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 3^rd 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.

Some of the leading European economies continued to show positive signs of growth which in turn has helped to promote demand for recovered fibre in Europe. However, the weak Euro economies continued to affect European consumption, leading to a slight reduction in collection of recovered fibre in Europe.

The Tsunami in Japan, continued to have an effect on Japanese exports to ASEAN countries, whilst the positive growth within the Asian economies (especially China & India),  continued to increase demand for exports.

Recovered fibre prices fluctuated greatly during the quarter, primarily affected by the Euro/Dollar rate, increasing demand for fibre, both within Europe as well as Asia, and reduced collection levels.

Freight rates in the quarter weakened slightly with the introduction of new capacities. However, rates are now at levels lower than seen in recent months and a correction is likely in the near future.

OCC prices for the quarter began at levels of USD235+ and rose during the last 3 months by USD10/15.

Similar trends were seen in Mixed Paper, with prices rising from USD227+ and during the quarter rose by USD5/10.

Stock levels of finished goods at the Asian paper mills looked to be below average levels seen previously.

Domestic collection levels have been gradually increasing which are now able to satisfy an increased level of recovered fibre demand for many of the countries in the region. However, imports of recovered fibre will continue to be sustained at or close to, current levels.

Demand from all the Asian countries, (China, India, Indonesia, Thailand, Vietnam, Taiwan & Korea) has continued to grow during the quarter. Demand for all recovered fibre grades (OCC, Mixed Paper, News & Pams, Office Paper, and HWS) has remained buoyant during the last 3 months.

We look forward in the second half of 2011 to a more stable Euro, improved collection levels and a market without too many fluctuations as has been a feature of the first half of this year.

The New Year started with concerns over the shifting trends in the Western & Emerging economies caused by rising oil prices, increasing interest rates, rising unemployment, and fears of inflation against a buoyant growth forecast for the Emerging economies, namely China, India, Indonesia, Brazil & Mexico.

Manufacturing output in these Emerging economies continued to grow while Economists continued to forecast a drop in overall production in the Western economies overall.

Europe continued to be embroiled in the Eurozone debt crisis, with Portugal being its latest victim. However, the positive news from Europe was that the big Western economies, Germany France & UK, were beginning to show signs of growth. Germany is leading the field with a projected growth of about 2.5 to 3%.

Manufacturing order books are looking busy, and the growth seen in Europe looks strong and is likely to last for some time.

The effects of the coldest December for 100 years continued to take their toll in the early weeks of the New Year, and, due to poor collection levels, OCC prices rose steadily to USD235+ by the end of January. Following the Chinese New Year holidays, demand remained firm & the upward trend held with prices climbing to USD245+, where they finished the quarter strongly.

Similar trends were seen in Mixed Paper with prices moving up to USD220+ by end of January and ending the quarter at levels of USD227+.

Demand from China, and other Asian countries continued to grow, with an equally competitive demand seen from European domestic Mills. This put pressure on volumes available for export and also resulted in firmer prices.

The effect of the Japanese Tsunami has also affected the recovered fibre prices towards the end of the first quarter, and will continue well into the second quarter.

Demand from other Asian countries, India, Indonesia, Thailand, Vietnam, Taiwan & Korea, continued to remain strong, with demands for all grades continuing to grow.

Freight rates continued to reduce during the quarter and by the end of the first quarter we had seen a decrease in freight rates of over USD500. At the end of the quarter, freight rate levels were still projected to weaken, going into the second quarter. The weakening freight rates will result in most carriers forecasting losses in their Financial Reports in the first quarter of 2011. The risk therefore being that by the third quarter we may see either increasing freight levels or a reduction in the number of ships serving the Trade, thereby reducing space availability.

The challenge facing the paper Mills in Asia, is to be able to meet the rising demand for new paper at the current price levels

Mr Baxi will be a guest speaker at the RISI Conference in Amsterdam March 15th – March 17th.

His Presentation will be discussing the following :

“Paper Recycling Trade: The Dangers of a Demand-Supply Crunch”

please visit http://www.risiinfo.com/events/euro_conf/ for further information

Following the October National Holiday in China we noticed some strengthening in demand from Far Eastern Mills, with an equally strong European Domestic demand. This continued to increase over the quarter, with end November – mid December being the strongest export period.

During the quarter the cost of freight remained reasonably stable, with slight upward adjustments seen in October & early November. This became necessary in view of the reduced High Cube container availability, as imports slowed once Christmas inventories were fulfilled.

Prices for OCC strengthened in October from levels of USD210 to USD215+, which moved up to USD220+ by mid-November.

Likewise, prices for Mixed Paper enjoyed similar increases with movement from USD180+ to USD185+ in October and by mid-November had reached USD190+.

Demand from India, and other Asian countries also continued to grow steadily with a gradual increase in prices.

The extreme wintery conditions experienced in December in both Europe and USA started to have an adverse effect on material availability. Collections were unable to meet demand and this forced prices upwards reaching new levels of USD230+ for OCC & USD200+ for Mixed Paper.

Floods in Queensland will also have affected short-term fibre supplies out of Australia for the Asian market.

