Paper

Winter Blues

The scrap paper industry doesn’t have much reason to celebrate this holiday season. Old corrugated containers (OCC) have seen four straight months of falling prices and will most likely end the year on a very weak note, sources say.

While the first eight months of 2005 saw a steady market for OCC, the late third and fourth quarters have not been kind. Domestic hunger for OCC has been lagging, and the export market cannot pick up all the slack to keep prices strong.

Coastal operations have an advantage, but the scenario has been particularly damaging to the Midwest. Far away from ports, Midwestern packers have to pay more in transportation costs to take advantage of the export market. "When you’re getting into transportation costs, it’s getting to be a break-even operation," says one Midwestern packer.

The loss of U.S. mill capacity has not helped the situation, either. One large mill closing in Michigan has been particularly damaging to the market in the Midwest, one recycler says.

One source says the current market conditions are being exacerbated by typical seasonal factors. But these are some of the weakest prices the market has seen in three or four years. One Midwestern packer expects OCC to bottom out at $40 per ton before things start to look up again.

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