Will 2020 be an improved year for the Confidential Document Shredding UK marketplace

2019 saw the fall of the waste paper market value. Here is our assessment of the past year and what we can look forward to in 2020.

As seasoned professionals and pioneers of the data destruction industry for on and off-site destruction, Shredall SDS Group are seeing new changes to the industry, changes that have instantly impacted our sector that haven’t been seen for over 20 year’s.

Managing Director, Nik Williams comment’s ‘whilst GDPR saw everyone get their data protection in order as far as compliance was concerned, we never envisaged other factors that are currently changing the marketplace and the cost of document destruction. Whilst more and more reporting has been required by our clients, this coupled with external audits and international standards over the last few years, the rising costs in the main are absorbed by the high remuneration of the recyclables in shredded waste paper’.

‘Unfortunately, the market values for sorted office waste paper has plummeted to unprecedented levels not seen for years – this has been caused by trading levy’s and embargos between the USA and China reducing the global market, intern the USA recyclables have been flooding the European and home markets due to parity between the US dollar and the pound/euro. Also added to the mix the Chinese market has reduced the recyclables being exchanged between the west and Asia markets.’

Cardboard / packaging grades:

This sector has been hit the hardest over the last year with price reductions of up to £50 per ton experienced, taking the actual sales value of baled OCC to as low sub £5 per ton.

Why? The issue is China driven. They have been gradually reducing their reliance on waste materials imports since the start of the last decade, from a peak of 30m tons imported to around 9m tons in 2019, and a projected rumour of 6m tons for 2020 and that China will cease imports altogether . This reduction in China imports and the capacity reduction in the country, plus the development of their own internal recycling processes, sees a structural capacity deficit for waste paper consumption of around 9m million tons in Europe. Whilst there are new paper mills being built in Europe and Asia which will reduce or eliminate this deficit, this will take time and estimates are that we could experience a period of around 6-9 months, where prices are depressed.

Tissue / printers / office grades:

This market sector has experienced price reductions of up to £40 per ton and while prices still remain relatively attractive in comparison to cardboard prices, a drop of about 25% in the value of any commodity, is always difficult for the commodity producers (although great news of the consumers). The explanation for the price reductions are quite simple and in this case – pulp prices have been falling significantly since their record highs in 2018 / 2019 and as waste paper prices more often than not follow the price trends in the pulp markets, it was only a matter of time before waste paper prices fell in tandem. 2020 unfortunately started with another reduction of £8 per ton, however there is some positivity– pulp prices do seem to have plateaued in the last month or two so we are hopeful that waste prices will shortly bottom out here also.

Source – Lets Recycle: https://www.letsrecycle.com/prices/waste-paper/

2019 UK domestic mill £ per ton	January	February	March	April	May	June
Mixed papers	30 – 38	20 – 30	15 – 25	15 – 25	15 – 24	10 – 27
Old KLS (cardboard)	60 – 67	50 – 65	45 – 65	47 – 65	40 – 60	35 – 50
Multi-grade	165 – 170	165 – 168	165 – 168	160 – 165	160 – 165	150 – 156

2019 UK domestic mill £ per ton	July	August	September	October	November	December
Mixed papers	10 – 24	*10 – 25	*10 – 20	*5 – 15	*0 – 10	-VE 5 – 5
Old KLS (cardboard)	35 – 45	40 – 55	38 – 50	28 – 40	20 – 32	10 – 15
Multi-grade	150 – 155	145 – 150	145 – 150	145 – 150	138 – 142	130 – 137

So, what is the industry outcome to the likes of Shredall SDS Group?

Chairman and founder Lloyd Williams comments,

‘It’s very unfortunate, but the security of protecting data leaks and company’s data secrets coupled with employees protection rights for the destruction of their records has led to our clients requiring higher levels of service and compliance. Shredall SDS Group foresee that whilst things may pick up in late 2020 it is more likely that 2021 will be the start of a recovery for prices and it should be a much better time for the industry as new mills will be in place.The commodity is out of our control and will be the same throughout the industry.’

Lloyd continues, ‘Paper and the tissue grades in particular will always exist. When China open their doors a little wider the rest of the global market will rise again. New paper mills are being built around the world and will need more material thus driving the prices back up.Our primary objective to all our clients remains the same as it has for the last twenty three years - our customers security is paramount.’