Waste paper has become a scarce material in Vietnam, and the price continues to rise, up about 60% since the beginning of the year!
Due to the Vietnamese government’s control and restrictions on COVID-19, the amount of waste corrugated boards in factories and families in Vietnam has been declining, so Vietnam has continued to increase its import of waste paper. From the beginning of 2021, up to now, the price of waste corrugated board exported from various countries to Vietnam has soared by about 60%.
As a necessary raw material for corrugated box production, due to the increasing shortage of the product source, the price of waste corrugated board has increased by about 20% since April. In addition, Vietnam’s imports of waste corrugated board in various markets around the world are also increasing. Among them, Japan’s exports to Vietnam increased by about 60%.
Vietnam has been a typical Asian country to respond to the typical COVID-19 countries and representatives, but now the average daily increase of 10000 cases of COVID-19 infected patients, this sustained growth rate has brought severe pressure to Vietnam’s medical system and infrastructure.
Therefore, as the more infectious delta virus swept through the region, Ho Chi Minh City and other areas in southern Vietnam implemented a stricter blockade policy. In late August, the Vietnamese government began to deploy troops to Ho Chi Minh City and distribute food and other necessities to domestic residents.
As part of COVID-19′s management and control policy, factories in Hu Zhiming and other southern areas are close to being unable to operate. Unless workers do not go home, they live in factories. Some companies currently have only 30% – 50% of their ordinary employees. Many other factories have completely stopped production, which also greatly reduces the total generation of waste corrugated board.
Waste corrugated board may also come from families. However, individual recyclers who usually recycle waste corrugated boards and sell them to waste paper recycling stations have been prohibited from entering COVID-19′s area. It is estimated that the household supply in southern Vietnam has decreased by about 80%. “There are no cardboard recyclers on the street,” said an industry insider.
At the same time, the demand for waste corrugated board in Vietnam is still strong. Although China has banned the import of all kinds of waste paper on environmental grounds, it has increased its import of pulp. In recent years, Vietnam has emerged or expanded many facilities to process waste corrugated board into pulp and export it to China.
The supply of these so-called corrugated corrugated cartons is now in a very tight state. Due to COVID-19, the output of new corrugated boxes in southern Vietnam has also dropped by 30%-40%. The material now sells for about vnd 7000 (31 cents) per kilogram in the region, up 20% from April before the current wave of infection.
A trading company said: “even if we pay more, we are trying to ensure that we provide customers with high-quality corrugated boxes.” the company is now purchasing more materials from northern Vietnam because northern Vietnam has not been seriously hit by the pandemic. Another option is to import materials. According to the statistics of the Vietnamese government, Vietnam imported 2.91 million tons of waste corrugated boxes in 2020, an increase of about 13 times over 2016. Most of the waste corrugated board that China no longer imports has now entered the country.
About half of the shipments in the past few years came from Japan or the United States. In 2018 and 2019, the waste corrugated board imported from the United States accounted for 30% – 40% of the total imports. In 2020, each company exported about 790000 tons to Vietnam.
Vietnam’s demand is a blessing for Japanese exporters affected by China’s waste paper import ban. In July, the price of goods from Japan to Vietnam was 27 yen (25 cents), about 60% higher than at the beginning of the year. “The export price to Vietnam is often higher than that to other countries,” said a wholesaler.
Shipments to Vietnam are also consuming waste paper stocks across Japan. Waste paper wholesalers in Tokyo now pay 22% more for waste corrugated boxes than in April. But it remains to be seen how long this prosperity will last. Vietnamese manufacturers’ operating rate is at a historic low level, while China’s box board production is also depressed due to COVID-19 related restrictions and concerns about the economic slowdown. “It is not clear whether the price of waste paper in Vietnam will rise further,” said a wholesaler.
The price of waste paper in Europe and America continues to rise, and the price of carton paper / kraft linerboard rises accordingly
Let’s look at the U.S. market. The average price of waste corrugated board in the United States has increased by about $20 since August to $183 / ton, a difference of $90 from last year’s average price, which also makes many people wonder how long it will last.
With the global blockade of COVID-19, the demand for corrugated packaging increased in the first quarter of 2020. Although this change in purchase mode is largely enforced by the government, with consumers becoming more and more accustomed to or even more fond of online shopping, consumers’ purchase habits have undergone structural changes. According to the producer price index of corrugated box manufacturing of the U.S. Bureau of labor statistics, the index measuring the price of corrugated packaging increased to 369.4 in May from 342.1 in the same month in 2020.
The rising price of corrugated packaging may squeeze many companies that rely on packaging to deliver goods to online consumers, especially when demand is still high and subsequent rounds of blockades are developing globally. From the first quarter of 2015 to the first quarter of 2020, the carton board production capacity in the United States generally increased at a slow and stable rate. However, the latest data show that paper manufacturers are increasing production capacity at an unprecedented speed to cope with the surge in demand for corrugated boxes, which will then be processed into corrugated board.
The increase in demand for corrugated packaging products has led to the price rising to an all-time high, which has exceeded the peak reached in the autumn of 2020. These price increases coincided with record waste paper prices. More and more global economies are implementing import regulations that directly affect the industry. China banned the import of waste corrugated board at the beginning of this year, which is a good example.
However, the rise in the price of raw materials and the increase in demand finally promoted the rise in the price of carton board paper. We can see this from the change of the average benchmark rating price of about $153 / ton last month. The index rose by about $20 to an average of about $183 / ton. Another price pressure comes from transportation, which increased by about 15% between the first quarter of 2019 and the fourth quarter of 2020.
In Germany, the supply of kraft linerboard market continues to be tight, so the seller is considering raising the price from October, and has begun the price negotiation for new year delivery. In view of the tight supply in the Kraft linerboard market, price negotiations have begun in the coming year. The corrugated board industry and its customers hope to ensure reliable supply in early 2022.
In the UK, the market price of wrapping paper and paperboard continues to rise because of strong demand. The price of waste paper is already very high and sometimes rising. In France, strong demand for wrapping paper and paperboard was dominant during the August holiday. In the context of good demand but limited supply, kraft linerboard manufacturers once again raised the price of brown and white kraft linerboard. Manufacturers want more price increases for September and October deliveries.
Why does OCC price remain high and what is its future trend?
Observing the raw materials used in the production of carton board, we can see that they are especially affected by the rising price of recycled fiber. This is mainly affected by the fact that the recovery rate of waste corrugated board decreased during the pandemic. Covid-19, a large scale shop, can not produce the same old corrugated cardboard as the new crown, and the price from the consumer’s home is even higher, and the recycling of waste paper is also quite different.
The global market is still extremely uncertain and mobile. As countries adapt to new regulations and continue to respond to the evolution of the pandemic, the global price of waste corrugated board is likely to remain high in the short term. However, the growth rate of corrugated packaging will be much slower than that in 2020, and the price of waste corrugated board is not expected to remain high for a long time. Fisher international expects prices to peak before they begin to fall in the coming months.
Post time: Oct-25-2021