Commodity Report

More of the Same

Sources report little change in either direction for the recovered fiber market as 2006 winds down and the industry prepares to begin a new fiscal year.

Prices for old corrugated containers (OCC) have remained stable, with minor variances depending on region. Generation is tremendous, says one Midwestern packer, contributing to an abundance of supply that is helping to keep prices somewhat depressed. The packer says the mild winter so far has contributed to the glut of material as people have no problem getting their material to the curb and drop-sites for easy pickup.

In addition, sources report that the market for old newspapers (ONP) is starting to slip after enjoying several strong months. Dropping investments in construction spending have begun to take their toll on the insulation market, which had been driving the demand for ONP for the past several months. The most recent statistics released by the U.S. Census Bureau in December have reported a 1 percent drop in total construction spending and a 1.9 percent decline in private residential construction—not promising statistics for insulators or for the materials they purchase. The ONP market is also suffering from an overabundance of supply as well, sources say, as newspapers are still thick with holiday advertising.

Demand for high grades remains strong, although a Midwestern source reports quality becoming a bigger issue as more material comes from the growing document destruction industry. She says the biggest culprit is "stickies," or adhesive material in sorted office paper (SOP).

Sources report steady export activity, with material moving particularly well out of the Pacific Northwest.

The market looks relatively solid going into the first quarter of 2007, although sources say much will depend on what winter weather brings, because bad weather can affect how companies build their inventories.