First, let’s take a look at the current waste paper market in Europe. In the UK, scrap paper prices continued to surge in May. Mixed recycled paper and board and old corrugated box (OCC) prices are mainly driven by domestic paper producers in the UK and continental Europe. Buyers from Turkey are also buying more paper for recycling on the UK market.
However, some businesses report that there are signs that prices for common grades may have peaked in mid-May and are now stabilizing. Prices have exceeded the "pain threshold" for some buyers, especially those from Asia. Starting in April, smaller Asian paper producers began to withdraw from the UK waste paper market. Large international companies are still active in the market, but they only buy in quantities that are absolutely necessary. Compared with April, the price of mid- to high-grade waste paper also increased further in May.
In Germany, waste paper prices also maintained an upward trend in May. Prices for regular grades have increased significantly in March and April. It is thought that average prices for mixed paper, supermarket paper and board and sorted graphic papers for deinking may rise further in May, averaging €20 per ton. Industry insiders attribute the new price increase to stronger demand from the paper industry, continued weakness in waste paper production and logistics and collection-related challenges due to several German public holidays in May falling on working days.
Paper mill capacity utilization and demand for recycled paper appear to be stronger than last year. Data from the German Paper Industry Association also confirm this assessment. Its statistics show that German paper mills consumed 4.1 million tons of waste paper in the first quarter of 2024, which was an increase of 7% compared with the same period last year.
In Mexico, North America, although export prices of containerboard from the United States to Mexico have increased by $30 per ton this year, the domestic market for this product has yet to show any response in terms of demand and prices. The overall sentiment is that the pace of domestic purchasing has been sluggish since late 2023, with no new factors emerging this year to sustain a solid recovery. Some sources mentioned that although the investment outlook in the country is positive due to the nearshoring trend, not much is actually happening.
Another key factor hampering investment is the presidential election to be held on June 2. Like the rest of the world, Mexico is polarized between two candidates with very different political views. "Everyone is waiting to see what happens before investing. If the candidate supported by the current president wins, we already know the rules of the game. If it is the opposition, we may see some changes. The economy is on standby," one source said.
A second source said there was no special reason for Mexico not to show gross domestic product growth this year due to its proximity to the United States and a pickup in industrial and agricultural demand. “It’s true that the year has started off slow, but we should start to notice improvements in the second half of the year as containerboard stocks in the chain are now at balanced levels.”
The third source added that the rising cost of old corrugated boxes (OCC) is also putting pressure on the market, but there is currently no space to discuss price increases with customers. “In fact, I see that factories are still shut down while other local producers invest in modernizing their paper machines and producing more products, so supply is greater than demand. On the other hand, imported OCC’s energy, labor and Costs are higher; further price cuts are unlikely to be considered, but price increases cannot be negotiated either.”
The investigation found that the transaction price of domestic imitation ox cardboard in Mexico was once again US$729-754 per ton, a year-on-year decrease of 7.5%, while the transaction price of corrugated paper was 11,100-11,500 pesos per ton, a decrease of 9.6% from the same period last year. Kraft paperboard exports from the United States also remained at US$620-650 per ton, down 5.9% compared with May 2023.
In terms of quantity, imports of containerboard paper from the United States increased by 24.7% year-on-year to 244,192 tons from January to April. The country is the largest market for U.S. containerboard exports and has benefited from a stronger peso. “Another reason we note that domestic prices in Mexico have remained unchanged so far is that imports from the U.S. continue to materialize at competitive costs as our currency is strong, making imports attractive,” No. 4 sources said.
In terms of new projects, following significant investment in recycled containerboard production in North America over the past few years, another major plant investment is breaking ground in Europe. Mondi, a global paper and packaging manufacturer headquartered in Weybridge, UK, has officially commenced a previously announced revamp project at its Duino, Italy, plant, with plans to convert the site's existing paper machines from producing low-weight coated paper. Changed to the production of recycled containerboard.
Andrew King, CEO of Mengdi Group, said: "We are excited about the progress of the Duino investment project and the opportunities this provides for our growing packaging business. This containerboard machine will strengthen our backward integration capabilities, Provides us with supply security to better serve our customers.”
Mondi acquired the factory from the Burgo Group in a deal of 40 million euros in January 2023, with an investment of 200 million euros in the project. The machine is expected to start up in 2025, and once fully operational, the company said it will be able to produce 420,000 tons of recycled containerboard for sustainable packaging product production. It will also become Mengdi's widest recycled paper machine, with a length of 8.5 meters.
"Our investment in Duino allows us to meet the growing demand for sustainable solutions in local markets in Central Europe, the Mediterranean region and Italy," said Markus Gartner, CEO of MondiCorrugated Packaging. Project Team Preparations are currently underway for upcoming construction works, including a new recycled fiber factory, wastewater treatment plant and associated infrastructure and warehousing.”
Mengdi also pointed out that where possible, factories will source materials locally to contribute to the local economy, reduce greenhouse gas emissions by shortening transportation distances, and enhance the resilience of the supply chain.
When the company originally announced the purchase of the plant in August 2022, it noted that the Duino site was also close to "two important export ports" and was ideally located to supply the group's corrugated solutions mills in Central Europe and Turkey. Serve. "We are excited about the opportunity to invest in the growth of our packaging business, build our integrated platform and expand our geographic coverage," King said at the time.
The Duino investment is part of the company's €1.2 billion approved investment in organic growth projects aimed at meeting the demand for sustainable packaging as well as enhancing its product offering and reducing its environmental impact.