Rising energy costs, rising inflation, a slowing economy and new tariffs are headaches for both manufacturers and distributors.
Consistent with the US forecasts in recent reports, the US economy is in turmoil due to high inflation, rising fuel prices, declining consumer confidence and other economic issues. This has prompted expectations of a slowdown in retail sales and a domino effect for manufacturers.
Declining orders from manufacturers will slow corrugated sales, causing a slowdown in paper mills and putting downward pressure on waste paper prices.
It’s happening now. Demand for bulk grades (mainly his OCC and mixed papers) and therefore prices plummeted. “Disintegration” is perhaps too strong a word, but “softening” does not justify change.
Factories are sitting in the driver’s seat with stocks of salvaged textiles, demanding prices that are 25-50% lower than they were paying months ago. This is a big blow for sellers who have to move large amounts of fiber. But it hardly matters what price the seller is getting because he has no room to store the huge backups of OCC and mixed paper that exist in MRF’s inventory.
Compounding the situation is a similar shortage of demand in international export markets. Markets in India, Mexico and Southeast Asia have slowed significantly, which does not bode well for the 35-40% of US reclaimed textile collections exported. For many sellers, this is the double whammy of weak domestic and export markets.
On the bright side, luxury goods such as sorted office paper and pulp alternatives are showing good demand, at least for now, and prices are still high and rising in some markets. But high school doesn’t “move the needle” by itself.
In Europe, many factors are mixed. In particular, significant increases in energy costs and inflation. Processors are desperate to lower raw material prices to offset rising costs, and have had some success in reducing brown packaging grades by about a third from their peak.
But this is not the catastrophe many collectors predicted. Global demand for regenerated fibers is still growing, but there is not enough material to satisfy all global markets and the market may have bottomed out.
In the UK we are seeing some small OCC orders at roughly the same price levels we saw in August. It’s a strange market for mixed paper, with prices appearing to be about £35-40 per tonne lower than OCC, but very few orders.
Elsewhere, news and PAM, SOW, and multigrade all softened slightly and seem to have peaked in the middle grade, but expect continued competition and solid pricing .
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