Recovered paper prices likely to remain buoyant during H1 2017

NEW DELHI (Scrap Monster): The US-based recycling consulting firm Moore & Associates has predicted that rally in recovered paper prices are likely to continue during the first half of 2017. Addressing delegates at the 2017 Paper Recycling Conference, Bill Moore stated that he was greatly surprised by the swift rise in prices for old corrugated containers (OCC) and other scrap paper grades during the months of November and December 2016. The rise in prices, managed to extend to January this year and the trend is likely to sustain during the initial half of the current year, Moore added.

Moore noted that there exists a direct correlation between OCC prices and global GDP, as is evident from detailed analysis over the past two decades. The price of mixed paper grade has risen in tandem with OCC prices. In fact, the gap in price difference between mixed paper grade and OCC has narrowed sharply during recent years. Earlier, mixed paper used to trade at around 65% of OCC’s price. However, analysis of price data for February this year indicates that the spread in value has dropped considerably, with mixed paper trading at nearly 76-79% of OCC prices. Incidentally, mixed paper is often used as a substitute for OCC, Moore added.

Moore noted that there exists a severe short supply of old newspapers (ONP) grade across the world. The newsprint has been on a decline for almost a decade now. Most nations are producing less newsprint each year, Moore noted. The production of other printing and writing (P&W) papers has also declined considerably over the years. The collection of sorted office paper (SOP) grade by recyclers has witnessed dramatic decline. Moore predicts that the shortfall of SOP is expected to get worse over the forthcoming years.

Meantime, participants at the 2017 Paper Recycling Conference India highlighted India’s prospects as the fastest growing market for paper consumption. The production of paper in India has also registered notable growth in recent years. However, the country needs to work on improving its scrap paper collection rates. As per estimates only around one-fourth of scrap paper is recovered in the country for recycling. The country should consider China as a role model for expanding its scrap paper collection rates. For instance, China’s scrap paper collection has increased five-folds from 10 million tonnes in 2005 to nearly 50 million tonnes in 2015.

India’s rising GDP and growing middle-class has resulted in increased consumption of finished paper by the country. The country’s total consumption of finished paper surged higher significantly by nearly 38% from 11.1 million tonnes in 2015 to 15.3 million tonnes in 2016. Further, the consumption is predicted to jump higher by another 50% to 23 million tonnes by 2025. Also, the country’s total consumption of recovered paper is likely to increase to 16 million tonnes by 2025. The recovered paper share of total mill feedstock, which stood at 20% in 1990, is set to touch 65% by 2025. The Conference also foresees key investments in modern baling and warehousing facilities in the country’s recovered fibre sector.

The 2017 Paper Recycling Conference India was 6 and 7 February at The Leela Hotel in Mumbai.