BIR Paper Division Calls for Price Stabilization

A call for a long-term agreement on floor and ceiling prices for recovered paper came from José Aragües, director of material supplies for SAICA, Spain's largest paper manufacturer, and vice president of the recycling committee of CEPI, the body that represents the paper and board industry of the European Union.

Speaking at the session of the BIR Paper Division during the Spring Convention of the world recycling federation in Madrid, Mr. Aragües, who is also president of Recipap which brings together paper makers and recoverers in Spain, said that "stable and adequate prices" would bring many benefits. Development of paper recovery would be sustained and no longer suffer the effects of highs and lows in pricing. Recovery would be self-financing and offer greater reliability at reasonable cost. He argued that speculative pricing, whether up or down, was in the long run bad for all those involved in the chain of paper use. Taking old corrugated containers (OCC) as an example, Mr. Aragües proposed that the price should never be allowed to drop below 35-40 euros per ton - to his recollection it had never actually fallen below 40 euros. A ceiling should be set no higher than 55/60 euros per ton, and throughout the range recoverers would have a minimum 30 euros to cover their costs.

Since the EU Directive on packaging recovery in 1992, national collection systems had been introduced all over Europe. In general, paper makers and recoverers had not had sufficient input to this development, even though they were the 'top experts.' The authorities should "listen to our advice to provide recovery at lower cost," he insisted. Setting the paper recovery scene in Spain, Mr. Aragües said that last year 3.8m tons had been used, 14 percent or 560,000 tons consisting of imports. The utilization rate was 81 percent but the recovery rate was still relatively low at 48.6 percent. However, the EU Directive had been a very positive influence, for since 1994 collection had risen by 80 percent in the context of a voluntary agreement with the government for a 'paper bank' system. By the end of 2001 nearly 80,000 of these collection containers would be in place. This separate collection approach delivered lower cost and higher quality without conflicting with the free market, he told delegates. Although an optimum had yet to be reached, the cost of paper at collection sites was 34 euros per ton, which compared with 72 euros for similar operations in France and 204 euros in Germany. The total cost of recovering paper in this way was 60 euros per ton. But when paper was mixed with other packaging materials in a single container the cost rose substantially to 525 euros per ton. The problem was to persuade members of the public always to deposit paper in dedicated containers. The message had to be put across much more effectively.

Immediate past president of the BIR Paper Division Gerry West of Severnside Recycling, UK, who chaired the meeting in the absence of President Dominique Maguin of Soulier, France, said he was "intrigued" by the speaker's proposal for a minimum and maximum pricing system. This was a step in the right direction, although he argued that to process corrugated board would involve a cost 50 percent higher than quoted. Mr Aragües countered that SAICA was engaged in the recovery of 1m tons a year and in Spain an operating cost of 30 euros a ton was quite realistic. Mr. West said it would be very useful to examine costs on a joint basis and he proposed that this should be undertaken within the framework of CEPI and the BIR daughter organization in Europe, the European Recovered Paper Association (ERPA). He recalled that within the next couple of years new test liner capacity of up to 1m tons a year would come on stream in northern Europe, involving countries that had traditionally exported recovered material to Spain.

A report on the crucial U.S. market by Steve Vento of Recycled Firbres, International, read by Mr. West offered little sign of any short or even medium-term improvement in a grim market. Prices had declined again with wood free deink grades suffering most. But deink news had held for the most part as collection was down a little and mill orders were constant. Overseas demand was weaker.

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