In Demand

Recovered paper dominates the ranks of commodities exported from North America. As the No. 1 export from the United States, the praise is usually reserved for bulk and packaging grades like OCC (old corrugated containers). However, recent trends have pushed sorted office paper (SOP) into the forefront as one of the most valuable grades on the market.

Office grades, like their bulk and packaging counterparts, are globally traded commodities, and demand from developing nations has driven prices for the material to historic highs.

On the domestic front, the booming secure document destruction business has had a measurable impact on the supply side, as well as on the composition of the grade itself.

"It’s just become a very popular grade," says Joel Litman of paper recycling company Texas Recycling/Surplus, Dallas. "It’s the grade of the 21^st Century, in a way. When we got in the business years ago, not many people handled office pack. Now it’s almost like corrugated."

The grade has been a particular standout in the first few months of 2008. "SOP seems to be the real belle at the party," says a recycler who operates in the Midwest. "It’s had the most upward movement in the last couple months of any grade."

Export demand has helped SOP to make a name for itself in the market, and many recyclers say they feel the grade is likely to hold onto its power position for the near future.

Export markets, particularly in developing countries, have been the primary drivers for recycled paper demand, and SOP is no exception to the trend, Mary Aldrich of MinnKota Recycling, Fargo, N.D., says.

"Export is driving the price," she says, adding that material is being exported "to China, Mexico, anywhere with big tissue mill capacity."

"There’s been pretty big growth," says Steve Spence, director of

Mexico is another major importer of office pack, says Litman, and Korea and India are also emerging countries in the fiber trade.

Office grades weren’t always the standout performers they have been lately. Aldrich recalls SOP prices hitting all-time lows at the beginning of the decade. "Those days are over," she says. "Exports have made a huge difference." Competition from offshore buyers has kept domestic demand strong and prices high, Aldrich says.

Overseas mills have a sizable appetite for recovered fiber and are investing in more sophisticated equipment to handle wider varieties of fiber to feed that demand, Litman says. This investment has been key in a sector where contamination is a constant and growing concern.

The growth in the secure document destruction industry has changed a number of things about the market for office grades, from the volume generated to how the material is collected, processed and priced.

"You’re seeing a demise of the general office recycling program," says Spence. "That material is being diverted to document destruction."

Sources say the secure shredding boom has affected quality more than quantity of office grades in the recycling stream. "It’s affected the quality aspect," says Aldrich, of the destruction industry’s impact on the SOP market. "There are a lot of undesirables that are ending up in the office sort, and it’s pushing prices down. We’re having to downgrade our material and we’re not seeing that sorted white ledger pricing."

Each mill has its own standards of what it will accept in its material—and what price it will pay, says Adam Kositzke of Wisconsin-based Fox River Fiber Co. Groundwood, unbleachables and brown fibers are common contaminants in the office paper stream, he says. However, the biggest contamination problem related to SOP has always been "stickies," Kositzke says. "The hot issue with SOP has been sticky pressure-sensitive concerns," he says. Those adhesives create problems for mills and for the actual pulp and paper producers, as they build up during the production of paper, Kositzke says.

Competition from the export market has pushed recyclers and mills to make changes and upgrades to handle the material. On the recycling side, "there’s more scrutiny of quality," Aldrich says.

"Mills are adding equipment, changing the way they run things to eliminate and remove those adhesives," Kositzke adds. "The document destruction industry has gotten so large and so strong, if you can’t handle that, you’re going to be missing out on that supply."

Kositzke says mills are working with suppliers to limit contamination and are improving operations to better process SOP from document destruction streams.

With those improvements in mind, the near-term outlook for SOP continues to be favorable.

Demand for recovered paper has continued to surge, even in the face of some less-than-stellar economic conditions in the U.S. Overall, those in the industry expect the market for SOP to remain strong.

On the other hand, the market outlook for old newspapers (ONP) has been bleak, with the newspaper industry reporting a decrease in advertising as well as the dip in subscriptions print media is experiencing because of competition from the Internet and television. Fears of declining supplies of office grades as offices become "paperless" have been voiced, but, so far, the market hasn’t confirmed those fears.

"People have been talking about it for years," says Kositzke. "But the simple fact is even when you do work via e-mail, you do a lot of paper work. Important things are printed; people still keep hard copies. The fear is there, but we haven’t seen a tremendous effect yet, and I’m not sure if we ever will."

"The computer was supposed to make everything paperless—we haven’t seen that," Spence agrees. For any work done on the screen, Spence says, in many cases, dozens of printed pages are still generated, so any threats from paperless offices have yet to be realized.

With that in mind, the supply and generation of SOP seems safe, and with so many developing countries around the world, demand is likely safe as well. Developing nations like China, India and others are demanding recycled paper, but the inhabitants of those countries are also developing consumer economies, which is pushing demand for the tissue products made from recovered fiber as well, Aldrich says, which should keep the market strong. "It’s really just a solid market, which is great to see," she says.

The author is associate editor of Recycling Today and can be contacted at jgubeno@gie.net.