Waste Paper in Russia = OCC Only. Rescue in EPR

Over the past two months, the price of MS-5B (OCC) grade waste paper in Russia has increased, following the growing demand for corrugated packaging. Center for System Solutions (Moscow) has analyzed the country’s waste paper market

“Over 73% of corrugated board products in Russia are made from recycled containerboard using MS-5B as raw materials,” says Denis Kondratyev, Deputy Director General of All-Russian NGO League of Waste Paper Processors Association, Director General and Partner of Center for System Solutions LLC.

“This means that the increased demand for corrugated board will definitely lead to the rise in demand for this grade of waste paper.

“The demand growth for corrugated board products is directly related to the depreciation of the ruble observed since the beginning of 2020. The currency fall has led to a decrease in imports of goods and an increase in exports.

“A similar scenario was observed in 2014, when the ruble began to fall rapidly. This served as an impetus for the development and implementation of the import substitution policy.

“The supply of the Russian market cannot cover the growing demand for MS-5B waste paper. It is practically impossible to increase the existing volume of waste paper collection, since it is already close to the maximum (88%).

The maximum effect of replacing MS-5B with other waste paper grades is estimated at 300,000 tons per year

MS-5B is the most common and collected waste paper in Russia. The supply of other grades is significantly lower due to the lower collection rate (21%). The net exports of Russian OCC in 2019 amounted to only 72,000 tons.

“Almost the entire volume of waste paper collected in Russia is processed domestically. Most of it (84%) is used in the production of recycled containerboards. For this type of product, MS-5B waste paper has practically no alternative.

“The rest of the waste paper is used in equal shares for production of other packaging (molded containers, packaging paper, heavy cardboard, etc.) and cardboards (mainly for construction and facing).

“It is important that packaging can be collected and reused in production (including cyclic production, i.e. processing of packaging into a similar package or materials for its production). Construction and other types of paper cannot be recycled.

“In the production of other types of paper, more waste paper of other grades can be used, but due to the low development of the system for collecting and processing secondary raw materials in Russia, the collection of such waste paper is extremely low.

“The price of MS-5B waste paper may go down by reducing demand and increasing supply.

“A decrease in demand is possible as the supply of other grades of waste paper increases. This will definitely reduce the consumption of MS-5B waste paper in the manufacture of all types of products, except for recycled containerboards.

“An increase in the supply of other grades is possible only with the development of a system for handling secondary material resources. The main driver for the development of this system is the optimization of the Extended Producer Responsibility (EPR) mechanism.

More than 200,000 tons of OCC can be imported from the EU to Russia annually

“The maximum effect of replacing MS-5B waste paper with other grades is estimated at 300,000 tons per year.

“An additional volume of OCC can be obtained by importing from EU countries. The high efficiency of waste management policy in the EU has led to a surplus of supply of this waste paper grade.

“More than 200,000 tons of OCC can be imported annually. At the same time, the price of waste paper in the EU is almost twice lower than in Russia.

“If both measures are applied, the supply of MS-5B waste paper in Russia could be increased by 13%, causing the return of its price back to normal.”

gofro.expert


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