Flooding the market

With the exception of sorted office paper (SOP), pricing for each of the major recovered fiber grades purchased for the domestic market increased or remained stable as flooding in the Southwest U.S. had an effect on supplies.

Mixed paper pricing rose in all U.S. regions for domestic mills compared with the month prior for the first time in more than four years, according to the May 5 PPW Yellow Sheet from Boston-based research firm RISI. Domestically, mixed paper pricing increased $5 or $10 in every region reported, while export prices to China saw a hike of $7 to $9.

Strong demand from China led to the uptick in mixed paper pricing, according to RISI.

A broker based on the U.S. West Coast says the “unbelievable rains” that have fallen across Texas and Oklahoma have “absolutely” affected generation. “We would anticipate greater generation than we have necessarily experienced,” he says of recovered fiber supplies in May.

A recycler based in the Midwest says as a result of the storms that spread across the Southwest, mills in that region have reached out to the Upper Midwest, to the benefit of his company. “It’s penetrating our markets … because one region of the country is suffering a tragedy, other parts of the country are filling the void,” the recycler says.

Mexican buyers, too, have purchased more recovered fiber from the Midwest region in the past month as their typical suppliers in Texas and Oklahoma are “suffering significant damages,” the Midwest recycler says.

He adds, “We’re the rubber band here in the

“Pricing has come up enough where all the recyclers, I’m sure, are feeling a little bit better about things than they were a couple of months ago.” – a West Coast-based broker

He says his company has seen “big record months” for the past three months, with inbound volumes increasing 10 percent each month.

A buyer based in Kansas City, Kansas, says typically a natural disaster is good for the recovered paper industry. He explains, “It spurs roofing, gypsum wall, boxes for clothing, goods and products you need in a home.” However, he recognizes that boost “is usually something you feel 90 days after the natural disaster.”

The Kansas buyer says a short-term deal for corrugated and double lined kraft from gypsum board mills has provided a “modest uptick” as they prepare for the effects from the flooding. “They’re trying to get the inventory up a little bit so the Home Depots and Lowes’ can have orders ready,” he says.

Higher pricing for old corrugated containers (OCC)—domestic pricing increased $10 in the Midwest and $5 in every other region, with the exception of the West Coast, which remained unchanged—was well-received by sources. “We’re happier than clams right now,” the Midwest recycler says of OCC pricing.

“Pricing has come up enough where all the recyclers, I’m sure, are feeling a little bit better about things than they were a couple of months ago. Steady as she goes,” says the broker on the West Coast.

OCC exports to China saw the only pricing decline across all U.S. regions, dropping $2 to $5, while export pricing for mixed paper, old newspapers (ONP) and SOP increased in each U.S. region.

While China’s economy is not anticipated to improve soon, the Kansas City-based broker says his company has sold bales to Europe, Mexico and Central America, despite the strong dollar “working against us.”

The high exchange rate for the peso relative to the U.S. dollar has meant fewer OCC purchases from Mexican mills. “They don’t want to buy any U.S. corrugated because the peso went down,” the Midwest recycler says.

On the other hand, he says, Mexico has purchased a sizable amount of ONP.

For a free trial of RISI’s PPW Yellow Sheet pricing, please visit www.risi.com/rt.