Recycled paper up in price

The price of recycled paper is set to rise due to a downturn in the supply of waste paper in Europe.

The shortage stems from a reduction in paper recycling, due mainly to a fall in paper use, and high demand from Asian countries, which want to buy it for their booming economies.

The price of collected waste paper has risen by about 20 per cent this year to between €72 (£49) and €77 per tonne in Germany, the largest market, according to Andrew Rettman, associate editor of industry information provider Paperloop.com. It is predicted that they could reach €100 per tonne by the end of this month. UK prices have been flat, but he said that this country's prices lag behind the rest of Europe.

"There is a lower generation of recovered paper, as people are not using it in the first place," said Mr Rettman. "And Asian buyers are buying at higher prices."

A rise would affect packaging companies, which use the paper for cardboard boxes, and the newspaper industry. Although reduced demand has not prompted an increase in the price of end products so far, Mr Rettman says large packaging companies are trying to charge more.

David Gillett, the Paper Federation of Great Britain's head of environment, said there was a UK shortage of high-quality recovered paper, not contaminated by rubbish in waste tips. He is calling for better recycling provision by local authorities so people can separate their rubbish, and predicts a growing shortage as the economy picks up.

Research from Goldman Sachs, the investment bank, said that although waste paper prices fell in last year's second half,a European supply shortage would push them up.