Paper

ON THE MOVE

Last month’s slow-motion market with piling inventories in many regions across the country has improved somewhat during the last few weeks of October, sources say, but the market is still sluggish.

Old corrugated containers (OCC) are still suffering the most of any scrap paper grade. Prices are particularly low—as low as $10 to $15 under the published asking prices in some cases.

Optimistic sources point out that at least material is moving, which was not the case last month.

A source in New England reports that the market is inconsistent. Some mills are buying, but grudgingly, while others are simply cutting back or refusing to place orders altogether.

Generation of OCC continues to be strong, which is most likely contributing to the apparent surplus and low prices. Generation can be expected to increase in the coming months as the country prepares for the upcoming holiday season and the increase in packaging materials that goes along with it that will end up back in the scrap stream.

Export markets, particularly China, have been picking up some of the slack from the domestic mills that have been running lean, sources say. A Midwestern packer says Mexico has also been buying steadily, the low prices increasing its appetite for U.S. OCC.

While China is engaging in some buying, it’s not pursuing the material as aggressively as some market watchers had predicted. Speculation ranges for why China isn’t buying as hungrily as anticipated, but some sources say it’s because China is suffering from some of the same high costs—like energy—as the United States.

Other grades are fairing better. Bolstered on the supply and demand side by seasonal trends, old newspapers (ONP) are enjoying a sturdier market than OCC. Advertising is up with the impending holidays and newspapers have grown thicker to match, keeping generation flowing and demand for ONP high.

Mixed paper is doing well domestically and in export markets, sources say. Even sorted office pack (SOP), which spent a good portion of the year slogged in a surplus with unimpressive prices, is showing signs of strength.

However, as winter approaches, transportation issues continue to be a concern. Weather is always unpredictable, but the potential for snow and ice could make an already difficult transportation situation worse, sources say.

The holidays can be an additional strain on transportation, according to sources. While typically a boom time of supply and demand for paper, increased shipping traffic creates heavy competition, which can complicate moving loads to their destinations.

Many sources expect the year to finish on a slightly depressing note, but most are confident that the first quarter of 2006 will bring higher prices, especially a rebound in lagging OCC.

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