Commodity Report

WIND AT ITS BACK

Throughout the past several quarters, Chinese buying has propelled orders for many grades of recovered fiber. However, Chinese demand is starting to ebb, and orders are slowing. The prevailing sense is that prices have climbed too high and that Chinese mills are loaded with inventory.

One West Coast exporter says the market for OCC (old corrugated containers) could experience a decline as Chinese buyers back out of the market, leaving exporters to wonder how long they may be out. A reduction in orders for recovered fiber, especially the bulk grades, could result in downward price adjustments.

Wind at its Back

In the United States, mill activity, while not significantly strong, has shown signs of life. Generation of printers’ grades is declining in light of reduced business for printing houses. Meanwhile, board production is balanced between supply and demand.

Sorted white ledger (SWL) is starting to become scarcer. The grade, which many tissue and high-end paper mills have sought, is more routinely being combined with the catch-all grade of office pack. Also, more SWL is being shredded, further reducing the available supply.

A change in dry cargo rates also was recently announced. Effective Sep. 1, members of the Westbound Transpacific Stabilization Agreement (WTSA) raised dry cargo rates by $150 per 40-foot (FEU) container and by $120 per 20-foot (TEU) container from the U.S. West Coast and by $200 per FEU and by $160 per TEU for intermodal moves or all-water shipment via the U.S. East and Gulf Coasts.

WTSA Executive Administrator Brian M. Conrad cites a steep decline in rates since the beginning of 2009 for the general rate increase.

(Additional news on paper recycling markets, including pricing information, is available from SDB’s sister publication Recycling Today at www.RecyclingToday.com.)