Home Magazine Downward Slide

Downward Slide

Departments - Paper

Recycling Today Staff October 8, 2012

The last quarter of the year looks to be challenging for the paper recycling industry. The slump in pricing for many paper stock grades, first seen this summer, appears to be picking up momentum in the third quarter. Many of the paper stock dealers contacted for this report are expressing pessimism for the rest of the year in light of reduced demand from domestic and offshore buyers.

Bulk grades appear to be moving in a downward arc in terms of pricing. Many sources say they may be nearing a floor, however. Old corrugated containers (OCC) have been struggling with slow domestic demand and declining offshore shipments, most notably to China.

Several paper stock dealers say inventories at U.S. paper and paperboard mills remain high. Many mills, therefore, are buying much smaller loads of OCC, anticipating further price declines through the fall.

As challenging as the OCC market is, the situation with old newspapers (ONP) may be more difficult. At press time, Catalyst Paper is slated to shutter its recycled newsprint mill in Snowflake, Ariz. The mill has been a significant buyer of ONP from the Southwest.

Additionally, SP Newsprint, which is in bankruptcy protection, sold its recycled paper mills in Dublin, Ga., and Newberg, Ore., to SP Fiber Technologies LLC (SPFT). According to a Bloomberg article, SP Newsprint converted its Chapter 11 reorganization to a liquidation in Chapter 7 three days after the approval of the sale.

Declining newsprint production has recyclers looking to the insulation end market. However, a number of recyclers say available ONP is of low quality and may not meet the needs of that consuming market. One recycler says insulators need either over-issue news or clean news for their products, neither of which are available in large quantities.

Mixed paper, which was being sold for more than $100 per ton recently, has reached the mid-$60s as of early September. According to a source, mixed paper is being affected by a number of large single-stream processors cutting back on sorting of this material. One paper stock dealer says this trend is significantly damaging the ONP and mixed paper grades.
 

 

He adds that a large generator of single-stream material has been thought to be shipping large blocks of material to China, which is a key reason for the sharp drop in mixed paper prices.

Reportedly, a large shipment of “mixed paper” to China was rejected by customs agents, who deemed the load to be garbage, and are now cracking down on mixed paper shipments.

A source in the Midwest says sorted office paper (SOP) and coated book stock are declining in price as of early September. The spread between SWL (sorted white ledger) and substitute grades also are narrowing, making SWL more attractive to recovered fiber buyers.

While office grades have declined in pricing, optimism is growing on the East Coast in light of the startup of a new towel and napkin mill. TAK Investments will open the mill, which is expected to use a range of office grades as its primary furnish.

 

(Additional information on secondary paper markets, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)

Sponsors

Current Issue

Follow us on Twitter
Follow us on LinkedIn