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Prices for old corrugated containers (OCC) imported from the US and Europe to Southeast Asia and Taiwan have continued to decline in the two weeks to Thursday September 26, despite suppliers’ anticipation of a price rebound.
A looming strike at ports of US East and Gulf coasts is planned to begin on October 1 and threatens to disrupt US recovered paper (RCP) supply to Asia. The potential shutdown of the US ports could put upward pressure on RCP export prices and drive customers in Southeast Asia and India to turn to European materials.
In addition, the appreciation of the euro and the British pound against the US dollar have inflated costs of the exports of European RCP.
Yet poor demand for packaging materials and recycled pulp in Asia have caused regional mills to slow down production or shut down machines altogether across Southeast Asia. This has resulted in increased availability of domestic collections in Indonesia, Thailand, Vietnam and Taiwan.
A vendor said that local OCC in those markets fell as a result, with the lowest level heard in Thailand at $140 per tonne. Regional mills opted to step up purchases of local brown grades, while slashing OCC imports and pressing down prices.
China-affiliated board mills and recycled plants in Southeast Asia, which usually pay more for the premium US grade, double-sorted OCC (DS OCC 12), cut imports of the grade substantially to cope with low demand for the materials from China.
Imports of recycled pulp in China, mostly from Southeast Asia, plummeted by 37%, or 171,231 tonnes to 288,344 tonnes in August from the recent high of 459,575 tonnes in April, according to China customs data.
Meanwhile, suppliers pointed out that packaging producers in the US and Europe have been taking downtime due to softer demand and OCC prices in those two regions have fallen.
A supplier said that sliding sourcing costs in the US and Europe enabled sellers to cut OCC export prices to accommodate Asian customers’ push for price drops, despite some sellers holding back on offers when prices fell below their desired levels.
Another factor at play is decreases of ocean freight costs for RCP cargoes shipped from the two regions to Southeast Asia and India.
A European supplier indicated that Indian buyers increased European OCC and mixed paper tonnages modestly this month following a shipping cost reduction for RCP cargoes, from $1,200-1,500 per 40-foot container to $700-800 per 40-foot container, compared with an average of $300 per 40-foot container from western Europe to Southeast Asia.
As of Thursday September 26, US DS OCC fetched $195-200 per tonne in Vietnam, Thailand, Malaysia and Taiwan, and $10 per tonne more in Indonesia due to required transshipments via Malaysia or Singapore and the country’s implementation of pre-shipment inspections for inbound RCP cargoes at the country of origins.
That represented a decrease of $10 per tonne for the grade from a fortnight ago.
China-based board mills and recycled plants in Vietnam and Malaysia forked out $208-210 per tonne for the premium US OCC grade, compared with $218-225 per tonne assessed two weeks earlier.
Benchmark US OCC slipped accordingly, down $10 per tonne to $190-195 per tonne.
Prices for premium European brown grade, OCC 98/2 dipped by $5 per tonne to $160-165 per tonne, dragging down benchmark European OCC 95/5 from $155-160 per tonne to $150-160 per tonne.
Japanese OCC stayed flat, though, at $180-190 per tonne.
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