Prices are Bottoming
28-10-2008
Unfortunately overseas buying will only recommence once mills feel that prices cannot reduce any further.  This is now nearing the bottom, when offered prices for OCC are below USD100 CIF, which in some locations is below cost, and landfill becomes the cheaper alternative.
 

The timing for overseas mills to replenish minimum stock levels is not yet certain. The mills are either still overstocked with finished product and raw materials, and/or have insufficient bank credit to guarantee payment.

Newsprint is not as bad as packaging, but with massive distress tonnage still in transit following so called irrevocable contract cancellations, these stocks will take a couple of months longer to be removed from wharves and to be utilised.
 

The extent of the market downturn from within China, and its packaging mills' export reliance will determine when the global recovered paper market begins to recover. China has sustained the global resource recovered industry since 2000, and without China, Australia alone would have up to 600,000 tonnes of fibre diverted to landfill. The other export question which has not yet surfaced must be, is the 638,000 tonnes of finished packaging boards still being exported under threat and will this fibre join other Chinese and Asian cancelled export tonnage?