Commodity Report

Primed for Growth

While industry watchers have been noting all year that paper recycling markets are showing significant improvement, during the recently concluded National Recycling Coalition’s Annual Congress a roster of speakers touted the substantial shift in market conditions over the past year. Further, many of these same speakers predicted that going forward most grades of recovered fiber should continue to improve.

Stan Lancey with the American Forest & Paper Association, Washington, was one of the industry speakers who touched on the dynamics taking place in the domestic paper industry. In his presentation, he noted that over the past several years there has been a significant jump in recovered fiber demands. At the same time there has been a sharp increase in the price of the material.

In his presentation, Bill Moore, principal of Moore & Associates, Atlanta, noted that strong demand has been abetted by increased investment, principally in Asia. This is leading to the surge in demand for U.S. recovered fiber from mills in China.

While Europe has been another source of fiber to China, several industry watchers say that Europe, due to its own increase in secondary fiber consuming mill capacity, will move from a net exporter of recovered fiber to a net importer.

While increased capacity is not truly taking place in the U.S., the improved economy is boosting overall markets in North America. The most recent figures from the Fibre Box Association (FBA) show that corrugated shipments over the first seven months of the year stand at 228.53 billion square feet, a 3.7 percent improvement from last year’s seven-month total of 220.46 billion square feet. For July, shipments of corrugated boxes checked in at 34.029 billion square feet, a 3.3 percent improvement from figures for July of 2003

Along with a sharp improvement in shipments, the FBA also reported the consumption of containerboard increased by 4.8 percent to 2.651 million tons for July. For the first seven months, the consumption stands at 17.688 million tons, a 4.6 percent increase from the same time last year.

With domestic mills running better schedules, and the Asian market expected to continue to purchase more fiber to feed its new capacity, the expectations are growing that markets for many grades of recovered fiber will continue to enjoy renewed strength.

While high grades may show some improvement, the old corrugated grade and mixed paper grades are primed to be some of the biggest beneficiaries of a growing market in China. n