Paper Markets in a State of Flux

Following the recently concluded Paper Recycling Conference & Trade Show, which was June 13-15 in Chicago, a number of paperstock dealers are expressing modest optimism that markets will hold up going forward. Despite this optimism, the short term will undoubtedly present challenges in terms of market conditions.

Prices for old corrugated containers (OCC) have softened throughout the past few months, but the overall sentiment is still fairly bullish. On the domestic side, orders from paperboard mills are steady, as these buyers continue to build up inventory levels. In the export market, Chinese mills continue to play a significant role in the market.

However, many recyclers have had a hard time finding containers for overseas shipments. This scarcity has abated somewhat, though higher freight rates are making it more expensive to move material to Asian mills.

A recent report from the American Forest & Paper Association (AF&PA), Washington, D.C., illustrates the modest improvement that has been seen in the recovered fiber markets as well as in paper production. Domestic paperstock consumption increased by 7.1 percent in May compared to May 2009 as well as increasing by 1.3 percent from April 2010. Throughout the first five months of this year, domestic paperstock consumption increased by 8.5 percent compared with the first five months of 2009, the AF&PA reports.

Positive news also was seen in the area of recovered fiber exports. For May, a total of 1.8 million tons of recovered fiber were exported. This represents a 7.7 percent increase from the same time last year. For the first five months of 2010, paperstock exports increased by 3.5 percent compared with the first five months of 2009.

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