High Grades See Sharply Higher Prices, Better Demand

Paper stock markets are showing very little in the way of any slowdown. More paper and paperboard mills are looking to push through price increases for finished products. Many paperboard producers are looking to push through linerboard and corrugated medium price increases next month.

Pulp producers are having good luck with several price increases for various types of market pulp.

International Paper announced plans to push through a price increase for printing and writing paper.

All these increases are pointing to better than expected price increases for many paper stock grades, especially pulp substitutes and deinking grades.

Vendors throughout the country see demand holding firm, with little in the way of any softening during the first half of the year. One of the hottest grades continues to be sorted white ledger. Reports from throughout the country find demand remains strong, with both domestic and offshore orders helping to push demand for the grade. Additionally, orders into Mexico, as well as other Latin American countries are helping drive demand for the grade.

While orders remain strong, there is growing concern that supply of the material is becoming more difficult. Several vendors note that with the cold weather only now starting to take its toll on supplies, there has been some concern that mills could wind up without the needed supply. Sources say prices supply will be tight until the spring. Adding to the overall tightness in the market is the difficulty many vendors have in obtaining trucks on a regular basis. A number of vendors report having longer delays in obtaining vehicles to move material, causing some stronger buying by mills to compensate for these shortages.

Mill prices for SWL are topping the $250 a ton level at many mills, with some indications that prices will continue to move upward.

Benefiting from strength in the SWL market has been office pack grades. Demand is very strong for this grade, with indications prices are anywhere from $140-$160 a ton at the mill, depending on the location.

Despite better prices, there appears to be shortages in supplies in some regions. Without any substantial increase in the collection there is expected to be more tightness in this market through the first few months of the year, if not longer.

Another grade showing some strong upward pressure continues to be coated book stock. The grade always has been one of the more volatile materials. With some sharply increased buying by some inconsistent buyers, as well as larger orders into Mexico, there appears to be more tightening in this grade.

Lower grades also are showing stability, with several grades showing strength. Although grades such as old corrugated, old news, and mixed paper are not showing the strong upside strength seen with many of the higher grades, there continues to be better flow of material from most regions.

On the West Coast, strong offshore orders are helping firm up supply in the region. There are reports of strong buying of OCC by China ahead of the start-up of a new board mill in the country. Other mills are having to compete with this strong buying by purchasing more material to build up their inventories.

Mixed paper markets are in fairly good shape. With strong demand from most other grades, the demand and interest for a more generic mixed paper has picked up over the past several months. The improvement is helping push the mixed paper price to a level that allows for some companies to access greater amounts of the material.

The reasons for the tightness in the market are plenty, from seasonal swings to weather related problems, strengthening markets and higher finished product prices. One area that has been discussed a number of times, has been the role of waste management companies, especially with some perceived shortages. During the past decade many solid waste companies went headlong into the recycling segment of the business, often paying significantly higher prices.

After a heady market during the middle of the 1990's, many of the grades collapsed. The result was many recycling facilities, whether owned by waste management companies or owned independently, shut down.

Adding to this trend has been the move by some waste management companies to pull back their recycling programs. Anecdotal information points to many waste management operations reducing their intake of material. Also, many MRFs have closed their doors, redirecting tonnage to other facilities, in some cases to independent paper stock operations. The result was some marginal tonnage not being collected.

Now, with paper stock markets in much stronger shape, many previous handlers of the grade are not rushing pell-mell back into many of these grades. Concern and caution is being seen. However, in the meantime, mills are running much better schedules, leaving some vendors unable to supply all the material they need. Down the road there will likely be further problems with supply, especially as overseas and Mexican mills continue to push for greater supplies of material.