It’s been the best of times for containerboard producers and the worst of times for recyclers and material recovery facilities (MRFs) trying to sell recovered fiber in 2019.

“It all depends who you’re asking,” says a broker in the Midwest. “Mills would say it’s the best time—they have the best pick right now. If you’re talking about a processor, these are some rough times because fixed costs in some cases and operating costs are exceeding revenue.”

Old corrugated containers (OCC) prices experienced a long, slow slide downward from $105.84 per ton in November 2017 to a low point of $25 per ton in June 2019. Mixed paper prices declined sharply in the fall of 2017 and into the beginning of 2018. Since the middle of 2018, mixed paper prices have remained near $0 per ton.

For containerboard mills, low secondary fiber prices have had positive effects on their bottom lines.

“From a mill perspective, the decline starting in 2018 and continuing through 2019 has brought very good returns to the containerboard side of the business,” a national mill operator says. He adds that it’s not just recovered fiber prices dropping; virgin pulp pricing also has dropped significantly this year, which has put pressure on sorted office paper (SOP) prices and demand.

Adam Josephson, director and equity research analyst at Cleveland-based KeyBanc Capital Markets Inc., describes the market for recovered fiber as “weak,” adding that it’s been weakening for a few years now.

“The market started to go downward toward the end of 2017 when China turned much more restrictive on the recovered paper that it would import,” Josephson says. “And the market has been downhill since, but what changed perhaps a year or a year and a half after the China effect came into play was that the domestic market also started to weaken.”

Many recyclers express that this summer’s market conditions for recovered fiber have been some of the worst they have experienced in decades.

“I’ve been through bad markets, but what’s different here is that the millions of tons the global industry was shipping to China stopped,” says a broker on the East Coast.

Josephson adds that China certainly triggered the downturn in recovered fiber markets in 2017. However, he says the global economy has been weakening much of this year, which has exacerbated the downturn for recovered fiber. He stresses that OCC in particular is largely influenced by global economic factors.

“This is not a U.S. phenomenon by any stretch,” he says. “You have weak demand for recovered paper seemingly everywhere in all major regions. It’s a global commodity, and global commodities ebb and flow. When the global economy is healthy, commodity prices tend to be high. When the global economy is on its back, which is the case now, global commodity prices weaken and go quite low—OCC is no different.”

Finding movement abroad

Moving recovered fiber has been especially challenging in 2019. The broker on the East Coast says it’s “a constant battle in today’s market to move material and know from day to day where pricing is going to be and where quality standards are going to be.”

The national mill operator says many countries have been oversupplied with recovered fiber in recent years as China has scaled back its imports.

“All of the excess material and supply—not just in North America but around the world—had to go somewhere,” he says. “Countries like Indonesia, India and Taiwan were inundated in 2018 and it continued this year. If there’s excess supply and not enough demand, that’s what happens. Latin America and Mexico have seen the same thing—they got inundated with materials.”

China has closed its doors when it comes to mixed paper, but the nation still buys higher grades like double- sorted corrugated. However, geopolitical factors, including tariffs, are making it tougher to export even high grades of recovered fiber to China.

“When a Chinese paper mill has to pay 15 to 25 percent more for U.S.-generated material versus buying material from Canada or Europe, that’s something that the industry didn’t ever deal with before,” the broker from the East Coast adds.

“I think the real problem in 2019 started when the trade issue became a legitimate trade war,” a MRF operator in the Midwest adds. “Recyclers need to recognize that we become the collateral damage of the trade issue. Trade wars are good in the short run, 30 days or so. This has been nine months.”

After China placed stricter requirements on its imports for recovered paper, several other countries in Southeast Asia have talked about following suit by implementing restrictive standards and inspections. In August, the Institute of Scrap Recycling Industries (ISRI), Washington, reported that Indonesia revised its Recovered Paper Import Standard. The Indonesian government directed preshipment inspection companies to inspect materials for a 0.5 percent prohibitives tolerance.

The broker on the East Coast says only Indonesia has come up with a formal inspection process like China’s, but he adds, “I think the trend is that countries who receive export material will move toward stricter quality and more reliance on their own material internal generation and look at inspection processes to put in place to provide some protection.”

Conceivable capacity

With fewer export markets available in the past year, a lot more recovered fiber has stayed in the mainland U.S. Recyclers who have contracts with mills have fared better, a recycler in the Upper Midwest says.

