Paper Recycling Conference: Dueling Price Methodologies

Representatives from RISI and Forest2Market make their cases for their recovered paper pricing models.

October 15, 2012
Recycling Today Staff

Presenters from two paper industry information providers offered insight into how they gather recovered fiber pricing at a session called “The Changing Face of Industry Pricing Indexes” at the 2012 Paper Recycling Conference in Chicago.

Todd Petracek of RISI Inc., Bedford, Mass., updated attendees on the changes taking place now that RISI has acquired Official Board Markets (OBM, also known as the Yellow Sheet).

In an initial transition stage the company is providing both its own Pulp and Paper Week pricing (known as PPI pricing) and acquired OBM pricing. RISI is releasing the pricing the fifth of each month. By early 2013, RISI will unify the pricing, adopting some OBM grades and regions and maintaining others from PPI.

The merger will allow PPI and former OBM editors to work together, said Petracek, providing “collaboration and checks and balances” that he said will improve the pricing survey process.

Petracek said RISI will continue with its methodology of journalists contacting sources in the mill, brokerage and recycling industries to collect open market transaction prices for different grades in different regions of the country.

A new product RISI will soon be offering is a weekly export price index, “based on actual transactions” with the index prices “only available to those who submitted data.”

Peter Stewart of Forest2Market, Charlotte, N.C., which offers the Market2Mill recovered fiber pricing service, criticized the journalist-based survey model, saying it adds seller or buyer bias to the equation. “It’s just inadequate for business going forward; [the indexes] are subject to manipulation and bias,” said Stewart.

Forest2Market’s Market2Mill service has been designed to collect transaction data from mill and recycling plants, said Stewart, with Market2Mill collecting some 42,000 such transactions in September 2012. Of those transactions, Stewart said 58 percent came from mill buyers and 42 percent from recyclers.

Stewart said the Market2Mill monthly report, also made available the fifth of each month, provides “unsurpassed detail,” including freight terms and pricing.

The Market2Mill information can allow buyers and sellers of recovered fiber to “determine if [they’re] performing well,” said Stewart. “Market2Mill handles the data so you can handle your business.”

The 2012 Paper Recycling Conference wasOct. 14-16 at the Marriott Magnificent Mile in Chicago.