Commodity Report

Stable and Steady

Following several months of falling prices, the recovered paper market has evened out in early 2006, with the old corrugated containers (OCC) hovering around $45 per ton.

Oversupply has depressed the OCC market, sources say, with no signs of a shift in the near future.

In addition to the low, but stable, price of OCC, other grades remained relatively steady throughout the month of January and into early February, which comes as something of a surprise to some in the industry. "This time of year, it’s sort of common for prices to be moving up for bulk grades, but we haven’t seen that," says a broker on the West Coast. With plenty of paper to go around, prices have been on the low side. Material has been moving, but slowly.

One contributing factor could be that most regions have experienced a fairly mild winter so far, which has helped collections.

This is true for curbside programs as well as drop-offs, says a Midwestern packer. "People are going to the drop sites—if it were 20 below, they wouldn’t be," the packer says.

A Southwest source says that high grades in his region have dropped slightly in price, while deinking grades have remained practically unchanged.

The generation of sorted office pack (SOP) has been strong with end-of-the-year cleanouts taking place. Sources say SOP prices should stay low in the coming months as tax season approaches in the United States, and people prepare to purge old files, flooding the market with material.

Overall, material is moving, just not at any great pace, sources say. While there may not be aggressive demand, there’s been no hiatus in buying either.

Export activity has been equally stable, with the Chinese continuing a pattern of quiet, steady purchasing. Mexico also continues to buy U.S. scrap paper at a steady rate.

Trucking issues continue to pose problems for the industry. While the cost of trucking is still high because of soaring gas prices, trucks are at least more available lately, says one Midwestern packer.

Out on the West Coast, the industry is still struggling with the Pier Pass program, which was implemented in the summer of 2005 to try to ease shipping traffic in the ports of Los Angeles and Long Beach. Under Pier Pass, pier operators charge shippers fees for moving material during peak hours.

One source reports the system still has some bugs to work out. While many of the high volume shippers are shipping in off-peak hours, some steam line offices aren’t open or staffed at night, which creates problems if things don’t go smoothly.