Pricing pickup

Domestic demand for recovered paper has helped to shore up pricing for this material, according to a speaker in the “Paper & Plastic Recycling Trends and Markets” session at WasteExpo 2016, June 6-9, at the Las Vegas Convention Center.

As countries around the world continue to recover as much scrap paper internally as possible, Dan Cotter, a vice president for Cellmark Inc. based in San Rafael, California, said pricing for a number of recovered fiber grades has remained stable because of domestic demand. He said every country is consuming more of its own internally recovered paper.

“As bad as pricing is, it’s much better than it would be if it weren’t for strong domestic demand,” Cotter said, referring to the U.S. market. “Domestic demand in the U.S. is certainly balancing out less demand from other countries,” he continued.

Supply and demand, Cotter said, “is still the basic law” for recovered paper markets.

He explained how paper use has declined globally. “The amount of paper being utilized by people across the world, especially in the U.S. and Asia, is dropping, and it is a trend that will continue into the future,” Cotter said.

Packaging grades are bucking this trend, with consumption actually increasing, he said.

Plenty of old corrugated containers (OCC) can be found in the recovered fiber stream today as more Americans opt to shop online.

“Some of this online shopping has really saved some of these MRFs (material recovery facilities) and collectors,” Cotter said, adding, “They’re happy to see more online shopping [reflected] in the waste stream.”

While consumption of paper is down overall, recovery of scrap paper is up. Cotter cited the most recent U.S. paper recovery rate—66.8 percent—as calculated by the American Forest & Paper Association (AF&PA), Washington, adding that it represents the peak of what can be recovered in this country.

Cotter said Japan has the highest recovery rate for paper in the world at 70 percent.

“Domestic demand in the U.S. is certainly balancing out less demand from other countries.” – Dan Cotter, vice president, Cellmark

Regarding pricing, OCC jumped by $5 per ton in the East and Midwest regions and by $10 per ton in the Southeast and Southwest regions compared with the month prior, according to the June 6 PPW Yellow Sheet from Boston-based research firm RISI.

Contributing to the increase in pricing in the Southwest were heavy rains and flooding, particularly in Texas and in Oklahoma, which slowed recovered paper supplies as demand from mills in Mexico picked up.

At $89.17 per ton in June, OCC saw its highest price per ton since August 2015, when it stood at $89.72 per ton. In September 2014, the grade sold for $90.25 per ton.

“If it weren’t for overcapacity, OCC would go for $100,” Cotter said.

He added, “Scrap paper prices will remain fairly high.”

Mixed paper, which sold domestically for $63.61 per ton in June, saw its highest price since October 2013.

Cotter predicted several recovered fiber grades will slowly fade away, including old newspapers (ONP) and white ledger. A number of newsprint machines in the U.S. already have been converted to produce other grades, he said.

RISI reports that pricing for ONP exports to China increased for the fourth consecutive month in June.

RISI reports that pricing for ONP exports to China increased for the fourth consecutive month in June, gaining from $21 to $23 per ton for shipments out of New York and Los Angeles ports.

In the U.S., domestic pricing for ONP and mixed paper increased by $10 per ton from the prior month in the Midwest and Southwest regions and by $5 per ton in every other domestic region, according to the PPW Yellow Sheet.

Sorted office paper (SOP) pricing surged by $20 per ton month over month in the Midwest, Southeast and Southwest, reaching its highest price in 21 months, according to the June 6 edition of the PPW Yellow Sheet.