Waiting for a Sign

July paper stock markets appear to be somewhat listless. With only a few exceptions, it looks as if most recovered paper grades will move sideways as paper stock dealers look for direction on the future of the markets.

Prices have been showing modest declines in July. Bulk grades seem to be trending somewhat downward, though it looks to many as if they should not decline substantially further. Old corrugated containers (OCC) continue to see downward pressure, as many domestic mills are not aggressively seeking to build up inventory. Many paper stock dealers say that generation also is down, which is keeping supply and demand in balance.

One Midwestern paper stock dealer says generation is down from 10 to 15 percent this summer. While he is able to move all the material he handles, he says it is taking more effort to find homes for many bulk grades.

Another Midwestern paper stock dealer concurs that markets are spiritless at best, with OCC and old newspapers (ONP) both dropping by nearly $5 per ton in July and further price declines possible through the rest of the summer.

On the East Coast, a representative of a large independent paper stock operation says he expects to see several more months of softness before bulk grades stabilize. Along with OCC and ONP, he says mixed paper also is becoming more challenging as of late.

A paper stock dealer operating in the Mid-Atlantic region is bearish about markets in the South, saying that bulk grades across the board are deteriorating. He adds that there are some modest pockets of strength in certain Mid-Atlantic regions.

“Bulk grades are sluggish. People are being prudent about not buying too much,” he says.

Reflecting the softness in the grade, he notes that one index has dropped its OCC price to $110 per ton in the Southeast.
 

In the Midwest, a large paper stock dealer says office grades, such as sorted office paper (SOP) and coated book stock, have heated up a bit. He says OCC and other bulk grades remain soft, though they are above $100 per ton.

Deinking grades are in good standing in the Eastern U.S. A source says coated book stock and some pulp substitutes are selling at a $20-per-ton premium compared with sorted white ledger (SWL), a reflection of the healthy tissue market.

A West Coast exporter agrees that some deinking grades, including office pack and coated book stock, saw a modest price increase in early July. However, after an initial bump, prices drifted a bit lower toward the middle and end of the month.

Despite the strength in some office grades, one source says SWL prices have dipped. He speculates that some consumers are buying lower grades of office paper because of the price spread between SWL and office grades. However, the recycler speculates, this behavior will inevitably result in the narrowing of the price spread between SWL and other office grades. “It is a somewhat short-sighted view,” he says.

He theorizes that mills will continually move between the different grades, depending on the price spread.

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