Prepared for packaging

Throughout most of the 21^st century, written communication formats—including books, newspapers, telephone directories and office memos—have suffered a loss of market share to electronic competitors.

Fortunately for recyclers and paper manufacturers, packaging grades of paper have maintained or expanded their roles in the industrial, commercial and retail sectors.

In the United States, the Washington, D.C.-based American Forest & Paper Association (AF&PA) says containerboard production in July 2017 was 5.2 percent higher compared to July 2016, and 1.7 percent higher compared to the previous month. The containerboard mill operating rate in July 2017 in the U.S. was 97.9 percent, and year-to-date production of U.S. containerboard for export is up 6.3 percent compared to 2016.

The positive news exemplifies the state of paper’s packaging grades not only in the U.S. but in most other global markets, providing an ample market for old corrugated containers (OCC) and other scrap paper grades prepared by recyclers.

DEALS BEING MADE

The first eight months of 2017 produced not only positive statistics for paper packaging grades, but also several investments in capacity and acquisitions tied to the packaging sector.

In July 2017, Canada-based Cascades Inc. announced it was making an $80 million investment into the construction of a new containerboard packaging plant in Piscataway, New Jersey, in the U.S.

This new plant is being designed to manufacture corrugated packaging products and “will be among the most modern of its kind in North America,” according to Cascades. It is scheduled to begin operating in the second quarter of 2018.

Once all equipment is installed, total annual production capacity at the new Cascades plant will be 2.4 billion square feet. The company says the mill will have a surface area of more than 400,000 square feet.

“The investment announced today, which is already included in our capital expenditure budget, is part of the deployment of our strategic plan that aims specifically to modernize our assets and increase the integration rate between our primary production and conversion activities,” says Mario Plourde, president and CEO of Cascades. “It also is part of our continuing process to reorganize and consolidate our containerboard and packaging activities in the northeastern United States [and] will help us better serve our customers and boost our production capacity.”

Also in the summer of 2017, United Kingdom-based DS Smith PLC announced that, along with its U.S. subsidiary DS Smith Holdings Inc., it had entered into a conditional agreement to acquire 80 percent of Indevco Management Resources Inc. (IMRI), the holding company for Interstate Resources Inc. (IRI Group).

The seller of the 80 percent IMRI share is Merpas Co. S.à r.l., a Luxembourg-based holding company that will receive $920 million (€809 million) when the deal is completed. DS Smith describes the IRI Group, which is based in the U.S. state of Virginia, as a family-owned integrated packaging and paper producer concentrated on the East Coast of the United States. It operates from 19 production sites and has approximately 1,500 employees. In 2016 the IRI Group had revenue of $618 million.

On its website, IRI Group says its corrugating medium mill relies 100 percent on recovered fiber. “Many of the grades at our kraftliner paper mill are high in recycled content,” says IRI on the site, adding, “Trim, scrap and reject materials from our box plants are recovered, baled and sold [for recycling].”

Customers in the United States accounted for 94 percent of IRI Group’s sales in 2016, says DS Smith, “with the majority of the IRI Group’s customer base for its packaging products being FMCG (fast-moving consumer goods) and food customers.”

“We have seen significant customer pull for our innovative packaging solutions in the U.S. and are excited by the opportunity to grow and support our customers’ needs over this large and growing market,” says DS Smith Group Chief Executive Miles Roberts.

Another acquisition in the U.S. paper packaging market was completed in June 2017, when WestRock Co. announced it had acquired Multi Packaging Solutions International Ltd. (MPS) and certain operations of U.S. Corrugated Holdings Inc. WestRock refinanced MPS debt as part of the transaction.

Based in New York, MPS prints, manufactures and sells paperboard, paper and plastic packaging products in North America, Europe and Asia.  “I am excited about our acquisition of MPS, which is an important step in the continuing development of WestRock,” says Steve Voorhees, CEO of WestRock. “MPS is a leader in the value-added packaging sector, and the addition of MPS to WestRock strengthens our differentiated portfolio of paper and packaging solutions.”

WestRock also acquired five corrugated converting facilities from U.S. Corrugated, a maker of corrugated products for packaging and displays, with headquarters in the state of Pennsylvania.

WestRock says it intends to integrate 105,000 tons of containerboard converted annually by the acquired facilities and another 50,000 tons under a long-term contract with a newly created company formed from the remaining assets of U.S. Corrugated.

