Commodity Report

Paper stock markets appear to be prime for steady to strong markets through the next several quarters. As the general economy improves, demand, both domestically and offshore, are showing signs of steady to strong buying.

Mixed paper continues to be the hot grade in the market. During the past several months, as more old corrugated containers (OCC) has been snapped up, fiber hungry buyers, especially China, are seeking out more material. Because this grade is far from reaching its maximum recovery level, the demand and supply for this grade are expected to remain fairly strong for an extended period of time.

OCC continues to hold its own, despite a modest downtick in early March. Chinese interests backed out of the market to a degree, softening prices for dealers. However, there are expectations that these same buyers will be jumping back into the market, especially with more capacity coming on line wihtin the next several years.

Along with offshore orders, many domestic paperboard mills are looking to build up their inventories and have been more aggressive with their purchases. Several mills have reportedly hiked their premiums to guarantee tonnage brought to their door. This is keeping material moving at a good clip.

High grades may start showing signs of an improvement in light of some modest improvement in pulp prices. Pulp substitutes and de-inking grades are more closely tethered to the overall pulp market. With more signs pointing to an improved world economy, more pulp producers are looking to push through price increases.

At the same time, the drop in activity during the past several years has reduced the supply of available pulp substitutes, cutting into the tonnage available.

The one grade that continues to be clouded in uncertainty is the old news market. Despite efforts by North American newsprint producers to slash capacity, demand has been iffy. While newsprint mills are now pushing for newsprint price increases, demand remains only tepidly better. With newsprint mills still not running as strong as they would like ONP demand remains only slightly better.

(Additional news about paper recycling markets, including breaking news and pricing, is available online at www.RecyclingToday.com.