- Chinese RCP buying now mostly done: Most of the 2020 import quotas have been filled as RCP from the US and Europe takes up to 45-60 days to reach China.
- Jan-August 2020 China RCP imports down 47% to 3.8mt: August imports have mimicked the trend seen in 2020 in anticipation of the full wastepaper ban effective 1 January 2020 (Download our recent report). Total RCP imports are down 3.5mt y/y, which has been partially offset by an increase in brown recycled pulp (BRP), which are now up 0.8mt or 164% y/y to 1.2mt.
- High domestic China OCC costs also driving brown recycled pulp (BRP) and containerboard imports: Most of the recycled pulp operations in Asia (c.1.5mtpa) are situated in Malaysia and Thailand, with a few in Indonesia. This capacity is geared towards China and to be sent in wet form (shorter distances than US). With BRP helping a bit to alleviate fibre availability pressure, increased imports from Other Asia are naturally expected to tick up. There has been an increased uptick in order inquiries in Vietnam, Thailand, Malaysia and Indonesia.
- However, Other Asia has stopped buying RCP and waiting for prices to drop: Some pricing pressure seen on US OCC as signalled by buyers in Taiwan and South East Asia. However, RCP collections in the US remain a risk due to COVID.
- We caution around elevated OCC pricing as pressure is now mounting in Indonesia: c.10 overseas suppliers are allowed to export RCP to Indonesia after having legalized their registrations in their countries of origins (US, Netherlands, Italy, Japan, South Korea and Thailand).
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