Paper Recycling Supplement -- Six Good Reasons

The world is a large place, and there are literally thousands of paper mills all over it buying U.S. scrap paper. Observing a list of countries that bought scrap paper last year is quite impressive (click here to see a ranking of countries). The list of the countries that didn’t purchase U.S. scrap paper would have probably beeen a shorter one.

Ninety percent of the tons shipped end up in 10 markets: But that doesn’t mean we should ignore the others. Throughout the world there is a full gamut of paper mills that produce packaging grades, tissue, printing and writing grades, newsprint and wallboard, just as they do here in the U.S. These mills run from what we would consider primitive to world-class paper machines, and everything in between.

The consolidation of paper mills here in the U.S. basically has eliminated the small independent paper mills, but they are alive and well overseas. These smaller mills create great opportunity for us, because they will use grades of scrap paper that most U.S. mills wouldn’t consider. Some will go as far as buying contaminated grades and removing the contamination manually.

Interestingly, I ran a list of grades of scrap paper our company exported last year. There were 72 different types. I think that speaks of the willingness of the overseas buyer to try different things, and when they fit, use them consistently.

I’d like to stress that the export market is not only a place to find niche end users. The largest demand from abroad is for the more traditional bulk grades, such as de-inking grades and pulp substitutes. And while the demand in the U.S. for these grades has been stagnant at best over the last few years, it has been growing rapidly overseas. The greatest reason for this increased demand, simply put, is more new paper machines; and not only new ones—big ones.

A listing of announced additional capacity for container grades in 2002 shows this segment will increase consumption approximately 3 million tons. Statistics show that only 6 percent of this 3 million tons will be in the U.S.

In fact, the total world consumption of scrap paper is estimated to increase 20 million tons between the years 2001 and 2004. This growth in consumption is not occurring here in the U.S. I could count on one hand the amount of new machines that have started in the U.S. recently. But I don’t think I could count the amount of idled machines in the U.S. if I used all my fingers and all my toes.

There is no doubt that the export of U.S. scrap paper is also on the rise. Today, it is possible to export from almost anywhere in the country, and more and more dealers are taking advantage of the export market. The amount of tons exported from the U.S. has been steadily growing, and this trend is expected to continue

Thus, given the facts that domestic consumption is stagnant, overseas demand is growing radically, and the hard fact that all the scrap paper that is currently collected and baled in the U.S. cannot be consumed by domestic mills, it is a foregone conclusion that we need to look outside the U.S. for additional markets for our products.

The real question is: What is the best way to access these markets and what is entailed? This is where a marketing company or broker plays a significant role. There are six key reasons why you should use a marketing company or broker to be effective in the export market.

1) Established Lines of Communication

They have established lines of communication and exiting relationships in place.

In the case of Cellmark, we have 45 offices worldwide that are in daily communication with the mills. They are there to deal personally with the customers, to get orders, to coordinate shipments, to collect payments and to deal with any problems that may arise, such as claims.

2) Understanding Customers’ Needs

Just like in the U.S., each buyer will have its own individual requirements, and it is up to the marketing company or broker to ensure that the material being shipped will conform to the buyers’ expectations. In addition, certain mills will have other requirements that will need to be met. It could be something as simple as a specific loading pattern or bale type that is either acceptable or not acceptable. And a good marketing company will know it and ensure that the shipment complies with the buyers’ expectations and needs.

Many overseas mills require extended payment terms; as much as 180 days, and sometimes even longer.

To summarize, the export market is something almost anyone baling scrap paper should explore. If you decide to export, you should use an established marketing company or broker. Of if you choose not to, be prepared to invest the time and money it takes to develop proficiencies in all the areas mentioned above.