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July Market News


What is it for you?

The European recovery remains intact but got off to a disappointing start in the first three months of 2014, when GDP rose by just 0.3% across the 28-strong European Union and a still poorer 0.2% across the 18-state euro area, according the figures from Eurostat. GDP in the EU will expand by 1.6% this year and 2.0% in 2015. Euro-wide GDP will rise 1.2% in 2014 and 1.7% in 2015. This year’s growth will be too weak to counter worryingly low inflation.

The main driver behind the euro zone’s recovery this year will be Germany, which makes up nearly 30% of the currency club’s collective output, and which is predicted to grow by 1.8%. The strengthening of the upturn in 2015 comes as the other three big economies, France, Italy and Spain, do better though growth in both France and Italy will still be below the euro-zone average of 1.7%. Outside the euro area, Britain is now experiencing a robust recovery and GDP will expand by 2.7% in 2014 and 2.5% in 2015.

Spending’s and investments in the Eurozone will stay low as consumers, companies and banks are focussed to strengthen their financial position. Financial markets are fragmented, as a consequence significant interest rates differences are paid by countries in the South- and North of Europe.

Here and there some new news however holidays are leading the market where some have more than others. Some of course see the glass half full when others belief it is half empty. What is it for you?

The largest volume commodity, OCC, held stable for the US board mills with export to China increased with $ 5-7 per short ton.

All eyes are on the U.S. West Coast, where negotiations for a new labour contract between the International Longshore and Warehouse Union of the dockworkers and the Pacific Association continue despite the expiration of the parties current contract. The negotiations cover 29 U.S. West Coast port including all the major West Coast container ports– Los Angeles, Long Beach, Oakland, Portland, Seattle and Tacoma. It does not cover ports in Canada or those on the U.S. East and Gulf coasts the main reason why shippers are seeking refuge at those ports.

Shippers in the US are clearly diverting and accelerating shipments to avoid potential impact from the negotiations. Many are diverting to Canada and US East Coast.

The Asian market is concerned about the disruption in recovered paper supply from the USA due to strikes by truckers and dockworkers. It increased prices further for US OCC.

SOP, HPSBS and CBS increased with $ 5 and $ 10 per short ton in the Midwest and Southeast regions.

In Europe Hamburger Containerboard increased prices for Brown Containerboard with
€ 70/ton and for white containerboard with € 50 per ton due to changed market circumstances. DS Smith as well announced a price increase of € 70 per ton for recycled containerboard effective first of August.

OCC in Europe was sold between € 110-112/mt delivered to the port, local mills still having good demand with equal or in some occasions better prices delivered mill. The order books of mills can be described as good, which as a consequence resulted in the increased end product prices.

Russian containerboard prices increased due to rising input costs at mills, driven by negative effects of the Ukraine crises. Chemicals and electricity prices increased as well as costs of bank loans due to the weakening of the rouble against the Euro and the dollar. The ongoing crises in Ukraine and the  slowdown of the Russian economy continued to put pressure on paper producers as well as box makers in the second quarter.

Tetra Pak, the world leading food processing and packaging solutions company, announced the completion of its upgrade for her packaging plant in Ponta Grossa, Brazil. It increased the capacity of the plant by 70%. Brazil is the second largest market for Tetra Pak Globally. Domestic demand for carton packaging in Brazil has been growing steadily at 5.5% CAGR since 2007. 

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