"Sloppy" Markets

As summer approaches, the pickup in recovered fiber orders from domestic board mills appears to be slowing. Several paper stock dealers say domestic recycled board mills are signaling that they have met their inventory needs and are reducing their new purchases of old corrugated containers (OCC) and, to a lesser degree, old newspapers (ONP) and mixed paper.

Several paper stock dealers in different regions of the U.S. say that many of these consumers have full inventories of recovered fiber and that markets are getting “sloppy.” However, a strong price correction does not appear to be underway.

Chinese mill buyers continue to play a major factor in the paper stock market. A number of sources say buyers for Chinese mills are purchasing their usual contracted amounts from coastal sources, though they are not buying additional material on the spot market of from the center of the country. This is further softening prices in the Midwest. Coastal regions, however, should still see steady orders for material into the summer.
 

“China is being selective in buying right now,” a West Coast exporter says of OCC. “They want to push the prices down.”

This has resulted in a $5-per-ton price cut in some regions of the U.S., the exporter adds.

Mexican and Canadian markets also are slowing. Several sources say some larger mills in Canada and Mexico are reducing their consumption of bulk grades. Newsprint mills in Canada and Mexico reportedly are taking downtime because of decreased demand for their finished product.

A paper stock dealer based in the Southwest says there is an abundance of OCC in Mexico, which has reduced demand.

A representative from an integrated paper company says that while the North American economy is “OK,” generation of material has not picked up significantly. This is creating problems, as he says his company is seeing volume decline “across the board” for grades of recovered fiber.

Another paper stock dealer concurs that generation of new recovered fiber has declined, which may indicate that the economy may be slowing again.

Old newspapers (ONP) markets are in a slightly worse shape than those for other bulk grades.

One recycler says SP Newsprint’s mill in Oregon has been consuming more wood instead of ONP, which is cutting into the overall demand for the material.

Other North American newsprint mills continue to take downtime, trying bring supply and demand into balance. In Mexico, Cartones Ponderosa is taking downtime, which will reduce the flow of ONP into Mexico. A number of newsprint mills in Canada are struggling with declining demand for their finished product.

Canada-based Catalyst Paper, a newsprint producer that has filed for bankruptcy protection, continues to struggle with its creditors and with restructuring.

Higher grades have held up somewhat better than their bulk counterparts. A paper stock dealer in the Southwest says sorted office paper (SOP) markets in that region are holding up fairly well because of purchases by Mexican tissue and towel mills.

(Additional information on secondary paper markets, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)