<B>OCC Markets Flat for September</B>

Old corrugated markets are still grinding downward, with downtime continuing to be a factor in the market. Moving into the middle of September there have been some reports of mills looking to take monthly downtime through the rest of the year.

Several sources note that one large consumer of OCC in the South will be taking machine downtime at one of its mills for two weeks a month through the rest of this year.

There also are indications that other large consumers of OCC will be taking periodic downtime at particular mills on a regular basis over the next four months. Several packers note a host of larger board mills have indicated plans to take intermittent downtime through the rest of the year.

While the possibility of weeks of downtime being taken each month through the end of the year is a cause for concern by many packers, several suggest that such an advanced indication could be a strategy to "chill" the OCC market as packers and brokers look to move their material elsewhere.

On a more promising note, over the past several weeks there have been signs of a gradual re-entrance of the offshore market for OCC. While prices haven't been bouncing back up on the East Coast, any move by offshore buyers to this area could be an indicator that a bottom is being hit and prices won't get much lower.

Exporters have been reporting of greater interest by Asian buyers for the grade, although orders haven't been that much stronger. The price disparity between shipping rates on the East and West Coast have been one of the biggest factors for the imbalance between shipments from the East and West Coast.

Although downtime is sapping a significant amount of optimism in the short term, there are pockets of strength in the Southeast. While downtime seems to be the biggest concern, there are a number of paperboard mills that have switched back to buying more OCC. According to one source, Georgia-Pacific, which had been using double-lined kraft cuttings from its own box shops has opted to switch back to using more OCC. This is a positive sign for a segment of the paper recycling industry that has seen OCC prices erode sharply over the past several months.