SPA Update on Brexit - November 2018
In a recent presentation from Andrew Large (Director General of Confederation of Paper Industries - the CPI) at the 97th SPA Conference hosted in Leeds, he gave the latest update as “now is the time to be thinking of your preparation for a NO DEAL Brexit as it is a 40% possibility of that being the outcome”.
The CPI continues to assess potential impacts of the various scenarios in the lead up to Brexit. In this respect, a very comprehensive document entitled “BREXIT BRIEFING : SEPTEMBER 2018” is available to all members of the SPA and guides the reader through all the many aspects of a NO DEAL outcome.
However, whether a deal is or isn’t agreed, the SPA felt it would be helpful for its members to have a practical review of what is happening.
For much of the UK corrugated industry, there is a significant proportion of paper being sourced from the main domestic suppliers’ factories in UK. Domestically produced recycled grades will remain available, as long as Mills don’t choose to take unexpected down time for maintenance.
Beyond UK shores, a large amount of new recycled capacity is coming on board across mainland Europe in late 2018/early 2019. We believe that the paper supply situation is easing overall, and in turn supply and availability of paper from mainland Europe will continue as before. In turn, for certain recycled grades, it is possible to source alternative supply from outside of mainland Europe too, should the need arise. In reality the potential imposition of tariffs is not really the main concern, as paper is already exempt under WTO rules.
The primary risk is the potential for increased bureaucracy leading to delays at ports, holding up shipments and impairing the ability to effect “on time” deliveries. It is noted however that the majority of EU paper suppliers hold stock across the UK, the levels of which we are reassured they would manage should a potential NO DEAL be approaching, and thereby help to mitigate the effect of any one-off or ongoing border delays.
It is possible that any ongoing extra administration, additional delays or supply chain costs that are incurred as a result of the changes post-March, and through the effects of Brexit, may have their effect on the price of paper in the UK. A potential falling market for paper may or may not mitigate for these extra costs.
We at the SPA will continue to monitor events and keep you posted on any significant issues or notable changes.