A plateaued period

A number of recovered paper grades remain stable in much of the U.S., while some grades are seeing continual decline and shipping rates remain low. Prices for old corrugated containers (OCC), mixed paper and old newspapers (ONP) were unchanged at domestic mills in the Northeast, Midwest, Southeast and Southwest as of Sept. 4 compared with Aug. 5, according to PPI Pulp & Paper Week’s pricing survey.

On the other hand, sorted office paper (SOP) declined by $5 to $10 per ton across the U.S.

OCC pricing along the West Coast also saw its first decline since March, when prices dropped $5 per ton for domestic mills. PPI Pulp & Paper Week says this decrease in price occurred even though export levels increased primarily because of the lowest shipping rates in years.

According to a source for a large recovery company based in the Northeast, export activity is busy in the Long Beach and Oakland, California, areas. The source, whose company exports a great deal of materia off of the West Coast, says the excess volume of recovered fiber the company has in North America is being consumed by Chinese and Indian buyers.

“The advantage export buyers in China or India have is they can buy anywhere in the world … They’re very astute buyers. They buy when it’s low and get out when it’s hot,” the Northeast supplier says.

Despite its current economic situation, China is still buying recovered paper from the U.S., an exporter based on the West Coast says. “China is still the 800-pound gorilla, buying a lot of tons,” the exporter says, adding, “not as much as before, but they’re still buying.”
 

The exporter says Chinese and other overseas paper mills are recycling much more of the scrap paper generated in their own countries. “China is recycling a lot more than they used to, so a lot of the consumption is local waste paper instead of importing from the U.S.”

While his company’s volume has been “fairly stable, it hasn’t been growing the way it used to grow,” the exporter explains. “It’s plateaued, that’s why we’re diversifying into different things,” he adds.

The exporter describes how his company has reached out to other sectors of the industry to make up for the loss in recovered fiber volumes.

The Northeast supplier reiterates this point when he describes how his company is “in the business of managing discarded materials.”

He explains, “We don’t just do fiber anymore; we’re in plastics, metals and electronics … It’s not just a fiber-based company anymore.”

He adds that most of the company’s volume increases are a result of the Northeast supplier’s efforts to “go out and get new business” beyond paper. “We steal [business] from someone else,” he states, adding, “The smart companies are looking to broaden their scope.”

The company saw a 2 percent increase in generation from July to August, the source from the Northeast says.

He predicts that containerboard generation will grow 1.5 percent a year, while printing and writing grades will drop 3 percent to 5 percent.

Other than packaging grades, including OCC, the West Coast exporter says he doesn’t foresee much increase in demand for other recovered paper grades.

The overall downward trend in ONP generation will continue, he says.

As the West Coast exporter explains, “People don’t read many newspapers anymore, and a lot of the demand used to be from the newsprint mills. [However], a lot of the newsprint mills miscalculated how fast people moved into the digital industry.

“ONP volume has been declining,” the Northeast-based supplier says. “Mills have gone bankrupt and had to redefine themselves. That business is not a growth business at all.“

SOP and white ledger also will not see growth, he says.