A measured tone

Summer has been positive for the domestic paper recycling industry. Paper stock markets are finding solid footing, with domestic mills seeking bulk grades and prices stable.

While the domestic market has been holding its own, the offshore market has been struggling somewhat. Chinese consumers continue to send out mixed signals, resulting in fewer export shipments of recovered fiber.

The market has been trading in a narrow range. However, many paper stock dealers say they have been able to strengthen their month-to-month orders. In some regions of the country, paper brokers say they are seeing an appreciable increase in interest, which is challenging them to go after more tons to meet existing orders.

The bellwether old corrugated containers (OCC) grade appears to be trading with price fluctuations of around $5 per ton. The tightness in the trading range is attributed to the difference between domestic mills’ interest and the paucity of new orders coming from China.

One source cites a large shipper of bulk grades to China as saying its orders to the country are down around 20 percent this year from the same time last year, while last year’s orders were down around 20 percent from 2012.

Despite the negative tone emanating from the Chinese market, domestic mills appear to be willing to purchase more recovered fiber. Several sources in the Southeast say mills in that region have been more active as of late, which has buoyed the opinion of recyclers.

Deinked No. 8 news has shown resiliency and rising prices. The price improvement, several sources say, likely is because of a lack of available supply rather than a significant increase in orders. With a steady decline in printed newspaper readership, less clean No. 8 news is on the market.
 

One source in the South says he has had the good fortune of finding No. 8 news, which has allowed him to keep his consuming mill customers filled with sufficient material. However, even he acknowledges that supplies are becoming harder to come by. He says he worries that a general decline in the grade is inevitable.

A source in New England says domestic material flow has been good, though concerns continue regarding the long-term viability of many consumers. He says he is concerned about the amount of capacity shutting down throughout North America. While declines in newsprint production are well-documented, he adds that the printing and writing paper sector is in an even more precarious position.

A number of noteworthy paper industry deals also have occurred. Austell, Georgia-based Caraustar, which is owned by private equity firm H.I.G. Capital, has acquired The Newark Group, Cranford, New Jersey. The deal may give the combined company access to more recovered fiber for its mill network.

While the Department of Justice has yet to approve the deal, if the merger is allowed to go forward, the combined company will be one of the largest uncoated recycled paperboard producers in the United States.

Caraustar also has acquired an SP Recycling facility in Tennessee.

While SP Fiber Technologies still operates a number of recycling facilities, it has signed an agreement with Georgia-Pacific in which its GP Harmon Recycling division, based in Jericho, New York, will supply OCC to SP mills in Dublin, Georgia, and Newberg, Oregon.

SP Fiber Technologies, which previously was known as SP Newsprint, has been converting its newsprint production capabilities toward kraft paper, which has resulted in the mill requiring more OCC as a raw material.

Another move geared toward strengthening supply was the acquisition of Accurate Paper Recycling, a Tampa, Florida, paper recycling firm, by Atlas Paper, a Miami-based recycled tissue and paper towel producer.