<b>Tight Markets Seen for Most Grades</b>

Reports filtering in find markets for most grades of recovered fiber are a bit tight.

Normally this would be good news. Prices would be firming, with greater upward price pressure. However, many of the paper stock dealers note that the tightness is being driven more by the lack of supply. The decline in the amount of fiber is in direct correlation to the slide in prices for most grades of recovered fiber. With prices significantly down from the same time last year, more vendors are opting to stop processing some grades of recovered fiber. Additionally, there are reports of some collectors landfilling the material.

Prices for OCC have hit low levels, with some dealers in the East and Midwest having to drop their scale prices to 0 or even charge to take in the material.

Although some mills are running steady schedules, there doesn’t appear to be much in the way of any surge in orders.

The tightening in some paper stock grades also is being caused by a modest increase in interest by the offshore market. This hasn’t been without problems, however. With the price of most grades of recovered fiber still very low, there are more reports of some mill buyers offshore looking to file claims against many shipments.

The move has generated a significant amount of anxiousness by a host of exporters. A number of exporters report China as leading with the move to file claims, although other countries mentioned as becoming more claims oriented include Italy and Korea.

What has generated concern is that the claims are coming with markets at such a low level, making it extremely difficult for a host of paper stock dealers to still cut prices and take advantage of the movement.

On the East Coast one benefit that is being enjoyed is the relatively low freight rates. With high costs on the West Coast creating havoc for many paper stock dealers, some East Coast exporters are noting that the difference between freight rates between the two coasts are much more competitive. This has led to slightly higher offshore shipments from the East Coast.

The Midwest continues to suffer from the lackluster markets in the region. A slew of mills have been taking downtime, while there continues to be talk about more machines and even mills closing down, either for an extended period of time or for the long term.

Adding to the problem with markets in the Midwest have been the labor problems that could sharply cut into the flow of material in the Midwest, especially the Chicago area.

The overall market has moved up slightly, although preliminary indications for June find that the bounce is coming after markets over the past two months being characterized as disastrous.