Export Prices Weaken with Strong Dollar

Exporters are finding it increasingly difficult to not only cope with the volatile market conditions. They are also suffering with the weakening US dollar and ocean freight uncertainty and add on charges from shipping lines from Australasia. The opposite to the northern hemisphere where rates are weakening.

The future is becoming increasingly difficult to forecast. Any buyer having to quote beyond two months is understandable when market conditions and pricing plus currencies are so volatile. No market segment is strong. China now controls 78% of Australia's exports which are reaching a new annual record of 1.5 million tonnes. The balance going to Indonesia, India and Asia, i.e. 300,000 tonnes is weak in comparison and may yet reduce further as Asia recovers and utilises more of its own materials.

Over the past five years we have experienced the decline of old newspapers quality coming out of MRFs. The definitions for News #7 and #6 have all but disappeared. We are finding that #8 News is considered just a Soft Mixed and pricing trends are heading down accordingly. The pricing spread now between #9 News and #8 News is USD40 per tonne, #8, and Mixed USD10, with demand outstripping supply for good deinking quality. For some time, a number of newsprint mills have been pricing good MRF news as #9. What we now are finding is just two fibre grades coming out of MRFs. This being at best 70/30 News and 80/20 OCC, subject to the prohibitive content. Most automated sorting cannot achieve below three percent, which does not meet new environmental regulations into most Asian and Indian countries.

The introduction of Container Deposit Legislation (CDL) for beverage packaging would overcome many quality issues, improve yield and reduce waste to landfills. The continuation of a flawed recovery and MRF processing system will only see fewer buyers and stricter environmental regulations, thus eventually becoming unaffordable to process commingled materials for recycling. MRFs will always have a role, but more for mixed and industrial materials, which would have otherwise gone direct to landfill, but not for materials where it is cheaper and better to separate at the source. The Northern Territory is likely to pass CDL legislation this November and Western Australia in 2011 which then only leaves the Australian East Coast to accept the inevitable.