Making a big splash in May 2017, Australian Visy/Pratt Industries Global Chairman Anthony Pratt stated he is preparing to invest some $2 billion to expand his North American recycling, containerboard and box making operations. Pratt made public appearances with President Trump at a World War II commemoration ceremony, and later on Fox News television.

Pratt Industries, the U.S. subsidiary of Visy/Pratt, started operating in the U.S. in the 1990s and now runs four recycled-content containerboard mills and a network of more than 15 recycling plants and more than 40 converting operations.

The company spent $260 million to build its fourth U.S. containerboard plant, which opened in Valparaiso, Indiana, in 2016. Thus, a $2 billion investment is likely to include additional mills and considerable expansions in the recycling and converting sectors.

“We have 7,000 people that we employ at our 68 factories in America,” Pratt said of his current operations in a May 2017, interview with Fox News. “We’re going to invest $2 billion in 5,000 high-paying manufacturing jobs, mainly in the Midwest,” he said of the company’s expansion plans.

OPENING UP THE BOX

As the application holding an increasingly dominant role in the papermaking and paper recycling sectors, packaging will be a leading topic at several upcoming recycling events.

In Warsaw Nov. 7-8 at the 2017 Paper & Plastics Recycling Conference Europe event, the Recycling Today Media Group says it will present a diverse educational program and a roster of high-profile speakers who will address many of the foremost issues confronting paper recyclers and consumers in Europe and abroad.

The collection, processing, trade and consumption of paper and plastic scrap will be the center of attention throughout the event. Paper packaging specifically will be addressed in certain sessions, including its growth in Central and Eastern Europe at a Tuesday, Nov. 7 session called “A Revving Engine.”

At that session, one of the presentations will be made by Marcin Kwiatkowski, a purchasing manager of recovered paper with Ireland-based Smurfit Kappa Group (SKG). SKG describes itself as one of the world’s leading providers of paper-based packaging, with around 45,000 employees at some 370 production sites in 34 nations. The company, with annual revenue of €8.2 billion ($9.75 billion), operates 15 containerboard mills in Europe, including three in Germany, one in Austria and one in the Czech Republic.

On Wednesday, Nov. 8 in Warsaw, the session “Paper’s Shifting Dynamics” will offer presentations designed to examine whether Europe’s mill capacity is in line with genuine demand there, as well as the packaging sector’s growing dominance within the industry.

Speaking at the session are: U.S.-based consultant Bill Moore of Moore & Associates (who provided the first half 2017 recovered fibre report for Recycling Today Global Edition); Jochen Behr of U.K.-based packaging papermaker D.S. Smith; and David Powlson, the director of Poyry Management Consulting Ltd.

Several weeks earlier in Chicago, the 2017 Paper & Plastics Recycling Conference North America event, Oct. 11-13, will include a session titled “The Changing Paper Industry” on Thursday, Oct. 12. That session’s description says, “The North American paper and board industry has gone through radical changes on the finished product side for some time: a steep decline in newsprint production, mill conversions to OCC-based containerboard, and a steady loss of printing and writing papermaking capacity. This panel will explore a series of case histories of innovative ways mills are dealing with these issues.”

Moderated by Bill Moore, speakers at the session include Bob Carpenter of WestRock, Jay Simmons of North Pacific Paper Co. LLC (Norpac), and Glen Johnson of Alsip Minimill, a former printing grades mill converted to packaging grades and now co-owned by Rusken Packaging Inc.

In December 2017, forest products information services provider RISI will host an event that gives paper recycling and containerboard production combined co-billing.

RISI’s International Recycled Fiber and Containerboard Conference (RCP & ICC Conference) will be held in Chengdu, China, Dec. 6-8, 2017. In its previous five editions, the event was known as the China International Recycled Fiber Conference (RCP Conference).

RISI says it decided to reposition RCP conference by integrating its other international conference brand—the International Containerboard Conference (ICC)— to look at problems affecting recycled fiber, containerboard and corrugated paper “from a holistic perspective of industry development, covering macro-economy directions, Chinese government policy adjustments [and] the change of relationships between supply and demand and resulting market volatility trends.”

Throughout 2017, says the group, China’s Ministry of Environmental Protection (MEP) has undertaken a series of steps to create new policies and measures regarding the importing of some recovered paper grades, in particular mixed paper.

“Based on the current market hotspots, we will discuss a series of topics of common concern for the industry,” says RISI, adding that these hot topics will be addressed by “industry experts, economic analysts and conference participants.”