SINGAPORE, June 3, 2022 (PPI Asia) - Prices talks for recovered paper (RCP) imports in Asia have hit a stalemate, with sellers and buyers having opposite views on the market.

“It is a tale of two worlds” said a major customer in Indonesia.

“Almost all RCP suppliers have been trying hard to make buyers believe RCP demand will pick up in Asia, following China’s easing of lockdowns,” the buyer contact pointed out.

“Vendors also pointed to decreasing collections in the USA and Europe, as well as a potential strike by port workers in the US West Coast, as justifications for the high prices they offered.

“The gap between their offers and what buyers are countering with is as wide as $20-30/tonne currently.”

Sources reported that demand for packaging materials and recycled pulp manufactured in Southeast Asia (SEA), Taiwan, and India for export to China is not improving with the apparent loosening of COVID-19 restrictions; it has got weaker, and prices are in decline.

“Prices for testliner exports to China, even the grade made from US old corrugated containers (OCC), have fallen below $500/tonne, and recycled fluting went below $470/tonne,” said a SEA producer.

“Sellers offered US double-sorted OCC (DS OCC 12) at $300-310/tonne. We will make losses if we buy it whether we sell the finished products in the domestic market or abroad.”

The downturn in China has cast a long shadow over other Asian countries, depressing RCP demand across the region, including in Taiwan, SEA, and India.

Suppliers had used soaring RCP prices in India as a benchmark for SEA over the past several months.

But now prices in India have plunged, with buyers there holding back on purchasing and canceling orders they placed previously, even while the ordered cargoes are in mid-shipment.

Following a drop of $20/tonne a fortnight ago, US DS OCC 12 has dipped another $10/tonne over the past two weeks, clocking in at $300-310/tonne, and US Select OCC 11.5 is down $5/tonne at the low end of the spread to $280-290/tonne (No. 19, p.4).

“Most buyers in India are traders. They usually cancel orders when prices plummet. Experienced suppliers are aware of that pattern and would have calculated it into their plans,” indicated a source.

Prices hold, volumes drop: The impasse has led to buyers slashing tonnage, while suppliers cut offered volumes.

In Taiwan, US DS OCC 12 is fetching $265-270/tonne and US OCC $260-265, both up $10/tonne from a fortnight ago.

In SEA, US DS OCC 12 has closed at $290-300/tonne and US OCC 11 at $280-290/tonne.

As a result, the benchmark US OCC 11 levels have shifted from $250-300/tonne to $260-290/tonne in Taiwan and SEA.

European OCC 95/5 looks steady, at $260-280.

However, customers in Vietnam and Thailand, the grade’s main buyers, have been pushing back during negotiations.

They also cut tonnage significantly, citing downtime taken to cope with slumping exports of finished products to China.

Prices for the premium European grade in the deals closed in the two countries have fallen in the range of $260-265/tonne, and buyers are trying to press them below $260/tonne.

In Malaysia, big-volume clients have also cut volumes, and European OCC 95/5 is now below $270/tonne.

In Indonesia, mills mostly put a hold on purchasing when the prices sellers offered were deemed too high.

Prices for deals with reduced tonnage were at $280-285/tonne, just slightly higher than the $270-280/tonne paid by small-volume buyers in other SEA countries.

Japanese OCC levels have shifted from $255-285/tonne to $260-280/tonne, with Taiwanese customers paying toward the bottom end and buyers in Vietnam and Thailand toward the top end.

From Fastmaarkets RISI