Due to the Vietnamese government's control and restrictions on the new crown epidemic, the amount of waste corrugated cardboard in Vietnam's domestic factories and households continues to decline, so Vietnam continues to increase its imports of waste paper. From the beginning of 2021, so far, the price of waste corrugated cardboard exported from various countries to Vietnam has soared by about 60%.
As a necessary raw material for the production of corrugated boxes, due to the increasing shortage of sources of this product, the price of waste corrugated cardboard has risen by about 20% since April. In addition, Vietnam's imports of waste corrugated cardboard in various markets around the world are also increasing. Among them, Japan's exports to Vietnam increased by about 60%.
Vietnam used to be a typical country and representative of the Asian region that successfully responded to the new crown epidemic, but now this country has an average of 10,000 new coronavirus infections every day. This continuous growth rate has put severe pressure on the medical system and infrastructure in Vietnam. .
Therefore, as the more contagious Delta virus swept the area, Ho Chi Minh City and other areas in southern Vietnam implemented stricter lockdown policies. In late August, the Vietnamese government began to deploy troops to Ho Chi Minh City and distribute food and other necessities to domestic residents.
However, the demand for waste corrugated cardboard in Vietnam as a whole is still strong. Although China bans the import of all types of waste paper on environmental grounds, it has increased its imports of pulp. In recent years, many facilities have emerged or expanded in Vietnam to process waste corrugated cardboard into pulp and export it to China.
Let’s take a look at the US market. The average price of used corrugated cardboard in the US has risen by about US$20 since August, to US$183/ton, which is a difference of US$90 from last year’s average price. This also makes many people wonder if this will continue. how long.
As the global blockade for the prevention and control of the new crown epidemic has stimulated a large increase in online shopping in the first quarter of 2020, the demand for corrugated packaging has also increased. Although this change in purchasing mode is largely enforced by the government, as consumers become more accustomed to or even prefer online shopping, consumers' purchasing habits have undergone structural changes. According to the US Bureau of Labor Statistics' Corrugated Box Manufacturers Producer Price Index, the index measuring the price of corrugated packaging rose to 369.4 in May from 342.1 in the same month of 2020.
Rising corrugated packaging prices may squeeze many companies that rely on packaging to deliver goods to online consumers, especially when demand remains high and subsequent rounds of lockdowns are developing globally. However, the latest US data show that paper manufacturers are increasing production capacity at an unprecedented speed to cope with the surge in demand for corrugated boxes, which will then be processed into corrugated cardboard.
The increase in demand for corrugated packaging products has caused prices to rise to record highs, which have now surpassed the highs reached in the fall of 2020. These price increases coincided with record waste paper prices. More and more global economies are implementing import regulations that directly affect the industry. China’s ban on imports of waste corrugated cardboard at the beginning of this year is a good example.
Why does the OCC price remain high and what is the future trend?
Observing the raw materials used in the production of boxboard, it can be seen that it is particularly affected by the rise in the price of recycled fibers. This is mainly due to the fact that the recycling rate of waste corrugated cardboard has declined during the pandemic. Large stores cannot produce waste corrugated cardboard on the same scale as before the new crown epidemic, and the price of recycling from consumers is even higher, and the amount of waste paper recycled is completely different.
The global market is still extremely uncertain and fluid. As countries adapt to new regulations and continue to respond to the evolution of the pandemic, the global price of waste corrugated cardboard is likely to remain high in the short term. However, the growth rate of corrugated packaging will be much slower than in 2020, and the price of waste corrugated cardboard is not expected to remain high for a long time. Fisher International expects that prices will peak before they start to fall in the next few months.