Hannah Zhao, Senior Economist, Recovered Paper
Aug. 5, 2013
The global recovered paper markets were generally unexciting in the first half of 2013. Although US domestic demand for the bulk grades was quite strong as a result of the relatively healthy US economy and paper packaging markets, China's Green Fence Operation and that country's weaker-than-expected fundamental paper and board demand have slowed Chinese recovered paper demand, including imports, and kept the global recovered paper market sluggish.
In the US market, the average price of OCC dropped to $113/ton in the first half of this year, compared to $132/ton in the first half of 2012 and $160/ton in the first half of 2011. The price of ONP #8 plunged as well, to $82/ton in the first half of 2013, compared to $98/ton in the first half of 2012 and $136/ton in the first half of 2011. Similarly, the average price of OCC imported from the United States fell to $215/tonne in the Chinese market in the first half of 2013, compared with $231/tonne in the first half of 2012 and $269/tonne in the first half of 2011.
China's Green Fence Operation is believed to be one of the major factors dragging the global recovered paper market down. Since it was officially announced in February, China's Green Fence Operation has gained a lot of attention. So how has this operation impacted the global market so far? According to Chinese Custom data, Chinese recovered paper imports declined by only 1% year-over-year
in the first half of 2013. Therefore, the effect of the Green Fence Operation seemed to be limited. However, if we dig a bit deeper into the data, we see that most, if not all, of this drop was the result of declining imports from Western Europe. Among the top 15 recovered paper exporters to China, seven out of eight Western European countries and regions saw significant declines in their exports to China over the first six months of 2013. Chinese total imports from these eight Western European trade partners dropped by more than 10% year-over-year. Meanwhile, Chinese imports from the United States, Canada Japan and Australia all expanded quite significantly, with those from Canada and Australia increasing by more than 20%. It's still too early to say at this point whether the changes in the Chinese recovered paper import flows will be temporary or will last. But this is definitely something that deserves people's attention.
Hannah Zhao, Senior Economist, Recovered Paper, is the coauthor of RISI's special studies, Outlook for Global Recovered Paper Markets and The China Recovered Paper Market: A Comprehensive Analysis and Outlook, as well as the World Recovered Paper Monitor, the World Pulp & Recovered Paper 5-Year Forecast and the World Pulp & Recovered Paper 15-Year Forecast. She works out of RISI's Charlottesville, VA, office and can be reached at Tel: +1.434.978.2927-14 or Email: email@example.com.
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