Bulk bounce

After several months of fairly bleak markets, a number of bulk paper stock grades have experienced a jump in prices. Several paper stock dealers report a significant jump in price and demand for old corrugated containers (OCC) in particular.

One recycler says OCC was selling at about $150 per ton in early October. Several paper stock dealers say they feel prices could continue to increase through the next several months.

The price increases have taken some paper stock dealers by surprise. Earlier indications were that prices would struggle through the rest of the year. However, several recyclers point to a number of factors that contributed to the increase in prices.

A number of Chinese buyers are attempting to meet their import quotas for OCC, according to sources. Many large buyers have been falling short on their orders so far in 2012, therefore, several dealers speculate, this move will allow these consumers to retain their quota volumes in 2013.

Other exporters say they are seeing an increase in spot orders. These orders are not tethered to larger Chinese players and could be the result of favorable prices and a recent increase in demand.

Another factor that has helped spur OCC exports is the possibility of a strike by the International Longshoremen’s Association. Fearing an extended strike, many Asian buyers scrambled to get orders on the water. While the labor talks are ongoing, the parties have agreed to hold off on striking through the end of the year.

While offshore orders have propped up OCC prices, domestic mills are not demonstrating significant strength. One source says a number of paperboard mills have equipment that allows them to move between using recovered fiber and wood chips as raw material. The price spread between OCC and wood chips is not enough to shift orders in favor of recovered fiber.

Markets for old newspapers (ONP) and mixed paper have not seen the improvement that OCC has. The closure of Catalyst’s Snowflake, Ariz., recycled newsprint mill has put a significant chill on the ONP market through the western U.S.

With the steady decline in generation of new ONP, many recyclers are finding less material available. At the same time, many material recovery facilities (MRFs) are running their lines to increase throughput, which, according to several mill officials, has led to a significant drop in quality levels.

Mixed paper also has hit a rough patch. China is a growing destination for this grade, and in recent months inspections of incoming shipments at Chinese ports have increased.

The high-grade market, including most deinking grades, coated book stock and office grades, is demonstrating a mixed outlook. One exporter says offshore orders have been improving. Also, Mexico, which had reduced its purchases of high-grade material from the U.S., now looks to be ordering large blocks of material from dealers in parts of the United States.

Domestically, one packer says the deinking markets are in free fall. She says coated book stock, white ledger and sorted office paper all have seen sharp corrections during September. She points to the sluggish U.S. economy as a key factor.

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