The paper industry’s push toward recycled content

Paper and packaging companies have been making an effort to use more recycled content over the past several years, with 25 expansion projects or new builds announced since 2017, according to data from the Brattleboro, Vermont-based Northeast Recycling Council (NERC).

“North American paper mills saw twin opportunities in 2017,” NERC says. “More goods were being sold online, increasing the need for boxes, and the Chinese government proposed a ban on importing recycled paper, increasing the need for domestic capacity to use recycled content.

“Their response was to launch an unprecedented expansion in North American capacity to use recycled content.”

Released in mid-March, NERC’s report, “Recycled Paper Capacity Increases in North America 2017-2024,” estimates these 25 investments in recycled paper mill capacity have the potential to use more than 8 million tons of old corrugated containers (OCC) and mixed paper.

However, the report says, less-efficient, more costly mill capacity often is shut down when new capacity comes online.

“While we do not know yet what the total new capacity will be, we know this expansion in using recycled paper is unprecedented,” NERC says.

The majority of  new capacity NERC lists is for mills producing linerboard and corrugated medium, using mostly OCC as feedstock. NERC notes almost half the mill projects anticipate using some mixed paper.

“Several mills plan to consume significant amounts of residential mixed paper,” the report says. “Because the price for mixed paper tracks that of OCC, increased capacity and market value for OCC normally increased the price paid for [mixed paper].”

Companies that invested in recycled paper capacity increases since 2017 include Packaging Corp. of America, Copamex, Pratt Industries, Bio Pappel, International Paper, Nine Dragons, Graphic Packaging, Domtar, Sonoco and Cascades, among many others.

However, during a Recovered Paper Industry Fireside Chat the Institute of Scrap Recycling Industries (ISRI) hosted in January, James Derrico, vice president of new business development at Sweden-based CellMark, said no matter how much the quality of recycled-content paper products has improved, he doesn’t see U.S. recovered paper consumers moving away from using virgin material entirely.

“They always want a strong box,” he said. “People associate a good-quality box with good-quality products, and brands know they’re not going to move to a highly recycled-content box for all their products.”

Speculation has been ongoing about what all this new capacity will do to recovered paper markets as supply continues to be a challenge since e-commerce has slowed considerably since the boom of 2020. However, with five of the 25 projects coming online in 2023 alone, the increased demand to feed those machines has pushed OCC prices up well above where they were a year ago.

According to Fastmarkets RISI’s PPI Pulp & Paper Week for March 5, the OCC U.S. average price is $103 per ton, marking 12 straight months of pricing increases. The OCC yearlong pricing progress puts the March average at $70 per ton—a 212 percent increase from the March 2023 average of $33 per ton.

Speaking about containerboard mills during the ISRI fireside chat, Leonard Zeid, president of the paper brokerage division at Moline, Illinois-based recycler Midland-Davis Corp., said, “I think they are seeing some good future sales”,. “They’re certainly not prepandemic, but I do think the containerboard business has firmed up a little bit, but there’s going to be a lag in the pipeline.

“Obviously, prices have firmed up but, unfortunately, [they’re] firming up because the lack of supply. … If you think about it, the box plants at the containerboard mills are running slower; they’re making less boxes because people are buying less things. There’s less scrap in the stream. There’s less generation, and the mills are having problems getting enough scrap to meet the demands they currently have.”

Adding to that future demand are a pulping plant being built by Oregon-based Total Fiber Recovery that will consume mixed paper and OCC, as well as Atlanta-based Graphic Packaging’s $1 billion recycled paperboard mill in Waco, Texas, that NERC estimates will begin operations in early 2026.