Pricing for old corrugated containers (OCC) exported to China dropped more than $20 per ton relative to the month prior for shipments out of every major U.S. port, while several containerboard mills in North America announced Oct. 1 price increases for the first time in three-and-a-half years.
The $50-per-ton price increases apply to linerboard and corrugated medium, marking the first increase since spring 2013, according to Boston-based research firm RISI.
The producers, including International Paper, Pratt Industries, Georgia-Pacific, WestRock and others, represent about 95 percent of kraft linerboard capacity, RISI reports.
In addition to this price hike, the paper company Sonoco, Hartsville, South Carolina, has announced plans to raise the price for all grades of uncoated recycled paperboard products by $40 to $60 per ton, depending on grade, effective with shipments in the United States and Canada beginning Oct. 3.
“It is critically important in a mature business, such as our paper business, to run our operations efficiently and provide a return that justifies continued investment,” says Palace Stepps, director of sales and marketing for Sonoco’s North America paper business, in a news release. “The increase is necessary to capture generally higher operating costs so we can continue providing high-quality, value-adding products to our customers.”
“Both high recovery rates and high reuse of fiber are examples of the corrugated industry’s commitment to producing sustainable packaging.” – Corrugated Packaging Alliance
Sonoco, which operates 11 paper mills, produces more than 1 million tons of finished product per year.
The availability of high-quality recovered fiber as well as advancements in papermaking technology have made it possible to reuse more OCC in the manufacturing process, says the Corrugated Packaging Alliance (CPA), Itasca, Illinois. The CPA reports that the strength characteristics of new boxes also have been maintained. “Both high recovery rates and high reuse of fiber are examples of the corrugated industry’s commitment to producing sustainable packaging,” the group says.
As for OCC pricing, the Sept. 7 PPW Yellow Sheet from RISI reports exports to China dropped in every U.S. region from the month prior, declining from $21 to $23 per ton FAS (free alongside ship, meaning the seller must deliver goods to a named port alongside a vessel designated by the buyer). In the U.S., pricing for OCC was stable in the Midwest, Southeast and Southwest month over month, while it dropped from the month prior by $10 at the Los Angeles port and by $5 in every other domestic region RISI tracks.
While export pricing of OCC to China is down month over month, OCC exports in the first half of this year increased 5.6 percent, RISI says, citing the U.S. Department of Commerce, Bureau of Census. However, if China’s buying of U.S. recovered paper decreases this year compared with 2015, RISI says it would be the fourth year in the last five in which China reduced purchases of U.S. recovered paper.
Exports of mixed paper and old newspapers (ONP) both declined 10 percent in the first half of this year. Overall, recovered paper exports in the first half of 2016 were down 6.7 percent to China.
Domestic pricing for mixed paper and ONP remained stable or declined in every U.S. region, with the exception of the $5-per-ton increase for ONP out of Buffalo, New York, reports PPW Yellow Sheet. Sorted office paper (SOP) saw the most gains, increasing $5 per ton domestically in New York, San Francisco, the Southwest and Pacific Northwest regions. In the Midwest and Southeast regions, SOP pricing remained steady from the month prior.
“The [uncoated recycled paperboard price] increase is necessary to capture generally higher operating costs.” – Palace Stepps, Sonoco
Looking ahead, factors that could affect pricing of and demand for recovered fiber grades include quality, PSI specification changes, transportation and Europe, among other influences, according to the article “Slowly but Steadily,” in this issue.
Explore the October 2016 Issue
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