The European market for recovered paper (RCP) is facing a 25% price drop, which creates “a new reality” for the paper industry, RCP expert at Geminor says.
According to Geminor, some of the world’s largest packaging producers located throughout Europe are reporting a decrease in their recovered paper demand. It says this is because the market for packaging goods is “under pressure and starting to tumble”.
For August, each of the German packaging mills announced an RCP reduction of 20,000 to 50,000 tonnes, or close to 15% down from normal offtake. In addition, several paper mills have brought forward or extended their necessary inspection and shutdown periods, Geminor says.
The cost of producing paper products, which mostly depends on gas and electricity prices, is reaching a level where the profits are fading away.
The European economy is facing an extraordinary situation with increased inflation, the war in Ukraine, and prolonged shipping capacity issues. Geminor says this naturally affects the paper industry, and two factors in particular are creating these sudden challenges: a dramatic fall in general consumption and a tripling of energy prices.
Geminor says that a high percentage of the collected recovered paper is reused in the packaging industry, which makes it sensitive to economic fluctuations. The decrease in the production of precursor products for the automotive and aerospace industries alone is resulting in a reduction in packaging production of as much as 17%, the company says.
Senior Account & Development Manager at Geminor, Yasser Ismail, said: “In addition, the cost of producing paper products, which mostly depends on gas and electricity prices, is reaching a level where the profits are fading away.
“Falling or rising recovered paper prices are not necessarily a problem, but the market players in all parts of the value chain need to adapt to a new reality.
“This may be a new breaking point in this industry. Most likely we will see more frequent fluctuations in the RCP markets in the future, with varying volumes, production capacity, demand, and prices.”
“Paper recycling is an important part of a sustainable Europe, but to develop a well-functioning circular economy, we need a more stable and predictable market.
“The European average recycling rate has fallen slightly, and to get it back on track we must ensure that recovered paper continues to be an attractive commodity.”