Commodity Report

The market for office grades remains strong overall, but prices have continued a slight downward trend that began earlier this summer.

"SOP is still strong, but it’s off its peak," according to one Midwestern paper recycler, commenting on market conditions for sorted office paper (SOP) and other high grades.

Although prices have come down somewhat, sources still report material is moving steadily overall. Generation is low, but one Texas-based shredder attributes lagging volumes to seasonal factors. "Summertime tends to be a little slower," he says. "As school gets back in session, you’ll see an increase in volume and generation."

One Midwestern packer says the strength of the document shredding industry has been making up for some lagging activity on the supply side with schools out of session. "There’s still a lot of paper available," she says. "Even in the summertime, shedders don’t slow down," she says, adding that some companies run their fiscal year through June 30, making the summer months a prime time for purges.

The summer slowdown has been felt more prominently by bulk grades. "OCC is kind of the dog of the summer," comments one Midwestern recycler, describing market conditions for old corrugated containers. Production typically slows down somewhat during the summer months, but sources say the sluggish U.S. economy is taking its toll on the manufacturing industry, which has in turn reduced the demand for boxes to a more pronounced effect this year. "Corrugated manufacturers are producing less," says one recycler based in the Southwest. "With the slow economy and less production, mills are consuming less. Manufacturers are scaling back, and fewer products equal less boxes."

Overall economic conditions are not favoring the market, and dwindling capacity is not helping matters, sources say, citing recent mill closures in Cedar Rapids, Iowa, and Snowflake, Ariz.