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Split Personality

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While OCC and deinking grades are holding up fairly well, the old news and mixed paper market are seeing some softness.

September 12, 2013
Recycling Today Staff

The paper stock market appears to be of two minds. Old corrugated containers (OCC), deinking grades, coated book stock, pulp substitutes and several high grades of paper, including office pack, have shown upward strength in price and demand. On the flip side, some of the bulk grades, including mixed paper and No. 6 old newspapers (ONP) and deinked news No. 8, are slipping in price and demand, in some cases significantly.

For OCC, the improvement has been driven by a combination of better-than-expected orders from Chinese consumers and a moderately more robust domestic market. Generation also has been sufficient to keep the flow of material to end markets steady. Several paper stock dealers say their packing plants’ inventories are minimal presently.

One Midwestern paper stock dealer says the OCC market “looks good” as of mid-August. “There is a nice rebound in pricing,” he adds.

The dealer says many domestic mills are playing “catch up” with orders, which is helping to firm up OCC pricing throughout various regions of the United States.

While domestic demand has been fairly decent, according to some reports, many domestic board mills have large inventories of raw material. Therefore, these mills may scale back their recovered fiber purchases in the fall.

If this happens, another paper recycler muses, OCC orders could dip later this year.

Haulers of OCC may get some help from a new law in New York City, which the National Solid Wastes Management Association (NSWMA), Washington, D.C., has applauded, saying it will increase the penalties against unlicensed carters and others who remove cardboard and other recyclables from licensed haulers’ customers.

The New York City Council has approved a law that will amend the administrative code of the city of New York, making it unlawful to remove or accept certain recyclable material.

The law, known as Intro 889A, has been designed to reduce losses suffered by licensed carters and the city’s Department of Sanitation (DSNY), NSWMA says in a news release.

While OCC pricing and demand has been healthy, mixed paper and ONP grades “are in the pits,” a large paper stock dealer says. “It is awful,” he continues. “Exports are in shambles. It is basically a crapshoot shipping overseas right now.”

In light of this situation, the paper stock dealer says his company is avoiding buying more of either of the two grades from some sources because of fears that the material will not meet the quality standards of domestic or offshore consumers.

China’s Operation Green Fence has magnified challenges that already exist for mixed paper. As the country continues to crack down on suspect shipments, some large exporters have decided they do not want to risk having loads rejected and are redirecting shipments to domestic mills. This switch, however, has flooded domestic markets with mixed paper, driving down pricing.

The prevailing attitude regarding offshore orders, particularly to China, remains cautious. Several exporters say they are shifting tonnage away from China to other Asian countries.

Several other exporters say they have shifted more of their ONP and mixed paper exports to India. However, a number of exporters say paper stock buyers in India also are scrutinizing incoming recovered fiber shipments to ensure their quality is acceptable.

The quality of the packs being shipped to buyers has noticeably improved, several paper stock dealers and mill buyers say. Despite these improvements, many of these same mills say they are being more aggressive in pushing for higher material quality standards. As a result, the profit margins at many paper stock plants have narrowed as they adjust their operations to meet consumers’ higher standards.

The Mexican market, which has been one of the key end markets for high grades of recovered fiber, appears to be getting more aggressive with its recovered fiber purchases from the U.S. A number of paper stock dealers say that tissue mills in Mexico are increasing their purchases of some office grades, ledger and coated book stock.

For ONP, one of the biggest concerns has been the fairly sharp decline in generation brought on by declining print readership. Newspaper publishers are responding by reducing their home delivery of issues. The Cleveland Plain Dealer, the largest daily newspaper in Ohio, reduced its home delivery from seven days per week to three days per week beginning in August. Advance Publications, the publisher of Cleveland Plain Dealer, has reduced home delivery at its newspapers in Birmingham, Mobile and Huntsville, Ala.; New Orleans; and Harrisburg, Pa. Several other newspapers have reduced home delivery in recent years.