Packaging progress persists

Pricing increases and strong domestic demand for U.S. old corrugated containers (OCC) have continued throughout the summer as has China’s demand for the brown grade. Despite pricing boosts domestically and overseas, mixed paper sold for nearly $100 per ton less in the U.S. than OCC in July compared with June, according to the July 7 PPW Yellow Sheet from Boston-based research firm RISI. The run on OCC pricing has been the most sustained ever in the U.S., RISI reports.

“The levels for domestic Southeast mill[s] and for exports to China out of Long Beach/Los Angeles were near their 25-year highs, with delivered U.S. OCC to main ports in China at $292 per metric ton on July 7, $3 per ton below the early March high,” RISI reports. “Southeast OCC was $185 per ton at the FOB (free on board) seller’s dock on July 7, the same as it was in March.”

OCC prices to China increased by $5 to $19 per ton FAS (free alongside ship, meaning the seller must deliver goods to a named port alongside a vessel the buyer designates).

With hikes of $18 to $21 per ton FAS, mixed paper had the largest export pricing increases among the major secondary fiber grades.

A New York-based exporter says many factors are at play. “There’s just good, strong demand right now for packaging,” he says. “On top of seasonality, you have some pretty good economies starting to build—the Japanese economy is looking good, Europe’s economy is doing well, our economy is doing well—and I think it’s going to keep things pretty strong for a while.”

Increased recovery of OCC is cited as one reason for the corrugated industry’s reduction of greenhouse gas emissions and its ability to “provide for a well-balanced system of fiber,” according to the Corrugated Packaging Alliance’s (CPA’s) recently released life-cycle assessment (LCA) on the U.S. corrugated industry. Its third LCA report, the CPA says the study measures and documents the cradle-to-cradle environmental impact of corrugated packaging manufactured from 2006 to 2014 through four life-cycle phases: converting, use, pulp and papermaking operations and end-of-life use.

“The LCA results demonstrate the efforts our mills and converting facilities are making to reduce the industry’s supply chain impact on the environment,” CPA Executive Director Dennis Colley says.

The corrugated industry reduced its greenhouse gas emissions by 35 percent between 2006 and 2014, the study shows. The reduction was driven by increased OCC recovery and the use of energy generated from renewable, carbon-neutral biomass and decreased overall use of fossil fuels.

In other industry news, the Paper Stock Industries (PSI) Chapter of the Institute of Scrap Recycling Industries (ISRI) has changed No. 56 sorted residential paper (SRP) to sorted residential papers and news (SRPN), RISI reports.

“It had come to the attention of the PSI Chapter of ISRI that the No. 56 specification named sorted residential papers may have been causing some confusion in the marketplace for recovered paper,” says ISRI Research Analyst Bernie Lee. “After reviewing the previous documentation of the development of this specification, it became clear that it was necessary to correct the name to sorted residential papers and news (SRPN).”

Lee adds, “This correction is to clarify that this grade (No. 56) is to be considered a dirty news grade rather than a mixed paper grade. The ISRI Scrap Specifications Circular is being amended to reflect this change, effective July 1, 2017, No. 56 SRP will now be No. 56 SRPN.”

In 2016, the ISRI board retired three old newspapers (ONP) and three mixed paper specifications—ONP grades Nos. 6, 7 and 8 and mixed paper grades Nos. 1, 2 and 3. It introduced sorted clean news (SCN) No. 58 and a new mixed paper grade, what is now the SRPN No. 56.