“Mills are full,” she says. “Stuff isn’t moving and it’s a tight market. We do know they have shut some people off who were not committed, but they are taking care of the companies that have committed to them.”

Many mills, including Cascades, Georgia-Pacific, International Paper and WestRock to name a few, took more downtime than usual in 2019, making movement tougher for recyclers and brokers. The national mill operator says many mills had high inventory levels and decided to take downtime to ensure containerboard and tissue prices didn’t decline.

Yet some companies have announced plans to build containerboard mills or convert mills to produce containerboard this year, which offers some optimism to recyclers. “I think you’re going to start to see surprised tightness show up in the next couple of years,” says Chip Dillon, a partner at Stamford, Connecticut-based Vertical Research Partners. “I don’t know if it’s in the middle of 2020 or the middle of 2021, but some time you are going to see the price inflect in some small way.”

Dillon says these new projects offer reasons for optimism; however, he says not all proposed projects will happen. He places them into three categories: Chinese companies starting operations in the U.S. to make pulp, existing players and new players.

“I think the real problem in 2019 started when the trade issue became a legitimate trade war.” – a MRF operator in the Midwest

In that first category, China-based companies such as Nine Dragons and Shanying International are opening mills in the U.S. to make pulp that can be shipped back to China. Dillon says these projects offer the domestic recycling industry the most opportunity because they are more likely to occur and have even started operations in some cases.

The second category includes existing paper mill operators that have announced plans to convert a mill to produce containerboard or to open new mills. This includes companies like Pratt Industries, which you can read more about in the cover story beginning on page 38 of this issue, Bio Pappel, Green Bay Packaging and Cascades. He says these projects are likely to occur, but some of the announced projects could fall through.

The third category are new players in the industry that have announced plans to start containerboard mills, including CorrVentures in Albany, New York, and Crossroads Paper in Salt Lake City. Dillon says these projects are more speculative and less reliable than those in the first two categories.

“Containerboard is used to make boxes,” Dillon says. “About 90 percent of the places that make boxes are owned by people who make board. So, if you’re Crossroads or CorrVentures, you have a limited number of places that make boxes to sell to.”

Looking ahead

Analysts and recyclers alike say recovered fiber prices likely hit a bottom this past summer and the only place left to go is up. However, it likely will be a slow ride uphill as 2020 approaches. Factors such as a possible recession and the continued trade war could slow gains in recovered fiber pricing.

“Forecasting for 2020, there may be a little upward trend in pricing,” the national mill operator says. “It won’t be significant—a lot of that has to do with how the economy does. We’re not real bullish on 2020; we don’t think things will go through the roof. There are a lot of big question marks about the future of where the economy is going to go.”

Current market conditions have changed how MRFs and recyclers do business. The MRF operator in the Midwest says MRFs now must communicate with suppliers to let them know the sliding costs of commodities.

“There’s been a quantum shift,” he says. “Things aren’t going back to normal; China is not coming back to buy a million tons.”

Quality standards for recovered fiber also will continue to get stricter domestically and abroad in 2020 and beyond.

“Quality has changed, and people are working harder on quality,” the broker in the Midwest says. “Everybody is tightening up their quality. In times of low price and low revenue, [recyclers and MRFs] have had to spend more money. It’s forcing companies to relook at contracting policies on material and then [at] robotics versus labor.”

The author is managing editor of Recycling Today and can be reached at msmalley@gie.net.

China’s changing policies regarding imports of recyclables have led to considerable investments in North America to further process and consume materials that were traditionally shipped to that country.

By the numbers

The number of wire chopping lines operating in North America has grown considerably since we last published this list in 2017. While the vast majority of the 74 wire chopping lines that we listed in 2017 remain in operation today, a number of new installations have been added to the list this year, taking the total number of lines in operation in North America to 123.

Looking specifically at Canada, the number of wire chopping lines in that country increased from eight in 2017 to 14 this year.

Within the U.S., Illinois and Texas are the states with the largest number of wire chopping operators at nine each. With eight wire chopping lines, Georgia takes the No. 2 spot for the number of these systems in operation. New York trails slightly behind in the No. 3 spot with seven lines in operation. A few installations are underway but not yet operating as of press time: Denver Metal Recycling in Denver; East Electrical in Marietta, Georgia; and Milliron Recycling in Mansfield, Ohio.

