Recovered Paper and Fiber Update Paper Division Meeting ISRI Summer Board of Directors Meetings Washington, D.C. July 18, 2016 Joseph C. Pickard Chief Economist and Director of Commodities ISRI
VIX Spikes after Brexit, Then Drops Sharply
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Recovered Paper Prices
U.S. Recovered Paper Market Trends New Supply (Short Tons) Recovered Recovery Rate U.S. Exports 2011 79,444,000 52,767,000 66% 23,233,000 2012 78,498,000 51,092,000 65% 22,326,000 2013 78,954,000 50,128,000 63% 21,029,000 2014 78,206,000 51,171,000 21,180,000 2015 77,895,000 52,040,000 67% 21,581,000
YTD U.S. Paper & Board Production -0.8%
Overseas Demand for RP
YTD Market Gains and Losses Country 2015 YTD 2016 YTD $ CHG % CHG India $112,306,340 $131,421,449 $19,115,109 17.0% Mexico $102,927,389 $113,392,186 $10,464,797 10.2% Taiwan $15,911,771 $21,896,105 $5,984,334 37.6% Indonesia $18,868,351 $23,495,738 $4,627,387 24.5% Thailand $15,924,893 $20,171,218 $4,246,325 26.7% Vietnam $8,009,400 $11,583,702 $3,574,302 44.6% Japan $5,330,866 $8,042,226 $2,711,360 50.9% Netherlands $6,851,469 $8,600,954 $1,749,485 25.5% Colombia $4,814,918 $6,555,162 $1,740,244 36.1% Italy $11,939,599 $13,224,354 $1,284,755 10.8% Canada $48,596,070 $49,691,503 $1,095,433 2.3% Trin & Tobago $83,563 $1,116,637 $1,033,074 1236.3%
YTD Market Gains and Losses (cont.) Country 2015 YTD 2016 YTD $ CHG % CHG China $824,438,109 $751,555,949 -$72,882,160 -8.8% El Salvador $11,807,118 $4,764,054 -$7,043,064 -59.7% Peru $6,928,352 $995,814 -$5,932,538 -85.6% Chile $5,687,881 $3,879,553 -$1,808,328 -31.8% South Africa $1,714,309 $75,075 -$1,639,234 -95.6% Israel $2,210,865 $960,325 -$1,250,540 -56.6% Ecuador $2,953,833 $1,744,247 -$1,209,586 -40.9% Malaysia $1,720,665 $649,444 -$1,071,221 -62.3% Australia $1,224,748 $177,117 -$1,047,631 -85.5% Korea $81,711,188 $80,665,376 -$1,045,812 -1.3% Venezuela $1,634,147 $741,855 -$892,292 -54.6% Philippines $3,300,270 $2,471,183 -$829,087 -25.1%
Global Developments from BIR Report “At the start of the second quarter, good availability of US fibres and weaker prices resulted in an increase in exports from the USA at lower price levels, although demand strengthened through the quarter and prices started firming up. This also had a direct effect on export values for European fibres: European OCC prices began the second quarter at US$ 160-plus per tonne and strengthened over the period to US$ 167-plus. Similarly, mixed paper prices opened the quarter at US$ 115-plus per tonne but improved to US$ 130-plus by the end of June. Demand from the other regular Asian markets of India, Indonesia, Vietnam and Thailand remained steady for news & pams and the middle grades (de-inking, sorted office paper, Multidruck and BBC). We are anticipating an increase in fibre demand over the next two quarters as the EU economies and the emerging economies of China and India are projected to see growth across the remainder of 2016.” -- Ranjit Baxi, J&H Sales International Ltd, GBR
YTD Chinese Demand from All Origins CHINESE RECOVERED PAPER IMPORTS (TONNES) OCC ONP Mixed paper Total RCP May 2016 1,314,445 428,330 439,128 2,262,835 April 2016 1,524,106 414,630 538,405 2,579,388 % change -13.8% 3.3% -18.4% -12.3% May 2015 1,309,809 498,319 523,428 2,425,901 0.4% -14.0% -16.1% -6.7% Year-to-date 2016 6,905,968 2,030,830 2,499,402 11,806,149 Year-to-date 2015 6,354,253 2,310,840 2,385,118 11,404,582 8.7% -12.1% 4.8% 3.5% Source: China Customs and RISI.
Global Growth Forecasts for 2016: Developing Economies Still Driving Growth Source: International Monetary Fund World Economic Outlook (April 2016).
Fed Projections for Domestic Economy, June 2016 Variable Central tendency 2016 2017 2018 Longer run Change in real GDP 1.9 - 2.0 1.9 - 2.2 1.8 - 2.1 1.8 - 2.0 March projection 2.1 - 2.3 2.0 - 2.3 Unemployment rate 4.6 - 4.8 4.5 - 4.7 4.4 - 4.8 4.7 - 5.0 4.5 - 5.0 PCE inflation 1.3 - 1.7 1.7 - 2.0 2.0 1.0 - 1.6