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The paper prices have been undergoing a steep rally from the very low level in the 3rd quarter of 2009 to the high level we can see today. The reasons for this were a combination of effects. First of all, the level we had last year was writing red figures for almost all paper mills; something had to change to bring the paper industry again to normal financial levels. This was not obvious due to the lack of demand and a few large new investments to come up in the market.
In spite of this, the paper industry managed to offset a series of price increases to move away from the red figures. Beside this movement we could see a shortage on the waste paper from the first quarter of 2010 which was developed due to the demand from the Asian area and due to the demand for the new machines that came in to operation in Europe. This we have seen in the price development which now is placed on a level of around the 380 to 400 euro per ton for the corrugated core material.
Further increases can not be justified now because of the needed profit level. Only because of raw material changes price adjustment could be the case.
We hold the opinion that the paper prices will stay stable for the coming months and there is a tendency to predict this for the rest of the year. It needs to be said that this is strongly influenced by the currency effects between the Euro and the Dollar. The recently announced upgrading of the Chinese currency versus the Dollar may disturb the flow of waste paper on the short term as well.
Wieger Wiegersma Founder & Business Development
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