Duncan, South Carolina-based Sisk Scrap Iron & Metal was putting the finishing touches on the installation of a new wire chopping line in mid-September to replace its previous line. With the ability to process 5,000 pounds per hour, the new line, supplied by Cable Management LLC, Meriden, Connecticut, is much larger than its previous line, which was capable of processing 1,200 pounds per hour.

Sisk Scrap Metal’s Travis Knight says the company installed its original wire chopping line nine years ago. He says Sisk plans to “take it to another level” with this new installation.

Many newcomers to this list also likely had leveling up in mind when they added wire chopping capabilities.

With weak market conditions and low prices, 2019 has proven to be a rough year for recyclers looking to move recovered fiber. Old corrugated containers (OCC) prices slid steadily from January to June, hitting a near 25-year low of $25 per ton that month. U.S. mixed paper prices have been hovering around zero dollars per ton since April 2018, and export demand for that grade hasn’t been great since China backed out of the market.

However, signs of improvement are on the horizon. Domestic demand for recovered fiber could rebound in a couple of years as many companies have announced domestic mill projects in 2017, 2018 and 2019. One of those projects announced in 2017 is Conyers, Georgia-based Pratt Industries’ construction of a new containerboard mill in Wapakoneta, Ohio. The mill is slated to open this month, and the company says it will consume about 400,000 tons of recovered fiber annually once it’s fully operational.

The company also operates a recycling facility just 2 miles away from this new mill. That facility will provide some recovered fiber to the mill; however, a majority of the mill’s furnish will come from other sources in the Midwest.

What sets Pratt’s containerboard mill investments apart from others is its unique ability to consume mixed paper.

According to Pratt Industries, the company selected the Wapakoneta site for its containerboard mill because it is centrally located to its box plant and sheet plant network. The company says the mill will support the hub-and-spoke business model that Pratt Industries Global Chairman Anthony Pratt has used with success throughout the company’s history. The Wapakoneta mill also sits in the heart of the Midwest with access to more than 45 million people who generate recovered fiber that can be used for the mill.

All of Pratt’s containerboard mills have the ability to consume mixed paper, and Pratt Recycling President Shawn State says this factor alone sets the company apart from other paper mills. “We’re unique in that we’re the largest consumer of mixed paper in the country because we have the newest technology in our mills,” State says.

He says Pratt ensures the mixed paper coming from its vertically integrated material recovery facilities (MRFs) meet its standards. He adds that the company operates 18 recycling facilities that provide a large percentage of the feedstock to its five paper mills.

While Pratt’s recycling operations can ensure better movement of its recovered fiber because of its connection to Pratt mills, State admits this year has been difficult for all recyclers.

“In every region, commodity prices are low,” he says. “Recyclers are having a tough go of it all over the country. Pratt Recycling is in a much better position than some of the recyclers who are not vertically integrated. Other recyclers are trying to make a profit based on their costs and commodity prices, which we do the same, but when conditions are as difficult as they’ve been, we know we will still be here to operate because we still have to supply our mills, whereas some of the other recyclers that don’t have vertical integration have struggled.

“Now, I don’t think it’s all doom and gloom,” he continues. “There are some upgrades to paper machines in the U.S. occurring now. Some mills are doing conversions that will enable them to start running recovered fiber and/or run more recovered fiber than they have in the past. There are announcements of new mills starting up and idled mills being purchased. Capacity is going to come to the U.S.—that is going to affect the market and help drive commodity prices back up, but I think it’s going to take a little bit of time.”

Recycled focus

Using recycled materials is key for Pratt Industries: It’s something that the company has prided itself on since a few years after Chairman Anthony Pratt brought the company to the U.S. in the 1990s.

Pratt entered the U.S. market in the early 1990s when it purchased a kraft paper mill in Macon, Georgia. (It sold that asset more than 20 years ago.) Shortly after that acquisition, Pratt bought JetCorr and Georgia Box Group, local corrugators and converters in the Southeast. In 1995, the company built its first 100-percent-recycled paper mill in the U.S. in Conyers.

Since the mid-1990s, Pratt has operated a number of paper mills, recycling facilities and box plants to ensure it has a vertically integrated company with the ability to grow and expand its presence in the U.S. “Our recycling facilities support our mills, the mills support the box plants and the box plants support our converting operations,” State says. “One of our competitive advantages is our ability to ‘close the loop.’ We will collect recovered fiber (boxes) through our recycling network and then take that box that Pratt made and turn it into another box that [customers] can buy that Pratt made. It’s kind of like a circular economy within the company.”

