Demanding domestic

The recent rebound in the old corrugated containers (OCC) market continues as demand has increased in light of expanded production capacity in the U.S. This strength is despite relatively soft demand from China and Asian markets overall.

Sources, including Lee Cornell, director of mill supply for First Star Recycling, based in Omaha, Nebraska, point to a successful run by domestic mills and an increase in generation from residential homes for the strength in OCC.

Frank Crowley, senior vice president with the brokerage firm Ekman & Co. AB, who is based out of New Jersey, says the slowdown resulting from the backlog of containers at West Coast ports during the labor dispute earlier this year increased demand for East Coast material. “What that did is it drove East Coast prices up a little, so where normally there would be a $20-25 per ton gap [relative to West Coast prices] on the bulk low grades—OCC, newspaper and mixed paper—that gap shrunk to where it was maybe $10-15 a ton,” Crowley explains. “The only reason why the gap didn’t shrink any further is that demand from China was relatively soft, so there was no panic buying when they came into the East Coast market in a big way,” he adds.

While volume heading overseas off of the East Coast was not much more than average because of the soft Chinese market, Ekman Recycling Executive Vice President Phil Epstein says similar problems are apparent on both the East and West coasts: Containers are available, however, terminals are operating at a slow pace, creating bottlenecks at the ports, backing up mills as well.

OCC generation has increased in the residential sector as more people shop online, increasing the amount of OCC shipped to homes, says Mick Barry, president of Mid America Recycling, Chicago.
 

“Generation in certain areas has shifted because of e-commerce; there’s more coming out of the household in terms of boxes, and it looks like a trend that will continue,” Crowley describes.

As for the Southwest market, demand for OCC and old newspapers (ONP) from Mexico has not been strong, Barry says. “Paper mill buyers in Mexico aren’t buying,” he states.

Barry predicts Mexico will soon reach beyond its borders to purchase additional recovered fiber.

He points to the restart of a paper machine at International Paper’s Valliant, Oklahoma, paperboard mill as a factor for increased OCC demand. “That’s helping to increase Texas demand, [and] also increasing Midwest demand,” says Barry.

For packaging grades, domestically, demand is strong, however, on the export side, Crowley says the low quality of material coming from single-stream material recovery facilities (MRFs) has lessened demand. “Single stream is affecting flow of material,” he says.

Single stream also results in “a fairly poor quality” ONP bale, and “If you don’t have the quality, they’re not buying,” Barry says of Mexico.

Sources say consumers in India, Thailand, Vietnam and Indonesia all are buying recovered fiber from the U.S.

However, China’s buying is lower than years’ past, Cornell says, “resulting in adequate supply” to meet demand.