Recovered paper export challenges continue at home, abroad

As contract talks between the Pacific Maritime Association (PMA) and the International Longshore and Warehouse Union continued at West Coast ports through late-June, export concerns among recyclers in the United States and overseas had not eased.

Negotiations began May 12 between the PMA and the union, with the current contract set to expire July 1. The contract covers 29 ports across California, Oregon and Washington and includes more than 20,000 dockworkers.

Export concerns were highlighted at this year’s Bureau of International Recycling (BIR) Paper Division meeting May 23, where speakers reported that major international flows of recovered fiber were under “serious threat” from proposed changes to European Union waste shipment legislation, despite current figures underlining the pivotal role recovered fiber plays in the production of paper and paperboard globally.

Francisco Donoso of Spain-based Dolar Servicios Verdes SL and divisional president of the BIR Paper Division board said worldwide consumption of recovered fiber in 2020 totaled more than 208 million metric tons, with 182 million metric tons absorbed by packaging alone. He noted that Asian countries remain “keen customers” for Europe’s substantial recovered fiber surplus, but he warned “exports to Asia are going to be much more difficult than [they are] at the moment.”

In the U.S. market, Bill Moore of Atlanta-based Moore & Associates tells Recycling Today, “The export business went up dramatically, now it’s slowly coming down.”

He adds, “If you have a good domestic mill that pays on time and doesn’t give you quality claims that aren’t true, you’re better off selling there. I think that’s the mantra that’s playing out now as this new domestic demand comes out.”

During the BIR session, Donoso pointed to the volatility of old corrugated container (OCC) prices in recent years and noted the recovered paper sector “had every right to feel exposed and a little nervous,” but suggested hedging via futures contracts offers more stability and predictability.

According to Fasmarkets RISI’s June 6 edition of Pulp & Paper Week, U.S. OCC pricing ended its eight-month decline with a $5-per-ton increase in the Los Angeles and San Francisco regions and holding steady across the rest of the country.

Mixed paper pricing remained steady into June, as did pricing for the high grades, while sorted residential papers and news (SRPN) saw a $5 per ton increase across the board. RISI’s report also notes that generation of OCC and mixed paper is down midyear—particularly from material recovery facilities.

Despite generation at U.S. MRFs being down, the American Forest & Paper Association (AF&PA), Washington, announced the 2021 paper recycling rate, which reached 68 percent—the highest rate achieved since 2018. It also noted that U.S. mills used 80 percent recycled paper in 2021 to make new paper and paperboard products, and that one-third of U.S. mills exclusively use recycled paper.

According to the AF&PA, the recycling rate for OCC increased to 91.4 percent from 88.8 percent in 2020. Terry Weber, vice president of industry affairs for AF&PA, in a late-May news conference, said the paper industry has planned or announced $5 billion in manufacturing infrastructure investments through 2021 to help increase the amount of recovered paper used by U.S. paper and paperboard mills.

Kevin Duncombe, president of Western Pacific Pulp & Paper, says, “I think any new capacity is a bright spot, and there seems to be a steady list of new projects in the works."

One of the major projects announced last year is Atlanta-based Pratt Industries’ paper mill and box factory in Henderson, Kentucky. The $500-million project was announced in July 2021 and, after breaking ground in December, is on track to come online in the fall of 2023.

Kentucky Gov. Andy Beshear calls the Henderson project “the largest jobs announcement … in Western Kentucky in 25 years." In May, The Gleaner reported the city of Henderson secured a $125 million building permit on behalf of Pratt for the 372,000-square-foot facility.

The Gleaner says the city obtained the permit because the Pratt complex is being financed through an industrial revenue bond, and the city owns the 200-acre plant site. Pratt General Manager Ed Kersey told the publication that “we’re starting to go vertical” as above-ground construction has begun.