In the short term, we will see price fluctuations as the imbalance between supply & demand (domestically as well as Global) remains strong. However, once the variation in weather influences settles down, we expect to see a more stable market by the end of the first quarter of 2011.

With reducing Stock levels at Mills in Asia, and with new expansions coming on stream during 2011, we will see a growth in exports both to meet the demand for the restoration of stock levels and to satisfy new capacities across the various Mills.

As we end the year & start the New Year 2011, one senses a general feeling of optimism with somewhat increased confidence that the pace of growth in the emerging economies – China, India, Brazil, & South Africa – should generate stronger confidence for Global Economic growth.

Japan’s second quarter GDP figures were at USD1.2 trillion whilst China was at USD1.33 trillion, with the 2009 GDP for USA at USD14 trillion. China’s growth has exceeded that of Germany, France, Great Britain and now Japan to become the second largest Economy.

The growth story was dampened slightly in the 3rd quarter when slower growth was forecast by all major global economies. Growth in manufacturing output was noticeably slowing down, affecting both demand of recovered fibre and new paper. Exports from China and other leading emerging economies registered a year-on-year decline for the second quarter.

China is forecast to grow by more than 10%, while India has projected growth in excess of 7.5% for 2010.

At the start of this quarter, we saw some strengthening of prices, both due to increased domestic demand and lower levels of collections. The forthcoming Asian Games in China also contributed to this strengthening in demand which unfortunately did not last long enough.

During July, OCC prices increased from USD205+ to USD220+ and for Mixed Waste there was a rise from USD175+ to levels of USD187+. Freight rates continued to remain strong during July, with
ex-works fibre prices firming.

However, by mid August, export orders started registering a decline with the mills expressing an inability to work with the higher prices. This resulted in a reduction in the recovered paper prices as well as the first signs of weakening in freight rates.

By early September the freight rates had fallen by USD200 supported by some weakening in fibre prices, whilst European mills continued to maintain their price levels.

September saw OCC prices reduce to USD210+ and Mixed Waste fell back to USD180+.

Similar trends have been seen in other Asian markets, where the mills have focussed on buying more local fibre, with reduced levels of imports, enabling them to meet the domestic demand for paper at the lower price levels. The markets that continued to import were Indonesia, India Taiwan, Korea, Vietnam & Thailand

Freight rates continued to decline during September with a corresponding fall in export prices. By the end of the quarter, we had a total reduction of USD350+ in freight rates. Export volumes also registered a similar decrease during the quarter.

By mid/end September, the mills in China had slowed down their purchases in view of the imminent week-long National Holiday. We expect the Mill buyers to come back into the market after the holiday is over, and anticipate some market strengthening by the end of October.

The 4th quarter will be a challenging period with winter approaching and the expectation that mills will increase their procurement. Collection levels in this forthcoming quarter will depend on the severity of winter both in Europe and US.

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.

The demand for stainless steel has doubled in the last ten years, with production increasing to more than 25 million tonnes a year. In this context, the recycling industry has become a vital player in providing a stable supply of quality secondary raw material.

Besides nickel and chromium, other major alloying elements used in combination with steel include; molybdenum, titanium, tungsten and vanadium. These metals are scarce and only available in very few parts of the word, which makes extraction costly and difficult. Recycling is therefore essential to avoid depleting the planet’s natural resources.

Recycling Processes

Most of these special alloys are very similar in appearance. Sophisticated identification technology, including X-ray spectrometry, are used to separate and prepare each type. Recycling stainless steel is a similar process to the one used for other ferrous metals.

Applications

Stainless steel is 100% recyclable and loses none of its original physical properties in the process. The most common applications include:

• Construction: The excellent corrosion resistance, strength and malleability allow for the construction of attractive, low maintenance and durable curtain walls and roofs.
• Food storage and production: Stainless steel resists bacteria colonisation, does not alter the taste of foods, and is easily cleaned and sterilised.
• Transport: Passenger rail cars of today’s high-speed trains are often constructed of stainless steel which offers structural strength and improved crash protection.
• Healthcare: Most surgical instruments are made of stainless steel because of its strength and resistance to regular cleaning and sterilisation.
• Household: Stainless steel has been traditionally used in cutlery, cookware and appliances.

Recycling Facts

• Recycling one tonne of steel saves 1,100 kilograms of iron ore, 630 kilograms of coal, and 55 kilograms of limestone.
• An average stainless steel object is composed of about 60% recycled material.
• Approximately 90% of end-of-life stainless steel is collected and recycled into new products.

Aluminium, which is the most abundant metal in the earth’s crust, is not surprisingly one of the most recycled materials today, after steel and paper. It is also the only packaging material that completely covers the cost of its own collection and processing at recycling centres. Recovering aluminium for recycling is not only economically viable, but energy efficient and ecologically sound.

Due to the limited availability of these metals, the unrestricted flow of non-ferrous scrap from country to country according to industrial and consumer demand is crucial. BIR has consistently campaigned for the free movement of secondary raw materials to avoid shortages in certain geographical areas and surpluses in others. Import barriers could limit the supply to the manufacturing industry in some countries.

