25 May 2017

In April there was a sudden drop in the values of mixed paper and cardboard commodities. In the space of a couple of days their value fell by up to 50%.

A combination of factors affected the drop including an increase in shipping costs that added $500 onto each container shipped. The cyclical demand for card and paper is also lower at that time of year, building up again in the summer. These both coincided with the implementation of China’s ‘National Sword’ Program, which is looking to reduce the import of illegal waste and contaminated products into the country, particularly addressing deliberate smuggling. Due to the National Sword program there was an increased level of inspections at ports resulting in perfectly legal shipments being delayed.   

All of these factors combined to result in a fall in demand and reduction in rates payable in the UK, Europe and China for cardboard and mixed paper produced in the UK and Ireland.

Mark Penny, Commercial Manager at J&B Recycling, said: “April was a challenging month for the UK recycling market in the face of a ‘perfect storm’. However, as J&B Recycling’s materials already pass the stringent specifications needed for Chinese imports and have never had issues in the past we were able to continue to supply the Chinese market during the period, whereas some other suppliers could not. It has been reported that over 160 containers intended for paper recycling were returned to Ireland as they did not meet the specification required”

“Our paper and cardboard outputs are produced to a high standard and are also inspected twice. Every bale and load is checked by our QA inspectors and the customers own verifiers attend our production site 2-3 times per week to ensure that quality and moisture levels of the materials are acceptable. Despite this we were still affected by the falling export prices for cardboard and paper.

“On the plus side all commodities are independent from each other. The other materials that we deal with such as glass and metal have been stable, although over the same period there was an amount of pressure on the plastics market.”

“Brexit made things better for the commodities market at first. As Sterling dropped it raised the value of our exports, but since then other factors have taken over. Despite the slump in values as a company it did not affect our trading. This was due to the strength of our operations and security of outlets, including the relationships we have with our customers for materials. In May/June we expect to see the prices starting to come back stronger as bottlenecks ease and demand goes up. Hopefully the shipping companies will re-evaluate the increases applied to shipping costs in the future too”

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