25% RCP Tariff Means No Movement in the Market

A new 25% tariff will be imposed on August 23, fulfilling most of the expectations the industry predicted. The tariff has directly affected the market, and suppliers are battling price cuts from buyers. This week, Berg Mill highlights the new RCP import tariff and how the market is being affected.

Industry Behaviors

Even though the tariff will be taking effect this week, the behaviors in the industry have not seemed to change. Trade of imported RCP has halted, and buyers are looking for price cuts as high as $30/tonne. According to RISI, “Contacts reported that the overseas purchasing arms of top Chinese board producers have continued their sourcing of RCP in the USA, despite the tariff, for their own mills in China.” There are not many options left in the industry; are the producers starting to make their own rules?

There is also a backup at ports and many of the RCP imports will not be approved by the August 23 date. Customs has demonstrated a quicker clearance process, but there are too many imports held up at the ports. Customers are hoping for decreases in price even though there is an RCP shortage. The hopeful attitude is all that the industry has left with continual import changes and tariffs.

Price Fluctuations

Though other prices have seen increases, importing US RCP into China remains a low cost with the 25% tariff. RISI outlines the price changes as follows:

• US double-sorted old corrugated containers (OCC 12) – $305-330/tonne
• US select OCC (11) – $220-230/tonne
• US new double-lined kraft corrugated cuttings (DLK 13) – $310-330/tonne
• US sorted office paper (SPO 37) – $310-330/tonne
• US sorted clean news (58) – $290-310/tonne
• European premium OCC – $255-260/tonne
• European old newspapers (ONP) – $250-260/tonne
• Japanese OCC – $260-270/tonne
• Recycled pulp in domestic market – $275-280/tonne

European premium OCC, Japanese OCC, and Japanese ONP have seen price increases, while European old newspapers (ONP) are struggling. Since the tariff news was made public, there has not been an increase in requests for recycled pulp. Domestic RCP levels have seen improvement, but the Chinese recycled packaging market is not seeing growth. Past trends have illustrated that the time between now and the end of year typically shows more demand due to Christmas.

A Closer Look at the Numbers

RISI notes, “Altogether, inbound RCP tonnage in China was 7.1 million in H1 – less than half than H1 2017.” The data reveals that, as of June, 35% of approved import permits (10.844 million tonnes) have not been used. Customs has improved their efficiency, but there are still backups.

At Berg Mill, we continue to work hard to overcome fluctuating commodity markets, opening markets in other countries, forging strategic alliances, and improving domestic processing capabilities. We would like to help you move off any paper, plastic, or metal scrap. Berg Mill has the expertise and know-how to navigate through these troubled waters.

If you handle large amounts of recycled waste and are looking for solutions to offload idle scrap, please contact our industry veterans at Berg Mill Supply.

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