A moment of relief?

Analysts expected old corrugated containers (OCC) pricing to reach all-time lows after a monthslong decline, but, for now, prices remain flat and offer a moment of welcome relief in what has been a “disastrous” year for the recovered paper grade.

Fastmarkets RISI’s Pulp & Paper Week for Dec. 5, 2022, reported the national average OCC price at $30 per ton. According to KeyBanc Capital Markets, Cleveland, that is only $10 more per ton than the lowest recorded OCC price ($20 per ton in 1993). In a Nov. 4, 2022, containerboard report, the advisory firm described the state of the OCC market as “a collapse in every sense of the word.”

“Global goods demand has dramatically deteriorated as the economy has done the same,” KeyBanc states.

The Washington-based American Forest & Paper Association reports a 9 percent decrease in total packaging paper and specialty packaging shipments for November 2022 compared with November 2021 in its monthly report released Dec. 16, 2022.

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“Everybody’s hiding because it’s such a disaster in corrugated,” Melanie Harman, executive vice president of sales at Duluth, Georgia-based Recycling Management Resources said in the fall.

In December 2022, Johnny Newsome, director of global mill supply and trade sales at Sonoco, a Hartsville, South Carolina-based recycled packaging producer, told Recycling Today the dynamics of the recovered paper market have shifted from domestic mills to export markets, but tight shipping capacity and increased export costs have created what he said are “significant issues.”

Vessel backups at major U.S. ports have been reported all year, and arguably the biggest impact has been felt on the West Coast. Container Management reports that the ports of Los Angeles and Long Beach recorded 21 percent drops in container volumes in November 2022 because of full warehouses, reduced orders from retailers and volume shifting from the West Coast to the East Coast.

Contract negotiations between the Pacific Maritime Association and the International Longshore and Warehouse Union—which were hoped to be concluded by the time contracts expired in July of last year—hit a snag in the fall, and analysts say they don’t expect a resolution in the near-term, further affecting supply chain networks.

“I can’t even tell you how critical this is,” a West Coast recovered paper trader said in the early summer of last year as contract talks were underway. “The whole process is geared toward import. How do we get all these ships that have all these goods coming in from Asia? How do we get them off that ship and unloaded and into the warehousing system? How do we get stuff on shelves for shoppers as quickly as possible? Meanwhile, us over here in export are like, ‘Hello? Remember us?’”

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Meanwhile, sorted office paper (SOP) prices have been on a slight downward trend that began in November 2022 after prices reached as high as $260 per ton in some regions. The national average SOP price, according to Fastmarkets RISI, is $227 per ton as of December 2022. The average price in December 2021 was $166 per ton—a nearly 37 percent difference.

Fastmarkets RISI reports some of the SOP price softening can be attributed to an early October fire at Resolute Forest Products’ Menominee, Michigan, bleached kraft pulp mill that “dried up tens of thousands of tons of consumption.” The fire lasted more than two weeks, and 420,000 square feet of the facility was a total loss. Resolute officials say they hope to resume operations sometime in 2023.

Despite some lingering doom and gloom in the market, the end of 2022 was marked by notable merger and acquisition activity. In December, Atlanta-based WestRock completed its billion-dollar purchase of Mexican paper and packaging producer Grupo Gondi, while Ohio-based Grief acquired high-performance barrier and conventional blow-molded container manufacturer Lee Container Corp. in a deal worth $330 million.