Done with double-sorted OCC

Recyclers and industry consultants say the price of double-sorted old corrugated containers (OCC) has decreased by $40 to $50 per ton for export markets as of the first week of October. Export pricing for that commodity escalated quickly in the August and September buying periods—the average price of double-sorted OCC for export to China was between $167 and $185 per ton in the September buying period, according to Fastmarkets RISI’s PPI Pulp & Paper Week Report Sept. 4. But prices for double-sorted OCC have dropped almost as quickly as they rose.

This year, China has been the main consumer of double-sorted OCC in export markets, and the price decrease this month indicates China is winding down its recovered paper imports. China’s Ministry of Ecology and Environment (MEE) has stated that it will no longer accept and approve import applications for “solid waste,” including recovered paper, starting Jan. 1, 2021.

“Shipments to China are rapidly winding down,” says Dan Gee, president of Recovered Paper Consulting LLC in Richmond, California, and a senior associate at Atlanta-based Moore & Associates, adding that he has heard that some West Coast suppliers of double-sorted OCC are still supplying that material to China but that no more East Coast suppliers are shipping double-sorted OCC to China because of timing on logistics.

He adds, “Some shipping lines are even just arbitrarily stopping shipments to any Chinese ports.”

Recycling Today reached out to several recyclers to gauge whether the price decrease on double-sorted OCC will have an impact on pricing and demand for lower grade OCC. Sources express concern that the declining value of double-sorted OCC could have an adverse impact on No. 11 OCC pricing in export as well as domestic markets.

A recycler based on the West Coast notes that the price differential between regular OCC and double-sorted OCC won’t be nearly as extreme in the future.

“The differential between [OCC] No. 11 and No. 12 is going to diminish significantly,” he says, adding that with China soon to be out of the market for that commodity, buyers will have the upper hand when purchasing double-sorted OCC.

He adds that demand is still good for double-sorted OCC. “There are certain destinations that require close to China specifications, like Indonesia or India, but those are much smaller markets.”

A national mill buyer says that it was a “sigh of relief” for him and some other mill buyers to see double-sorted OCC prices come down this month. With China just about out of the market for high-quality double-sorted OCC, he says, more high-quality, reasonably priced material is available for domestic paper mills.

Gee adds that it is still a little early to tell what will happen to demand for OCC in response to China shutting its doors on all recovered paper. He notes that the ongoing pandemic also has made it tough to predict future buying patterns.

“It will take a few months to see what happens on the export and domestic side” for double-sorted OCC, Gee says.

Although double-sorted OCC prices aren’t likely to be as high in the future, Gee says decent demand for this commodity will remain in Southeast Asia and India.

Domestic markets also will continue to consume double-sorted OCC in the future. The national mill buyer says he expects mills to continue to purchase double-sorted OCC for linerboard production, especially at mills that might lack new technology to handle dirtier materials.