Seller's market: American demand may be flat, but global buyers remain intensely interested in scrap paper.

The demand for recovered fiber is generally considered flat in North America, but it remains strong in most of Europe. And any scrap paper that is not used in Europe is being snapped up by the Asian market.

Speakers on the keynote panel of the European Paper Recycling Conference, which took place in Brussels last fall, predicted a continuation of healthy demand for scrap paper globally, meaning packers and shippers in North America can continue to boost their recovery efforts, even if domestic demand remains flat.

The smaller-world syndrome brought about by globalization, which can certainly cause unwelcome change for businesses caught on the wrong side of a developing trend, has been credited as a major reason for recycling markets that have stayed vibrant, even as the U.S. paper and board industries are relatively flat.

SCRAP-FRIENDLY EUROPE. "Over the past decades, the paper industry has grown tremendously, especially in Europe; it has bypassed America," said Herbert Noichl of Austria's Mayr-Meinhof Karton AG.

The growth of Europe's paper and board production has been second to only Asia, Noichl said. He also predicted, "Rapid growth will move from Western to Eastern Europe."

Many of Europe's paper mills use recovered fiber, which means that most of the 50 million tons of scrap paper collected last year stayed on the continent. Noichl said about 10 percent of Europe's recovered fiber is exported, although "this percentage is growing," he noted.

Noichl foresees Europe's recovery rate increasing from its current 60 percent up to a range of 64 percent to 67 percent in the next five years. "We will continue to be an exporter to the rest of the world," he predicted.

Much of that export tonnage is now heading to China, noted Wade Schuetzeberg, managing director of ACN (Europe), a Rotterdam brokerage that procures tonnage for the Nine Dragons mill complex in China.

Mills in China are now buying consistently from North America and Europe, rather than participating on a spot basis. The global trade between China and the rest of the world is "part of a wider trading loop that feeds into the recovered fiber market," remarked Schuetzeberg.

More papermaking capacity is being added in China, but "the highest growth rate, I believe, is behind us," Schuetzeberg said of Chinas containerboard and boxboard segments.

But Chinas new appetite for scrap paper has brought sustainable benefits, he added. "The outlook for paper recycling has never been better," said Schuetzeberg. "Trade has increased [and] so has pricing."

GLOBAL NATURE. Moderator Bill Moore of Moore & Associates, Atlanta, said the scrap paper market has truly become global, as price changes tend to occur quickly and globally.

The global nature of the industry is reflected not only by the speed with which information now travels from continent to continent, but also by the sheer size of the paper recycling industry as measured by the total global consumption of recovered fiber.

Information presented by Moore and assembled by Germany's EU Consulting indicates that the total amount of recovered fiber consumed in 1970 was less than 40 million metric tons.

This figure increased to 50 million metric tons in 1980, and from there the growth has continued. By 1990, the world's paper mills and other consumers were demanding some 80 million metric tons, a figure that had skyrocketed to more than 150 million metric tons 10 years later in 2000.

As China and other rapidly industrializing nations have emerged as consumers, the figure continues to grow. Projected consumption in 2006 stands at more than 190 million metric tons, according to EU Consulting, and that figure could grow to more than 220 million by the end of the decade.

A breakdown of the fiber consumption growth by global region during this span reveals the extent to which the North American market may have been the first to mature.

While tonnage consumed in North America grew impressively between 1970 and 2000, its annual tonnage figure has since stayed fairly flat.

Driving the growth this decade has been burgeoning demand in China and other parts of East Asia, as well as steady growth from Europe, where recovered fiber is gaining ground as a feedstock vs. wood chips.

As Europe is engaged in its ramping up of recovered fiber use at the same time that North American demand has stagnated, this has caused companies operating in Europe to devote more attention to research and development.

Moore said the European paper industry has become the "mill recycling technology leaders," while, "The U.S. paper industry is falling behind in maintaining its capital base, upgrading its technology [or] investing in research and development."

The rapid growth in recovered fiber use in Europe and Asia is not without its obstacles, Moore also noted.

Just as mill companies in North America have had to consistently preach quality to scrap paper suppliers domestically, European and Asian mills are finding it necessary to communicate that they do not want the increased tonnage to be accompanied by looser quality standards.

QUALITY COUNTS. Dealing in (and with) such a wide variety of languages can make terminology an issue in both Europe and Asia. Mill and recycling trade groups hope referring to a common code can cut down on some of the confusion.

Paper recyclers and mills have a solid quality yardstick in the EN 643 document, and a new measuring device could help mills enforce that quality, according to one speaker at the European

Paper Recycling Conference. H.M. (Maarten) Kleiweg de Zwaan of the European Recovered Paper Association (ERPA) updated conference attendees on the status of EN 643, a document forged by ERPA and CEPI, the European confederation of paper manufacturers.

