Old paper market under considerable pressure

Will you soon be paying for your paper and cardboard waste?

Since China imposed an import ban on old paper, Europe has ended up with a surplus and that has an effect on price. The revenues for old paper and cardboard are collapsing.

Asia closes its borders

For years, the export of old paper and cardboard to China and other Asian countries presented no problems. After all, China had a big hunger for feedstock thanks to its strong economic growth. The market of supply and demand was in equilibrium. The main reason for the collapse of the price of old paper is that China – as it has done for plastics – has closed its borders to old paper. Other Asian countries such as the Philippines, Malaysia and Indonesia have followed the Chinese example. Only paper that meets very high requirements is still allowed to enter the Asian market. Where once roughly 30 million tonnes was sold to the Far East, that figure is now scarcely 10 million tonnes.

Downtime in the European paper market

The recent import restrictions have led to the sales of old paper stagnating and prices falling worldwide. What was, for years, a revenue stream now risks becoming a cost stream. These prices have fallen by more than 75% compared to two years ago. Countless European paper factories have already announced that they are ceasing (or temporarily ceasing) activities at the end of 2019, and the end of the downward spiral does not yet appear to be in sight.

Digitalisation and increasing quality requirements

The progress of digitalisation in Europe has led to further consolidation on the paper market. Quality requirements are continuously increasing, while the quality of the old paper being collected is falling. This is explained by the fact that some, mainly non-European, collection systems are more geared towards the reduction of residue waste than the quality of waste flow for recycling, as is the case in Flanders. Europe is paying the price for this, because we are among the top sorters in the world and, as a result, we have always supplied materials of excellent quality to Asia.

The old paper market is therefore under considerable pressure. Nevertheless, the separated collection of old paper and cardboard is still – despite the reduced market conditions – a far less expensive and more sustainable solution than throwing it away with residue waste. Recycling uses 60% less energy and has a better carbon footprint.

We are monitoring the situation closely and your trusted Indaver contact person will keep you informed of the impact on your waste contract.

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