Prices of waste paper soar as demand surges

WHY HIGH PRICES

Global economic recovery.

Growing demand for paper worldwide, particularly in the dynamic Asian economies.

Increasing numbers of recycling mills being built to circumvent high pulp prices.

WESTMINSTER (England) — The worldwide surge in demand for paper had led to a sharp increase in prices for waste paper as well, said a Financial Times report.

In Britain, a tonne of once-read newspapers was worth £100 (S$224) in April, up from £70 in March and £20 a year earlier.

As a result, the Westminster City Council’s rubbish is in hot demand. In recent months, waste-management companies from Britain, the United States and even China have approached the local authority about handling the refuse, most of which is paper, the Financial Times reported yesterday.

"The way waste paper demand has taken off over the last six months, it has become a very aggressive market. Everyone is looking for where they can get hold of used paper," said Mr Mark Banks, the council’s recycling officer.

With waste paper now commanding record prices, and new recycling plants coming on-stream this month that are set to expand demand, a trade that was once "run by people in baggy sweaters and sandals", according to one industry observer, is now set for a new era of competition and consolidation.

Mr Geoffrey Jones, national secretary of ~the British Waste Paper Association, said the surge in waste-paper prices was caused by 4he same factors that pushed up European newsprint prices, which prompted the launch six weeks ago of a European commission investigation.

Global economic recovery, growing demand for paper worldwide, particularly in the dynamic Asian economies, and the Increasing numbers of recycling mills being built to circumvent high pulp prices has resulted "in an imbalance in supply and demand, that has driven up the price for waste paper."

Mr Jones argues that the waste-paper industry is cyclical, noting that prices only recovered to 1990 levels last December after "four barren years".

Elsewhere in the industry, however, there is more confidence in the long-term future of the wastepaper market. This month, another recycling plant, Aylestord Newsprint, owned by SCA-Minorco-Mondi, the Swedish-South African joint venture, will come on-stream with a capacity to recycle 380,000 tonnes of waste paper per year by 1997.

Aylesford forecasts that by then, UK recycling mills will require 1.2 million tonnes of waste paper each year, up from 750,000 tonnes last year, while total available raw material will grow more slowly to three million tonnes in 1997, from 2.8 million tonnes last year.

The belief that demand will swell and put continued pressure on supply is being reflected in the growing interest of the large integrated waste-management companies in the small independent wastepaper collectors.

Earlier this year, UK Waste — a joint venture between Wessex Water and Waste Management International of the US —bought Clarfield Recycling, the Bristol-based waste-paper collector, for an estimated £2 million, a signal to the industry of the increased value of wastepaper collection networks to International waste managers.