Following the paper trail

Simon Weston, Director of Raw Materials at the Confederation of Paper Industries, provides an update to the state of the recycled paper market.

Much has happened since the start of 2015 when Gemma Stapeley wrote the last review of recovered paper markets for Resource magazine. Last year was an annus horribilis for paper manufacturing in the UK. Whilst the industry has invested heavily in new machinery over the past decade, improving energy efficiency and reducing its environmental footprint, 13 paper machines were closed in 2015 with the loss of close to 900 kilotonnes (Kt) of capacity, including Gemma’s own Aylesford Newsprint.

Demand for paper products is closely linked to social trends, and as society changes so does the paper industry. Since 2000, there
has been a 40 per cent reduction in demand for newsprint and a 30 per cent decrease in demand for printing and writing papers, reflecting the increasing popularity of digital media. On the other hand, demand for hygiene products such as tissues has risen by nearly 15 per cent. Demand for packaging is most closely linked to economic growth, and over recent years demand for corrugated papers has grown steadily, although the average weight of corrugated board used in packaging has fallen by nearly 15 per cent over the same period.

Recent CPI data indicates that in 2015 the total volume of recovered fibre collected was similar to 2014,
at just below eight million tonnes (7,976Kt). Domestic mill consumption fell to 3.36 million tonnes, down nearly 400Kt, and the excess was absorbed by export markets, which grew to 4.9 million tonnes. The collection of corrugated and kraft grew 10 per cent, whilst mixed and mechanical papers fell by 12 per cent. From a small base, the collection of high grades rose 10 per cent.

Following the paper trail

This year has started without much cheer, underpinned by steady demand from both UK and exporting mills but with little optimism for the short-term future. The UK is now very dependent upon export markets and is therefore vulnerable to issues such as fluctuating demand in the world economy and quality. For the first time last year, Chinese mills became bigger users of British recovered paper than the UK itself. Their demand and quality requirements post-‘Green Fence’ will shape the recycling agenda in the UK for the foreseeable future.

The price of most grades of recovered fibre has remained broadly stable since the first quarter of 2015, hovering close to the cost
of recovery. As a consequence, there has been growing demand that the financial risks of collection be more evenly shared by the
supply chain. This has generated friction between stakeholders, with some service providers seeking compensation for poor input quality at MRFs, local authorities considering future service arrangements and reprocessors and exporters abandoning poor-quality material. Wet weather at the start of the year and associated moisture claims have not eased these tensions.

Poor quality continues to be an abiding issue for the industry. Despite 65 per cent of post-domestic collection now being co-mingled, the MRF Code of Practice appears moribund with neither the level of participation nor the average contamination in output material reflecting a high-quality performance. The recently revised EC Circular Economy Package seems to point more firmly than ever towards proper separate collection, and CPI applauds the efforts of the Resource Minister and WRAP to rationalise collection systems in England to support a clear public understanding of recycling.

Finding outlets for recovered material will be a key concern for producers in coming years. The UK market is structurally oversupplied, and this will not change any time soon. Selling recovered fibre for a good price into a buyers’ market will be a competitive process and will depend upon material being of an appropriate quality wherever in the world it is destined to go.