Demand for Recovered Fibre continued strengthening at the beginning of the quarter with both strong export orders and an equally strong European domestic demand.

Export prices have been continually increasing since January due to rising Freight charges, a weakening Euro, allied to a strengthening USA Dollar, and a growing cost of Fibre.

At the start of April we saw prices for Recovered Fibre continue to stabilise at the March levels, with OCC trading at USD$230+ and Mixed Waste at USD$185+.

With further Freight rate increases announced during April, prices for Recovered Fibre increased to  levels of USD$235 + for OCC and USD$190+ for Mixed Waste by the end of April.

Following the week-long Holiday in China at the start of May, the Asian Mills were finding it difficult to continue working at the unsustainable price levels that had been reached.  This forced the Asian mills to reduce buying.

During May & June, we were once again facing Economic uncertainty with the now-familiar economists’ forecasts, talking of double dip recession, over heating of the Asian economies and the European economic and Sovereign debt crises faced by some of the EU members, namely Greece, Spain, Portugal, Italy & Ireland.

All this had a spiralling effect both on prices and Fibre demand during May & June.

During this volatile period, prices of OCC crashed from levels USD235+ to USD165+, with Mixed Waste trading at only USD140+ (against USD190+ previously).

With reduced export volumes, for the first time in 18 months, we saw signs of decreasing Freight rates.

No Freight increases were applied in May, but instead we have seen a reduction in rates in the region of USD150 per FEU.

We see this decreasing Freight rate to continue over the summer period due to a reduction in exports, which has resulted from low availability of material due to poor collection volumes and reduction in export orders.

The last fortnight of June saw a slight revival of the export market, greatly helped by reduced Freight rates.

However, the low collection volumes have tended to increase the price of the Fibre, which resulted in OCC export prices reach levels of USD$205+ and Mixed Waste USD$175+, by the end of June.

Other grades, News & Pams, Magazines Sorted Office Paper & Coated Book Stock continued to hold their demand with rising prices due to low arisings.

Demand in other markets, Indonesia, India Taiwan, Korea, Vietnam & Thailand also continued to grow during the quarter, albeit at slightly reduced levels by the quarter’s end.

The 3rd quarter will be a challenging and a difficult period compounded by continued poor collection levels, the holiday period, and the ongoing effects of the recession dampening consumption of packaged goods.

The swing in business trends following the Global emergence from recession became very noticeable at the start of 2010.

Strong demand from Asia, especially China, at the start of the year was accompanied by equally strong European domestic demand

The container Shipping Lines which were projected to post losses of around USD20Billion for 2009, continued their drive not only to increase basic freight rates, but also started imposing new surcharges examples of these being, increased BAF (Bunker Adjustment Factor), and CAF (Currency Adjustment Factor),  STF (Suez Canal Surcharge), ERC (Emergence Risk Surcharge), EBS (Emergence Bunker surcharge), Piracy Surcharge, THC, (Terminal Handling charge), and other surcharges that the Lines considered appropriate to impose. The total Freight cost payable was therefore the freight charge plus all the other surcharges added on, making Export pricing more challenging than ever. In the 1^st quarter, exporters had to absorb total freight increases of between USD400-500, with further increase USD150-200 already announced for April

The tough winter, the worst for 30 years, contributed to greatly reduced collections of Fibre, against an increasing global demand, resulting in a strong increase in Fibre prices in Q1.

During the 1^st quarter Paper mills had to cope with rising fibre prices which in turn reflected in increased Finished Paper prices.

Exports from Europe continued to be affected by the weakness of the Euro  which depreciated by more than 5 % against the US Dollar during the last 3 months, with Sterling depreciating by over  7% against the US Currency in the same period.

The trend in prices for OCC during the current quarter showed a strong upward trend, with January prices of USD195+ moving up to USD235+ pre Chinese New Year. Following this Holiday period, the Mills were reluctant to procure at pre New Year prices. We started experiencing price adjustments in March down to USD230+ which by the end of the month were in the order of USD215+.

Mixed Paper prices began the year at USD175+ and moved up to USD195+ by the beginning of the Chinese New Year celebrations. Once again, in March Mill buyers were seeking lower prices and we saw a dip in the price to USD185+.

Demand for other grades, News & Pams, Magazines Sorted Office Paper & Coated Book Stock also reflected a similar pattern over the last 3 months.

Indonesia, India Taiwan, Korea, Vietnam & Thailand continued their normal levels of imports and we look forward to their business maintaining these levels for the remainder of 2010.

With winter now behind us, we anticipate a rise in collection levels, but the challenge for prices to be sustained at the March-end levels will strongly depend on European domestic demand, currency volatility and more importantly how far the Shipping Lines feel they can push the freight rates to.