Commodity Report

Following in step with the last few months of 2004, the late winter months have been a relatively stable time for scrap paper generation and pricing, with only a few exceptions. Overall, recyclers remain moderately upbeat with business fairly steady during the first quarter of the year. Recyclers report little movement in pricing in either direction.

Generation has been consistent with traditional levels for this time of year, sources say. Old newspaper (ONP) has suffered slightly in light of the typically smaller newspapers printed in the late winter months, but is expected to begin to rebound in early spring. With a steady supply from the grocery and other food industries, old corrugated containers (OCC) and other packaging grades are being steadily generated in most regions of the United States and may even be making a small recovery from the January drop-off that traditionally follows the post-holiday boom in scrap paper supply.

The Northeast market for OCC got a little shock last month with a $15-to-$20 jump in asking price. Mills and brokers have been paying $10-to-$15 less than published prices in some cases, and the market is expected to adjust itself in March. Other grades, including high grades and mixed paper, have reportedly seen little movement in prices recently.

Some big domestic buyers of mixed paper have recently cut back, especially in the Northeast, leaving mills and brokers looking farther away for buyers. Lack of domestic buyers is keeping mixed paper mills and dealers looking to China, where demand for the grade is as strong as ever.

All grades are moving, thanks in part to a relatively mild winter, and most mills in most regions are having little trouble clearing out their inventories.

Rounding the bend into early spring, the paper market can expect at least a small surge of confidence now that inclement weather will, for the most part, cease to have a negative impact on productivity. Areas prone to snow like the Midwest and the Northeast can look ahead to spring weather without fear of Mother Nature causing anything more than short-term downtime. However, this might not be the case in the West, as unusually heavy rains in California could slow generation and hamper domestic transportation and shipments abroad.

China remains a regular topic of conversation in the paper industry as one of the strongest buyers of American-generated OCC and mixed paper. This is expected to continue. India, Japan and South Korea are also strong bidders.

In other paper industry news, Koster Industries, an equipment auction company headquartered in Long Island, N.Y., has purchased the assets of idled Bay States Paper, Fitchburg, Mass. The company is expected to start selling off equipment during the first half of this year.

Caraustar has announced plans to permanently close one of its recycled paperboard machine lines in Rittman, Ohio. The line had been idle for close to a year.

Finally, Canusa Corp., Baltimore, and Evergreen Fibres Inc., Stamford, Conn., have formed EC Independent, a sales agency joint venture. The new company will focus on furnishing paper mills on the East Coast.

(Additional news about paper recycling markets, including breaking news and pricing, is available online at www.RecyclingToday.com.)

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March 2005
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