Paper

THE DOG DAYS OF SUMMER

The end of July and very beginning of August have seen a slow recovered paper market in terms of both pricing and generation.

While the market typically bottoms out in early-to-mid July, it can usually be expected to rebound in August—a trend that has yet to be seen so far this year, sources say.

Generation is slow across the board, especially for the key grades of old corrugated containers (OCC), old newspapers (ONP) and even mixed paper.

The languishing generation of ONP is to be expected this time of year, says one Midwestern recycler, who describes the phenomenon as the "summer blahs," where not a lot of people are buying advertising in newspapers—or the newspapers themselves for that matter. Some industry observers say the market is still feeling the sluggish effects of the July 4 holiday, with mills taking downtime as well as consumers taking summer vacations.

While many in the industry expect generation to lag come the dog days of summer, what’s peculiar about the current scenario is that prices are also unusually soft, says one California broker. Sources from all over the country report dipping prices in ONP and mixed paper, although OCC, for the most part, has floated around the same price all summer.

"Normally in the summer the prices go up because the collection goes down due to all the holidays," says one California source. But the current state of the market is "well off the projections," says a Midwestern recycler.

Another Midwestern recycler predicts a possible rocky near future for OCC in that region in light of the closure of a Michigan mill, but says the effects are yet to be seen.

The market for office grades remains sloppy, and one source says not to expect any signs of improvement any time soon. He says the growing number of secure document destruction companies "is going to cripple that market for awhile."

While there’s still some movement, the export market has remained relatively quiet—"oddly quiet," according to one source. Chinese purchasing has slowed down considerably, which could be in part because some of the smaller mills are taking summer downtime.

However, a West Coast source reports that China is currently a bit over capacity and is having a difficult time maintaining the prices of finished paper products. He says this is discouraging paper mills there from paying higher prices for their raw materials.

Some industry sources report having trouble booking other Asian destinations for recovered fiber—particularly India and Pakistan.

While the movement may be slow, material is moving:There is little evidence of large inventories building up for any grade, sources say.

Transportation issues have also been causing some unrest in the market. A recycler in the Midwest reports that many recyclers in the region are starting to feel the effects of mounting transportation costs, which are chipping away at their margins.

(Additional news about paper recycling markets, including breaking news and pricing, is available online at www.RecyclingToday.com.)