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E-Commerce rise in US & Europe may create fibre ‘scarcity’ for Indian Paper Mills

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E-Commerce rise in the west may disrupt the recycled fibre supply chain in Asian countries

E-Commerce rise in US & Europe may create fibre ‘scarcity’ for Indian Paper Mills

Noida | 24 October 2021 | The Pulp and Paper Times:

The effects of the stay-at-home orders and lockdowns that were set in place at the beginning of 2020 due to the COVID-19 pandemic have created a number of changes in daily habits. The rise in e-commerce amid the pandemic has been one of the most significant changes to have occurred. This change in shopping habits has been beneficial for the pulp and paper industry as demand for paper and packaging materials used to ship goods to consumers has substantially increased. However, we are now seeing that this rise in e-commerce has also allowed US paperboard producers to turn recycled catalogs, boxes, and newspapers into new paper products.

“The Americans are using a lot of their own recycled fibre right now to serve the new demand which is coming, just exploded in the COVID time. So the availability of fibre and their willingness even to export paper out of those countries is highly unlikely immediately,” said Mr. Manish Patel, Managing Director at The South India Paper Mills Limited during ICCMA’s Congress 2021 held at Greater Noida. 

With more people shopping online, there’s a lot more cardboard in the recycling stream these days. It wasn’t just you. Americans consumed more corrugated cardboard boxes than ever last year.

"Just about every consumer segment accelerated in the fourth quarter. We continue to see strong double-digit growth in e-commerce, and we believe the vast majority of e-commerce adoption is permanent," International Paper CFO Tim Nicholls said in February.

Outlining the e-commerce rise in US and Europe, Ms Garima Aurora, Director at Unisource Papers explained the gravity of the situation during the event, she said that since the pandemic has changed the import of containerboard to India been less than to 15 percent main reason is already highlighted that within the home market (US & Europe) paper was consumed much more, corrugated box demand grew because of E-Commerce rise is one the reason. Even the corrugators were stocking much more paper because they were paranoid that prices might go up so they bought much more paper then requires. So the import to India was quite less.

Mr. Manish Patel said that there is huge spike in demand for corrugated packaging from the E-commerce sector in those countries and lot of new capacities in (US and Europe) are coming up to use recycled fibre. So the availability of recycled fibre for the Indian Market or elsewhere globally is likely to be difficult.

“You will see higher prices of the benchmark mixed waste grade” he said firmly.

Corrugated cardboard makes up a large percentage of the paper that enters recycling plants from homes, so the surge that has occurred due to the pandemic and the rise in e-commerce has significantly increased the value of mixed paper. New tissue paper and cardboard is created from the longer fibers in the discarded cardboard, which helps to strengthen mixed-paper pulp and produce improved material.

While answering one of the questions, Mr. Patel says, “e-commerce is becoming the habit for buying things so the retail trade is going to shift and stay there for a long time, and we have to be ready to deal with the idea that E-commerce is going to consume a lot of packaging from our countries not only here but also those economies over the time. So the availability of material (Fibre)is, I feel going to be sustained high”

Ms Garima informed that Chain is going to roll out coal phase-out policy, they want to substitute coal with other cleaner forms of energy like natural gas.

Mr. Manish anticipates that coal prices should see a correction post-December. 

New capacities coming on stream across Europe - including in France, Germany, Italy, and Turkey - will amount to almost 4 million tons of annual additional output potential over the next three years.

Replying on a question about the possible drop of export level of recovered paper to South & South East Asia due to new capacities, Mr. Jean-Luc Petithuguenin, PRESIDENT PAPER DIVISION, Bureau of International Recycling(BIR) said that, If there could be such drop, it will be due to high freight costs and/or lack of containers; the new capacities in Europe are not to consume the same qualities as in India or Asia – and when I say « qualities » I am referring to international standards such as the EN-643 norm.

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