Prices of recycled packaging materials are soaring, driven by booming demand, currency fluctuations and tight supplies.
Products made from recycled materials are becoming more popular, with the percentage of material being recycled growing every year in the EU. Data from the Confederation of European Paper Industries shows that the European paper recycling rate reached more than 70% last year. One of the key products made from it is testliner.
In the EU, recycled and waste paper prices are on an upward trend, driven by good demand, scarcity of supply and high feedstock cost. Corrugated waste paper prices have risen from about £75/tonne in March to £93/tonne in September, a rise of 24%. Testliner prices have risen by 5% over the same period to £350/tonne.
The prices are increasing primarily due to currency changes. As the euro weakened against the US dollar, EU paper prices became relatively cheaper, prompting Asian buyers to buy more EU paper. The increased demand for EU exports, which in turn lowered supplies and led to higher prices. This situation was intensified by production issues over the summer. The cost of waste paper has also rose significantly this year.
The strong pound also meant UK prices were higher compared with other European countries in euro terms, making export from the UK less profitable for UK sellers.
Consequently, although testliner prices remain relatively stable year on year in sterling terms, in euros they have increased by 10%.
In 2016, there are new recycling capacities set to be opened in Europe. However, this additional capacity is not likely to affect the market quickly and the additional supplies might be seen earlier than 2017.
Monika Sosnowska is a market analyst at Mintec