13 November 2008 | Paul Snell
A lack of demand from buyers in the Far East is damaging the recycled paper industry in the UK.
According to the Confederation of Paper Industries (CPI), the UK relies on global demand for 50 per cent of the paper it recycles, with 75 per cent of this going to the Far East. But a "retreat" of these buyers from the UK and European markets has meant merchants have had to pay to store their excess stock and sell at far lower prices than expected.
The CPI said the reliance on buyers from overseas meant rapid price collapses were "always a significant risk" for the UK industry. It added the amount of stored material would mean prices will remain low, and are unlikely to recover quickly even if buyers from the Far East return.
Government targets for collecting recycled paper have also been driven by demand from overseas, but the association warned taxpayers may now be vulnerable for local councils' storage costs.
"Increased Far East demand for recovered paper is likely to return in the medium to long term but this is unlikely to be at the growth levels seen over the past five years," said Peter Seggie, recovered paper sector manager at the CPI. "The UK must learn the lessons of these volatile times and look at lowering future risks by examining what can be done domestically to make the UK more self sufficient."