Suppliers seek price rises for OCC imports into SEA and Taiwan despite low demand

Low levels of OCC collection in US and Europe have triggered suppliers to search for price increases but resistance from Asian buyers remain strong

Dwindling collections of old corrugated container (OCC) material and resulting price increases for the grade in the US and Europe have motivated suppliers to raise or maintain their offer prices for OCC imports from those two regions into Southeast Asia (SEA) and Taiwan.

US double-sorted OCC (DS OCC 12) has been offered at $170-185 per tonne in Asia, while European OCC 95/5 has been priced at $165-170 per tonne in sellers’ initial offers to customers.

Suppliers pointed to the implementation of OCC price rises in the European market, which include €25 ($27) per tonne in France and Spain, as well as €10 per tonne in Germany.

In the US, local OCC in most of the country has shown price increases of $5-10 per short ton, according to sister publication PPI Pulp & Paper Week.

A seller said that OCC generation would continue to be low in both the US and Europe, because consumers in those regions have cut back on spending, leading to fewer boxes being manufactured and consumed, while costs to recycle boxes and transport them are on the rise.

In Europe, rolling strikes across France have been exacerbating the low collection issue and causing shipping delays for recovered paper cargoes delivered from western Europe to SEA, the seller said.

Bloated inventories

Vendors’ plans for price rises have met strong resistance from customers in SEA and Taiwan, however.

Major buyers indicated that packaging producers in China, led by the country’s top manufacturer, Nine Dragons Paper (Holdings), have continued to take massive downtime and to drive down prices for finished products there, with no sign of recovery in sight.

The slump has slowed the exporting of recycled pulp and packaging materials from the region to China. Mills in Thailand, Vietnam and Indonesia reported that inventories of both OCC and finished products have stacked up at their warehouses.

A producer in Vietnam said that his company has halted the purchase of 10,000 tonnes of OCC imports in its previous plan for this week, because the poor demand for finished products in Vietnam and its export markets has left its mill with bloated stocks.

Large packaging mills in Thailand and Indonesia have told suppliers that they are taking downtime to tackle weak demand and can rely on local OCC supply to cover their production needs.

Recycled pulp plants in the region, operated or contracted by China-affiliated firms, have reported the worst performances they have ever had due to there being no demand from China.

Most of them in Thailand have stopped production. Four of the five recycled pulp mills in Batam, Indonesia, are out of action.
Buyer contact

“Price talks between sellers and buyers for OCC imports have hit a logjam,” a buyer source said. “Suppliers’ offers are countered by customers who seek cuts of more than $10 per tonne. Neither of them is willing to back down, and most negotiations have ended up fruitless.”

Stagnant OCC pricing

The price of US DS OCC 12 was reported at $165-180 per tonne in Taiwan and SEA except Indonesia. The price for benchmark US OCC 11 has therefore been assessed at $160-175 per tonne, dipping by $5 per tonne at the top end of the spread over the past two weeks.

European OCC 95/5 prices have stayed flat at $145-160 per tonne.

Japanese OCC prices are also steady, at $155-160 per tonne. Offers of material of this grade as low as $150 per tonne were heard in Vietnam, but no buyers could verify such a deal.

This was published in PPI Asia, the industry’s most trusted pulp and paper market news and prices for the Asian region. Want to access more price, news and market analysis like this? Speak to our team to find out more.

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