In July 2007, we published the first paper Market Situation Report. This update looks at the key factors influencing the UK markets for recovered paper and board (recovered fibre) since then, including: developments in the domestic and overseas paper manufacturing sectors; changes in collection trends; and movements in prices.

Key points
  • Declining paper consumption has led to lower volumes of paper recovery, despite rising recovery rates
  • Production capacity has continued to contract in certain parts of the UK paper manufacturing industry but has expanded in others. As a consequence, the nature of the demand for recovered fibre is changing
  • Prices have been very volatile over the past 18 months, reaching unusually high levels in mid 2008, before declining steeply and then recovering towards historic averages

Overview

In July 2007, we published the first paper Market Situation Report. This update looks at the key factors influencing the UK markets for recovered paper and board (recovered fibre) since then, including: developments in the domestic and overseas paper manufacturing sectors; changes in collection trends; and movements in prices.

In addition, the report focuses in detail on trends in UK paper production and consumption and its implications for future demand for recovered fibre.

Chapters

UK consumption and production of paper and board

An estimated 13.2 million tonnes of paper and board products were consumed in the UK in 2008, 7% less than in 2007. Consumption of unconverted paper and board was about 11.5 million tonnes in 2008, with the remainder imported either in the form of converted products or as packaging for other manufactured goods.

Paper recovery in the UK

8.8 million tonnes of paper and board were recovered from the UK’s waste stream in 2008, up from 8 million tonnes in 2006 (Graph 2), representing a further increase in the collection rate to around 67%. Although the collection rate may increase slightly further in 2009, collection volumes look set to fall as the decline in paper and board consumption feeds through into lower volumes of material in the waste stream.

Recycling the UK’s recovered paper

Newsprint and board mills are the main users of recovered paper and, in the UK, these products are produced entirely or almost entirely from recovered fibre. By contrast, the quality specifications of P&W papers are a barrier to including or increasing recycled content, while the 50%-60% recycled content in tissue products is constrained by a perceived consumer preference for the products made from virgin fibres.

Prices

2008 and 2009 saw extreme volatility in recovered paper prices. Prices of all grades fell sharply in late 2008 as uncertainty surrounding the severity of the economic slowdown dented market confidence and caused a degree of market disruption. Prices of OCC and mixed paper grades – for which a larger proportion of recovered fibre is exported – were more severely affected than prices for news and PAMs, which were supported by stable demand from the domestic market.

 

Sustainability and challenges going forward

Recycling paper is significantly more environmentally beneficial than allowing it to biodegrade in landfill. The available data suggest that this remains the case even if the recovered paper has to be transported to China to be recycled. Further WRAP research into the environmental benefits of recycling will be published in early 2010, but current data suggest that the 8.8 million tonnes of paper recovered in 2008 avoided 11 million tonnes of carbon dioxide equivalent emissions.

Long-term challenges and opportunities for the recovered paper sector

The past year has seen marked changes in the UK’s patterns of consumption and production of paper. Some of these changes have been (probably temporary) responses to the challenging economic conditions posed by the recession, but some of them reflect long-term (structural) changes in paper usage.

This section explores some of the long-term trends in the paper sector and their potential implications for the supply of and demand for recovered paper in the UK.

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  • Paper Market Situation report update: Winter 2009-10

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