Commodity Report

The Market Balances

Moving into the beginning of 2010, most paperstock dealers say they are seeing fairly solid prices for various grades of recovered fiber, including old corrugated containers (OCC), high grades, deinking grades and pulp substitutes. However, as is the case with many other secondary commodities, generation is off, and in some cases significantly.

One East Coast broker says pulp substitutes and deinking grades had been displaying significant strength at the end of 2009. Following significant downtime, wood pulp prices have been on a tear. This has helped drive prices for pulp subs and most deinking grades upward.

Demand remained fairly strong, with domestic and overseas orders plentiful at the close of 2009. Orders into China remained good, while domestic mills, despite their much publicized problems, continued to buy material.

However, inventory levels have been depleted, with available tonnage prior to the winter holidays off significantly. As a result, paperstock dealers have been battling over every available ton, helping to raise prices.

Recovered fiber dealers are expressing a mix of pessimism and cautious optimism.

On the downside, mill closures continue to negatively affect the market. Smurfit-Stone, with headquarters in Creve Coeur, Mo., and Chicago, has announced plans to close two of its mills—one in Montana and the other in Michigan—further shrinking the domestic end market for recovered fiber.

Despite these and other cuts in capacity, the domestic paper industry overall has been running at a fairly decent level. With the decline in capacity and decreased generation, the market is in better balance.

(Additional news on paper recycling markets, including pricing information and consuming industry reports, is available at www.SDBmagazine.com and from SDB’s sister publication Recycling Today at www.RecyclingToday.com.)