Kleiweg noted that the two groups have continued to discuss modifications and updates to EN 643. In an era when more exporting and more single-stream processing is taking place, there is no mention of plastics and other non-paper content that can be found in bales. "This is creating difficulties at customs offices," said Kleiweg. "If they see a bit of plastic, they can reject it."

Kleiweg said that the paper industry is making clear that "recovered paper pulled from garbage is not suitable for our industry," particularly at paper mills making food-contact products.

Speaking from the mill side, Guillermo Valles of Spain's SAICA emphasized that recovered paper has become the paper industry's raw material of choice, with 45 percent of paper currently produced globally using recovered fiber. "The forecasts show that recovered paper will be the main raw material [utilized] by 2010," he said.

Valles said quality through the entire supply chain will be critical, although he acknowledged, "It's almost impossible to have a strictly clean material," he adds

Like Kleiweg, Valles also called for wider attention to the EN 643 document in Europe and urged mills and recyclers to standardize quality testing of materials.

It would be his "dream," Valles said, for bales to be tested uniformly for quality and barcoded for tracking purposes, so that producers could be rewarded for high quality and identified for poor quality.

Among the testing procedures gaining acceptance in Europe is a drill sample and spectroscopy system marketed by Germany's Paper Technology Specialists (PTS). A presentation prepared by PTS' Patrick Plew described how the system quickly drills out a core sample from a bale. That sample is then measured using spectroscopy to determine moisture levels and to check for the presence of plastics or other inorganic compounds.

Plew's presentation attempted to ask and to answer the question, "Why do this? When you buy fiber, you don't want to pay for water; you don't want to pay for plastic; you don't want to pay for ash. It's very difficult to make paper from these materials."

The European Paper Recycling Conference was hosted by the Recycling Today Media Group and took place at the Hilton Brussels in Belgium in September of 2005.

SPANISH ACCENT

The second annual Recycling Today Media Group's European Paper Recycling Conference is scheduled for late September 2006 in Barcelona.

Barcelona will play host Sept. 25 and 26, when recyclers and mill buyers will meet to attend sessions on current market trends and to take advantage of extensive networking opportunities.

Delegates from more than 15 nations attended last year's event, which was supported by the Confederation of European Paper Industries and the Independent Waste Paper Processors Association.

The European Paper Recycling Conference offers recyclers, brokers, consumers, mill representatives and equipment and service providers involved in secondary fiber trading and processing an important forum to network with industry colleagues and to discuss the latest market trends.

The European Paper Recycling Conference also includes a display area featuring equipment and service providers showcasing the latest products and technology to improve production efficiency and quality.

Potential attendees interested in staying informed of the latest program information for the European Paper Recycling Conference can visit www. paperrecyclingeurope.com. The official conference Web site contains registration information, program agenda, speaker and hotel information and other details.

CRAVING CONSISTENCY

Once recycled paper machines and mills are online, they can best be fed through long-term buying from valued partners, say mill buyer panelists who spoke at the European Paper Recycling Conference, which took place last fall in Brussels.

"Buying consistently leads to supplier understanding of our fiber specs," said Tony Denny of Harmon International Ltd., the U.K.-based buying arm for European mills operated by Georgia-Pacific Corp., Atlanta.

"We'll import [recovered fiber] from America, which sounds more expensive, but the yield at the headbox can be much better," Denny said.

Seeking European supply, Denny said Harmon International is emulating its U.S. sister company by placing balers at generating sites to procure clean, captive tons.

Johan van der Zwaag of Norske Skag's office in Belgium says the global papermaker operates nine mills using some 5 million metric tons of recovered fiber. This capacity represents a large investment in recovered fiber feedstock that is put into place to last some 40 to 50 years, van der Zwaag noted.

He said that Norske Skag has observed less volatile recovered fiber pricing, though the challenge of increased buying from Chinese mills has caused an overall upward trend.

In the United Kingdom, Peter McGuinness, Severnside Recycling, said the company supplies fiber to St. Regis Paper (both companies are part of DS Smith Group), which at 1.8 million tons per year is the largest paper stock consumer in the U.K. Challenges for mill buyers there include the temptation for more U.K. recyclers to export scrap paper and the declining quality of the domestic fiber supply because of increased commingled residential collection.

In such a climate, long-term relationships will prove crucial, McGuinness predicted. "As competition for fiber intensifies and mills come under increased market pressure, only those who have access to secure and economically priced fiber will succeed," he said.

The author is editor of Recycling Today and can be contacted at [e-mail].