Recycling Processes

The metal recycling industry has an efficient structure with numerous small companies purchasing scrap material and feeding this to highly effective larger international businesses.

Non-ferrous metal recycling involves some, or all of the following steps:

Applications

All metals can be recycled with minimal or no loss of their original physical properties. They are such versatile materials that the possible applications for each metal and their combinations are endless.

Aluminium

Aluminium has (great recycling potential) and is often re-used for the same application for which it was originally manufactured. Its strength, flexibility and light weight, make it ideal for:

• Building & construction: Window frames, building structures, roofs, etc.
• Transportation: Airplanes, trains, boats, cars and trucks. It is also used in smaller vehicles like bicycles, motorbikes and other mobility devices such as wheelchairs.
• Packaging: Aluminium is used mostly in the form of cans and foil.
• Electricity: Since 1945, aluminium has replaced copper in high-voltage transmission lines.
• Cooking and tableware.

Copper

After silver, copper has the best electrical conductivity of all the elements. It is also very good thermal conductor and is readily alloyed with other metals such as lead, tin and zinc for foundry applications to produce, among other goods, products for the transmission of water such as valves.

Other common applications for recovered copper include:

• Electrical applications: Wires, circuits, switches and electromagnets.
• Piping: Plumbing fittings and also in refrigeration, air conditioning and water supply systems.
• Roofing and insulation.
• Household items: cookware, doorknobs, and cutlery.

Lead

Most of recycled lead is used in batteries, but the are many other applications for this metal:

• Car batteries: Lead is still used extensively in the plates that work as electrodes.
• Colouring: Although less common today, it is used in ceramic and glass glazing.
• Radiation protection: Lead offers protection against X-rays.

Zinc

Zinc is present in everyday life in the form of coins. However, it also has other important uses:

• Galvanisation: Zinc is commonly applied as a coating to protect iron and steel from corrosion in a process known as galvanisation.
• Batteries: As an anode component material in batteries.
• Brass: Created by alloying zinc and copper.

Tin

Apart from precious metals, tin is one of the most expensive non-ferrous metals. Hence, recycling from secondary materials is very important.
Its applications are very varied:

• Cans: by covering steel sheet with a thin layer of tin one obtains tinplate, the raw material to make cans
• Car production: tin increases the resistance of the motor block, piston rings and clutch plates;
• Springs of any kind become tougher through the addition of tin
• Glass: tin oxide coatings of glass surfaces to make them more resistant

Recycling Facts

• Almost 40% of the world’s demand for copper is met using recycled material.
• At present, approximately 30% of global zinc production comes from secondary zinc.
• Over 80% of the zinc available for recycling is eventually recycled.

Aluminium

• Of an estimated total of 700 million tonnes of aluminium produced since commercial manufacturing began in the 1880s, about 75% of this is still being used as secondary raw material today.
• One tonne of recycled aluminium saves up to 8 tonnes of bauxite, 14,000 kWh of energy, 40 barrels (6300 litres) of oil, 238 million Btu’s of energy and 7.6 cubic metres of landfill.
• The energy saved by recycling one tonne of aluminium is more than enough to power a US household for a whole year (The average US household uses about 10,000 kWh year).
• Recycling aluminium uses 95% less energy than producing aluminium using raw materials.
• Recycling one aluminium can saves enough energy to power a 100-watt bulb for almost four hours.
• A used aluminium can is recycled and back on the grocery shelf in as little as 60 days.
• For every single can manufactured using virgin ore, the same amount of energy used will produce 20 recycled cans.
• The aluminium drink can is the world’s most recycled container – more than 63% of all cans are recycled worldwide.

COPPER

Copper’s recycling value is so high that premium-grade scrap holds at least 95% of the value of the primary metal from newly mined ore.

Recycling copper saves up to 85% of the energy used in primary production.

In order to extract copper from copper ore, the energy required is approximately 95 million Btu/tonne. Recycling copper uses much less energy, about 10 million Btu/tonne.

By using copper scrap, we reduce CO2 emissions by 65%

ZINC

The average car contains up to 10 kg of zinc in its galvanised body panels. When they are discarded, these panels can be readily made into new parts of identical quality.

Total recovery of zinc within the non-ferrous metals industry amounts to 2.9 million tonnes, of which 1.5 million are new scrap or process residues and 1.4 million are old scrap.

Secondary zinc production uses 76% less energy than primary.

Nearly 70% of zinc from end- of-life products,, is recycled. Old zinc scrap consists primarily of die cast parts, brass objects, end-of-life vehicles, household appliances, old air conditioning ducts, obsolete highway barriers, and street lighting.

LEAD

50% of the lead produced and used each year throughout the world has been used before in other products.

Today, about 80% of lead is used in acid batteries, all of which is recoverable and recyclable. Some countries boast a 100% recycling rate  and most are capable of the same result.

Using secondary lead instead of ore reduces CO2 emissions by 99%

TIN

Globat tin production amounts to 350,000 tonnes of which 50,000 tonnes is produced from scrap and other secondary sources.
Primary production of tin requires 99% more energy than secondary production