Will paper products benefit from plastic's fall from grace? ©Getty Images
Will paper products benefit from plastic's fall from grace? ©Getty Images

Commodities: the great paper chase begins

Can paper and pulp meet the shortfall from China’s recycling halt – and cope with the new packaging trend?

When China sneezes, the world catches a cold, and paper and pulp is feeling this effect now.

In January, a ban on waste imports including plastics, paper and textiles came into force in China, previously a top destination for recyclable rubbish. With an inevitable shortage in recycled paper pulp, producers turned to virgin timber, pushing up wood pulp prices – and Europe has now become a sellers’ market.

According to WRAP, in December, pulp prices hit £747 a tonne in Europe, compared to just under £650 a tonne in December 2016.
But IHS Markit believes this spike will be short-term, lasting only until production ramps up. Karolina Tomczyk, senior economist at IHS Markit, says: “Slowly retreating cost pressures and upcoming capacity should help to stabilise prices.”

Despite digital technology, global paper and cardboard production is climbing, from 391.2m tonnes in 2008 to 407.6m tonnes in 2015, according to Statista. In part, this is because demand for packaging has grown. There have been rises in industrial production, consumer spending and internet shopping, with many businesses turning to cardboard and paper for their packaging needs.

Another driver is plastics’ fall from grace, with governments pledging to cut waste. In response, businesses are turning to natural resources. For example, McDonald’s packaging is set to be renewable, recycled or from certified sources, while J D Wetherspoon has already ditched plastic straws for paper.

All this could be a factor in rising global pulp prices, which IBISWorld had predicted will rise by 5.1% a year in the three years to 2019, even before the focus on the ‘plastic pandemic’.

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