Following Ramadan and the Chinese Golden holiday periods, Q4 is shaping up as more of the same which in itself is not too bad, but certainly not wealth creating with a volatile currency and expensive shipping from some Australian and New Zealand ports.
Europe has soaked up a major volume of export tonnage with the new 600,000 tonnes Prowell Papier machine in central Germany, which has reduced total European exports by 15% with Germany alone 90% down. The bottom line remains that with generation still negative from some developed countries, any surge in demand for bulk grades will see a price escalation of USD20+ overnight when China demands supply security. Likewise, any decline in demand will have the reverse affect and the swings are monthly.
Pulp substitutes are following the pulp price index, which is showing higher inventories and falling capacity utilisation. These prices have not yet levelled off after a ten percent fall in September down to USD600 for BHKP. Prime paper pricing is at last returning to profitable levels. Hopefully, any further erosion of pulp prices will not see these modest gains roll back.
Recovered coated papers remain in short supply for newsprint mills. This scenario is likely to continue with some segments of the printing and publishing industry still bouncing along the bottom with no positive sign yet of recovery. In some respects, the price differential between some recovered paper grades and pulp is contradictory and volatile which is becoming harder to forecast. Any uncertainty and Asian buyers will hold off purchasing until it is clearer.
The quality of recovered business papers is also a concern, as long as single stream collection prevails and manual sorting costs continue to escalate. Make it easy, get it cheap (hump and dump) is fine for packaging mills, but for those that demand fiber fit for purpose for tissue and fine papers, insist to get it right or be heavily claimed.