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Third Quarter 2011
The global economy is going through challenging times. The Eurozone debt crisis, rising unemployment, weakening consumer spending, rising interest rates, fears of recession or a “double-dip” are all individually or jointly affecting economies around the world in one form or another.
Advanced economies are slowing down sharply whilst those of the emerging nations are facing increased risks of inflation due to rising interest rates and/or credit tightening. Financial institutions, once again, have to endure increased stress caused by non-compliance.
Global recovery is continually getting difficult, with some fearing that if we were to have financial/economic crisis, then this perhaps could develop into a worse-case scenario than we saw in 2008/09.
The above factors are affecting both demand for Recovered Fibre, as well as the order books at the Paper Mills. Reduced collections & weakening orders, have greatly affected prices during the 3rd quarter.
The steady demand that we saw in the second quarter continued into July, but by mid-August we noticed a downturn in demand leading to a price drop, which by mid-September translated into sharply weaker prices all round.
OCC prices for the quarter began at levels of USD240/245 and rose towards USD250/255 in early August before retracting later that month to USD250, with a further fall to USD240+ by the end of the quarter.
Prices for Mixed Paper began the quarter at levels of USD235+ and rose towards USD240+ in August but in September prices weakened to levels of only USD230+, by the end of the quarter
This decline in price was expected to continue into quarter 4.
New paper prices also started to weaken noticeably in the Asian markets, with above average Inventories of both Recovered Fibre & New Paper.
The strengthening US Dollar against various Asian currencies also had a negative effect, increasing import prices for the Mills.
Demand from all the Asian countries was noticeably weaker by the end of the quarter. (China, India, Indonesia, Thailand, Vietnam, Taiwan & Korea).
The final quarter of a very turbulent 2011 is going to be difficult, both in terms of demand as well as supply, with prices expected to weaken sharply.
