Recycled brown pulp up to $475 per tonne to China

Rising demand drives price hike as low-stock mills seek volume

Recycled brown pulp (RBP) pricing and demand picked up some in February after China’s Lunar New Year holiday, increasing $10 per tonne to $475 per tonne net CIF, according to Fastmarkets’ PPI Pulp & Paper Week Feb. 24 pricing survey and market report. This increase to China occurred after a two-month, $35 per tonne combined decline in December and January. Mills that consume RBP have “very low inventories,” contacts said.

February’s price hike puts RBP’s pricing near year-ago levels, when RBP increased with demand to $480 per tonne net CIF delivered to China in February 2021. China’s buying this time last year was heightened due to its global ban on recovered fiber that took effect at the start of 2021, and its attention increasingly turned to RBP last year.

After two months of soft demand at yearend 2021, as well as at the start of 2022 that dropped RBP by $20 per tonne and $15 per tonne in December and January, respectively, to $465 per tonne in January, buying increased in February.

Restocking after China’s Lunar New Year holiday has brought back some buyers, contacts said this week. Mills in China have low recovered paper inventories, according to contacts. RBP-consuming mills have “picked up running now,” a seller said.

“Everyone is looking for (RBP) right now,” the seller off the US West Coast said. Contacts said Lee & Man’s RBP mill in Malaysia sought extra tonnes this month.

Still, some major buyers told P&PW that demand is “flat” in February.

“(We’re) still buying, but in a slow mode,” a major buyer said Feb. 22.

Sellers saw this buying backed up with higher pricing.

“Demand of (recovered paper) and RBP has picked up after Lunar New Year,” a major seller said. “The RBP price is going up in line with (the recovered paper) price.”

The seller quoted $485 per tonne net CIF to China’s main ports for RBP made with US old corrugated containers (OCC) in February.

Packed ports and rising freight rates continue to strain transportation

Transportation struggles, especially packed ports, continue to stall shipments. Increased freight rates, too, remain. Sellers off the US West Coast said container rates increased up to $200/container in February.

“We cannot ship,” a major US seller said of Southeast Asian markets. “The port is so congested. The vessel keeps skipping (containers), or we only have one or two days to deliver a container.”

In the February 2022, Fastmarkets’ VP of Asian Paper Beth Lis said a “high level of uncertainty remains about how quickly shipping issues will unwind.” A resolution is expected in the second half of this year, or even not until yearend, Lis said.

“In the meantime, supply pressures should remain significant, both in terms of finding containers to ship product and finding available capacity to supply imports to Asia,” Lis said in the monthly report. “Also, with Russia currently being a huge supplier into the region, the level of swing between lightweight containerboard (vs) newsprint production there will be a factor.”

Russia’s invasion of Ukraine this week would surely affect material movement.

Lis wrote that global trade absolutely affects economies.

“The role of exports is so big for China that disruptions, such as trade wars and global slowdowns, are often felt by the economy,” Lis said. “At the same time, exports to China are critical for many global industries, which improves the country’s negotiating position. This mutual dependence among major economies makes any politically-induced disruptions complicated to handle and potentially more disruptive.”

While shipping issues are not expected to improve any time soon, they also are not anticipated to get “materially worse,” she said.

“If they do,” Lis said of transportation troubles, “it could lead to fewer or higher-priced imports, which could give local producers a little more leeway to raise their prices. In addition, any COVID-19 restrictions in China that affect recovered paper collections could result in greater cost pressures on Chinese suppliers than currently expected, which could lead to higher prices.”

In December, Chinese imports of containerboard fell by 150,000 tonnes to 513,000 tonnes, according to Fastmarkets’ Asian Pulp and Paper Monitor. “The retreat likely reflected the weakening in local demand, and was seen for both linerboard and corrugating medium,” Lis said.

For 2021, Chinese corrugating medium imports totaled 2.9 million tonnes vs 3.9 million tonnes in 2020, a decline of 25.6%. Lower Asian shipments, especially from Indonesia and Vietnam, accounted for much of the drop; declines also were seen from the US, Middle East, and Western Europe, while Russia did expand its shipments of lightweight unbleached kraft linerboard to China for the year.

Exports increase year-over-year

From the USA, RBP exports were up in 2021. Recent data from the American Forest & Paper Association (AF&PA) show that recycled pulp exports in 2021, at 462,000 tons, increased 27.5% vs 2020’s 362,000 tons, a 100,000 per ton, or 27.6% rise from the year prior. (AF&PA’s data does not separate brown vs white pulp in its statistics and reports a combined number for both.)

Fastmarkets has been reporting that this demand is expected to continue to trickle up, and RBP exports from the USA are to move up with demand.

Contacts see this demand, too. As mills in Southeast Asia and India ramp up RBP production, buyers and sellers alike expect more RBP demand this year than ever before.

“They will be buying more from the second quarter on,” a seller said of RBP mills in Malaysia. “They’ll be pumping up very heavily (on buying RBP) just because they’ll need it.”

Pratt exec speaks out on plastics in landfills

Pratt Industries and Visy Exec Chmn Anthony Pratt spoke out in favor of reducing material going to landfills as well as his stance against plastic packaging at an American Chamber of Commerce luncheon in Melbourne, Australia, on Feb. 24. “People are demanding more recycled content in manufacturing and packaging, so landfill reduction will be a huge issue and by stopping paper [from] going to landfill and producing 100% recycled packaging, and even turning our nonrecyclable rejects into clean energy, our manufacturing business model avoids more than 5 million tonnes of methane emissions each year,”

Pratt said. “The second big trend in the future, I think (that) will continue, is the end of plastic. I believe that single-use plastics will go the way of the Dodo bird. Not because plastic isn’t a useful material, but because the world is now led by passionate Millennials and Gen Zs, and this is awakening a new big shift in packaging to reduce waste … and the use of more sustainable materials like plant-based fibers like paper, so in the future there will be no single-use plastics in packaging, it will be replaced by repulpable, paper-based products, or glass, aluminium cans or recycled plastic.”

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