A volatile reality

Over the last year or so, the old corrugated containers (OCC) and mixed paper markets have brought most everything but good news.

Prices for both grades have plummeted in 2025. As of November, the U.S. average per-ton price for OCC was $44, down nearly 41 percent from $74 in November of last year, while mixed paper prices have been more than halved, down to $20 per ton this November compared with last year.

During a seven-month stretch last year, OCC prices hovered between $101-$106 per ton, but the grade has not surpassed $100 per ton since 2022.

“[OCC] is all over the place. It’s one of the most volatile commodities ever, and this week … has been pretty scary,” industry veteran Bill Moore said during the Paper and Plastics Recycling Conference in Chicago in mid-October, referring to a new Chinese policy implemented Oct. 10 requiring recycled pulp importers to specificy whether the material was produced using a dry or wet method.

“Mixed paper is right up there with OCC in terms of its volatility.”

Moore, president of Atlanta-based consulting firm Moore & Associates, moderated a panel that included Matt Elhardt, chief revenue officer at Charlotte, North Carolina-based ResourceWise; Melanie Harman, director of mill fiber procurement at Fort Washington, Pennsylvania-based PaperWorks Industries; Matt New, vice president of sales at Swedish company Ekman Recycling; and Todd Shumaker, president, commodities and brokerage, at New York-based Circular Services.

The group discussed the ever-present volatility in the OCC and mixed paper markets and, with China restricting imports of recycled wet pulp, painted a gloomy picture when it comes to any potential market upswing.

Pandemic market aftermath

Containerboard is the largest segment of the recovered fiber industry and the largest that consumes OCC. Elhardt’s data show Asia is home to about 65 percent of global containerboard capacity, followed by Europe and North America, while North America uses more OCC as furnish compared with the rest of the world, which consumes a wider variety of grades.

“Whereas most of the rest of the world is fine using stuff other than OCC, North America writ large really doesn’t for the most part,” he said.

In 2022, after a spike brought on by the COVID-19 pandemic, U.S. containerboard slack capacity—the number of mills that didn’t have orders—reached about 9 million tons, which Elhardt said was a 25-year record.

“Put another way, 1 out of every 4 linerboard machines didn’t have an order going into 2023,” he said. “[There was] a very dramatic destocking that happened as a consequence. We saw a lot of mills closed.”

Since then, 4.6 million tons have come out of the market as companies closed older, inefficient and mostly virgin facilities.

“Virgin mills in North America take a staggering amount of money to maintain compared to recycled mills,” Elhardt said. “The industry saw very tough sledding in terms of operating rates. These companies rationalized their footprints, and predominantly that was virgin capacity that has come out.”

He noted that if box demand trends continue as they have over the last year—which analysts have largely agreed will happen—it wouldn’t be surprising to see more closures.

“The industry still has 4-5 million tons of capacity that we would say is generally nonviable in a downcycle,” Elhardt continued. “Our expectation is that you could have another mill or two close.”

A closer look at China

According to Elhardt, China has added 25 million tons of containerboard capacity over a period in which the operating rate was consistently below 70 percent.

“That operating rate would essentially bankrupt most North American companies,” he said.

China also has so much unused or slack containerboard capacity that if that unused capacity was a country, it would be larger than every paper-making country’s containerboard capacity except the U.S. Elhardt’s data show Chinese slack capacity is about 31 million tons, slightly lower than total U.S. containerboard capacity, which is about 36 million tons, while the next highest is India and Germany at about 11-12 million tons.

“National Sword stopped most OCC shipments in 2019,” he said. “There was a repivot that, at the same time, China’s been dramatically and aggressively investing in wood-based fiber-making. [China] first started by importing wood chips from Australia, New Zealand, then Thailand, then Vietnam and Malaysia.

“But they’ve also been very aggressive at building their own forest base [as] part of a program called Made in China ... and the most recent five-year plan was to aggressively invest in their own forest base to feed their own mills. Of course, the more virgin fiber China is consuming, the less fiber they need from the rest of the world, whether it’s recycled or market pulp.”

Because of those dynamics, domestic consumption in China has “exploded.”

Meanwhile, when the country enacted restrictions on recycled pulp imports in early October, it immediately raised concern among North American recyclers.

“OCC demand has been down, and the export market has been propping that up,” Bloomberg corrugated packaging market analyst Ryan Fox told Recycling Today at the time. “Now what?”

Inside box demand, pricing

The three main drivers of box demand are e-commerce, manufacturing and food and beverage. After the hangover that followed the surge in e-commerce in 2020 and 2021, Elhardt said now we’re in “a new normal.”

According to his data, box demand as measured in tons is lower than in 2018.

“I have always watched operating efficiencies for whatever sector I’m seeing into—containerboard, paperboard, away-from-home tissue, and none of those are healthy right now,” Harman said. “When you see less than 90 percent operating rates, which I think we are all at 87-88 [percent] … it just means there’s no demand.

“It’s not just the U.S., it’s everywhere, and it is creating challenges for cost, it’s creating challenges for the consumer.”

How does that demand impact the price of OCC?

“Over the last seven years, you can see there’s been times when demand increased, and as you’d expect, OCC prices increased,” Elhardt said. “And the converse is true. When demand decreased, OCC went down.

“What is really interesting about this particular commodity is that about 30-40 percent of the time, prices do the exact opposite of what you’d expect. That’s because we know there’s an important supplier generation component to OCC prices.”

The other most important component, he said, is unique to the recycled materials industry as its supply is created by its own demand.

“Put another way, today’s OCC that you collect was demand for corrugated about three to five months ago,” Elhardt continued. “Because of that, it’s naturally set up for its structural feature that the industry always has imbalances of supply [and] demand—almost perpetual—and that’s what leads to the volatility. … Containerboard demand versus collection … [is] never matched. It’s because of that lead lag. There’s never times that you’re going to see that matched.

“OCC is one of those rare commodities that is self-producing. Its supply is a function of its demand, but with a lead in the lag and, moreover, the fact that it is not really valuable compared to maybe metals or rare earths or lithium. Inventorying it, which is the typical commodity strategy to dampen volatility, is not really feasible.”

Because of those dynamics, Elhardt said the industry should “expect volatility basically forever” unless a financial instrument is discovered to solve it.

The author is managing editor of Recycling Today and can be reached at mmcnees@gie.net.