Commodity Report

Recyclers and mill buyers who were waiting to see what China would do are still waiting, sources say. Export demand hasn’t been particularly influential throughout the last couple of weeks, which has kept the markets for paper’s heavy-hitters—old corrugated containers (OCC) and old newspaper (ONP)—steady.

Recyclers and buyers aren’t necessarily concerned about the recent slack. "These are numbers you can conduct business at," says one Midwestern recycler.

While many sources remain calm about OCC and ONP, others express some frayed nerves over the high grades.

"We’re on a slippery slope," according to one source in regard to sorted office paper (SOP), which has been soft for months. Generation continues to soar—supplied by the secure document destruction industry, but prices have been lagging far behind other grades.

One source reports that quality issues in paper coming from document destruction firms have some mills taking a step back and re-evaluating the grade. Some are considering whether they should be paying SOP prices for scrap fiber generated from secure document destruction firms or whether the feedstock should be considered its own grade, one source says.

One recycler says the price of office paper has dipped below that of mixed paper and that mills are basically able to name their own price.

Out West, the situation is pretty much the same, only California sources report a little more export activity. One California recycler reports OCC has seen a tiny boost in price, while ONP has been slightly softer.

Most sources report generation of OCC and ONP is about par for this time of year and that, with the exception of office paper, material seems to be moving well.

One source says California recyclers are anxious and more than a little wary over the launch of extended hours at the ports of Los Angeles and Long Beach beginning in July.

According to local media reports, the introduction of the Pier Pass program is designed to encourage shippers to move their cargo off peak hours in an attempt to ease congestion at the piers. Port operators will be charging shipping fees starting at $20 per 20-foot container during peak hour traffic—3 a.m. to 6 p.m.

In other news, the international market was a topic of interest at the recent BIR Spring Convention, held in late May.

David Symmers of IWPPA (Independent Waste Paper Processors Association) in the U.K. reported that his country had achieved record recovered paper exports of 2.6 million metric tons last year, including more than 720,000 metric tons shipped to China.

Divisional Vice-President Hubert Neuhaus of Ludwig Melosch GmbH said Germany "seems to have reached a collection ceiling," and yet some 1 million metric tons more recovered fiber would be required this year to satisfy new production capacity." As a result, he expected a decline in German exports to Asia.

Divisional Vice President Ranjit Baxi of U.K.-based J&H Sales International Ltd. indicated that China’s recovered paper imports during the first quarter of 2005 had reached 3.08 million metric tons, with the United States accounting for 42.8 percent of the total, the European Union for 28.5 percent and Japan for almost 18 percent.