The year’s first quarter is a busy time for paper recyclers who deal in high grades and shredded office paper (SOP). 2007ended on a steady note, and some sources say they anticipate a sharp influx of material in the near future, though strong demand, particularly from China, should help hold up prices.
With the boom in the secure document destruction industry, the last year has seen a very strong generation of SOP and high-grade office pack. Like other grades, SOP fluctuates with seasonal variations, and generation typically sees an upturn in the first few months of the New Year, says one Midwestern broker. "We’re so busy we can’t even keep up with it on the document destruction side," says the broker, adding that January and February tend to be times for file purges. Generation should continue to be strong throughout the first quarter heading into tax season and will likely surge again once the April 15 deadline for filing has passed, according to some sources.
Contamination remains one of toughest challenges in marketing paper from the secure destruction stream. One shredder based in the Southwest says each transaction varies, depending on the mill. "Mills are learning—they may drop their prices to get material," he says. "There are certain things inherent in offices—stickies, glue, unbleachables…say you send [a shipment] with cassettes in it. They’ll take it, but they’ll offer less for it. They won’t pay as much because there’s more cleaning involved."
He adds that each mill/buyer relationship also dictates a preference for baled or un-baled material, though that preference may not be reflected in price. If a mill knows a given plant, a relationship baed on trust is established, he says. "They know we’re not going to put anything in there that shouldn’t be in there, so there’s no distinction between baled and un-baled."
Certain grades are getting pushed out of the market because of contamination issues in some regions, adds a Midwestern shredder. "You can’t even sell white ledger right now, not in our region," says the shredder. "The stipulations on the quality—you don’t want to risk it. [Mills] are getting so much pre-consumer and printers’ mix, they don’t need [white ledger]."
Pricing for bulk grades held steady moving into 2008, and sources are cautiously optimistic about the first quarter of the New Year. Concerns for later 2008, including the period following the conclusion of the Summer Olympics in Beijing, have some sources considering a possible slowdown of export activity to the previously ravenous China.
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