taken from PPI Asia, the industry’s most trusted pulp and paper market news and prices for Asia. 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 from Asia. Speak to our team to find out more and subscribe to our newsletters.