Commodity Report

2006 is finally looking up for the recycled paper market, particularly old corrugated containers (OCC), which saw a reported $10 price increase in April.

The small jump has been much anticipated after a disappointing last quarter of 2005 where OCC prices languished around $45 per ton, which was "crippling for everybody," says one Midwestern packer.

Prices increased a bit in March, and with the $10 boost in April for OCC, the entire market is picking up steam, a trend sources hope is here to stay heading into the summer months. "The paper business is looking brighter," one Midwestern recycler says.

However one source reports the West Coast showing somewhat softer markets for OCC. "Inventories are high, and exports aren’t too strong yet," the packer reports.

The market has not seen much change for other grades—old newspapers (ONP), mixed paper, sorted office pack (SOP) and deinking grades. Sources report material continues to move at a steady pace and prices have remained stable and practically unchanged from last month. "OCC is kind of a market in itself," says one Midwestern recycler.

However, one source reports sluggish markets for some of the high grades in the Midwest, particularly manifold white ledger and white blank. He says that mill closures in the region have been the chief cause for depressed prices.

On the export front, China continues to buy steadily, but not aggressively, says one Southwestern paper recycler, who also reports steady export activity to mills in Mexico. A Midwestern recycler says China uses enough paper to ensure its status as a regular buyer, even if it doesn’t have the insatiable appetite for paper seen in previous years.

One aspect of the business that is becoming all too predictable is high operating costs, mostly because of transportation and fuel costs. This is becoming more of a long-term market condition—an unwelcome fact of the business that is unlikely to go away any time soon.

However some sources report the availability of transportation services improving, particularly trucks.