Pratt Industries has launched five 100-percent-recycled paper mills, with locations in Conyers; Staten Island, New York; Shreveport, Louisiana; Valparaiso, Indiana; and Wapakoneta. It also has opened 18 recycling facilities across the U.S. The company also operates a total of 54 corrugated box plants and converting facilities, which ensure Pratt Industries is vertically integrated.

The Conyers MRF, near Atlanta, is Pratt’s newest recycling facility, which was built four years ago. State says it’s also the company’s largest MRF and handles residential recyclables from the city of Atlanta, DeKalb County and the surrounding area. He says 9,000 tons of curbside collected recyclables run through the MRF monthly.

“There was a need for a facility in the Atlanta market,” State says. “We also need the fiber supply for our paper mill in Conyers, and it made sense to place it right next to the paper mill for the cost reasons. There’s essentially no freight from the MRF to the mill.”

Because of the size of the Conyers MRF, the company also invested in “state-of-the-art” technology for the facility. State says the MRF features optical sorters and ballistic separators. He adds that the company is working to install more optical sorters and robotics in the first quarter of 2020.

Getting the word out

Beyond helping the recycling industry by consuming recovered fiber, Pratt has taken steps to work with municipalities to clean up residential recycling streams and debunk recycling myths circulating in mainstream media. Michael Altobelli, Pratt Northeast region recycling vice president, says there has been “so much negative press … about recycling and the recycling crisis” in the last year, which has led to confusion in municipalities among residents.

To address some of the confusion in New York City, Pratt Industries launched the Manhattan Paper Challenge this summer. From July 1 to June 30, 2020, the 12 community boards in Manhattan will compete to see which board can achieve the highest increase in its paper recycling rate. The top three community boards will receive grant prizes each quarter, and an annual prize will be awarded to the top three boards next summer.

The initiative aims to increase paper recycling participation in Manhattan. Altobelli says Pratt wants to see the amount of paper recycled in Manhattan increase as result of the initiative.

New York City supplies about half of the material that Pratt’s Staten Island mill consumes, so Altobelli says it’s important that residents know the guidelines for recycling and about the need for recycled paper at Pratt’s mill in New York City.

“New York City is fortunate to have a paper mill in its city that can consume recovered fiber and to not have the same problem that many other large municipalities have today,” Altobelli says. “Pratt has a mill here using the majority of municipal mixed paper. New York City has a sustainable program and recognized how important it was to partner with an end user.”

Since opening in the late 1990s, Pratt’s New York City paper mill has produced more than 7 million tons of 100-percent-recycled paper. “We continually invest in educational programs in NYC, such as the Manhattan Paper Challenge, to ensure NYC residents are aware that the paper recycled right in this city is a valuable resource and is used to create high-paying green-collar jobs right here in the five boroughs,” State adds.

Growth opportunities

State has been working at Pratt Industries for the past 19 years, and he started working for the Pratt Recycling division about 12 years ago.

He says Pratt has a fast-paced, entrepreneurial culture that’s focused on growth, with Pratt Industries doubling in size about every five years.

“Capacity is going to come to the U.S.—that is going to affect the market and help drive commodity prices back up, but I think it’s going to take a little bit of time.” – Shawn State, president, Pratt Recycling

The company also has expanded its geographic footprint. Last year, Pratt Industries expanded to the West Coast when it opened a corrugated plant in central California after acquiring Robert Mann Packaging. Today, Pratt Industries has 70 factories in 27 states and 9,000 employees.

Pratt Industries Global Chairman Anthony Pratt says he firmly believes in the future of American manufacturing. In 2017, he pledged to invest $2 billion in the USA over the next decade to create 5,000 jobs, mainly in the Midwest. Since then, Pratt has invested about $800 million and is ahead of schedule on this commitment.

The company says Pratt also believes that America is over-packaged in comparison with Europe and Australia, which is why Pratt Industries’ mills specialize in producing lightweight liners and mediums to make boxes lighter yet just as effective as those made with heavier paper grades.

Since China backed out of the U.S. recovered paper market, State says Pratt has had the opportunity to consume more mixed paper and OCC.

“Mixed paper predominantly comes from households and curbside collection, so we’ve been able to consume material that others haven’t been able to consume,” State says. “That in turn has helped keep curbside programs going. It has to have a place to go.

“When Southeast Asia started clamping down on quality and cut off mixed paper from coming into their countries, Pratt was the go-to recycler and paper mill for these folks that had mixed paper that was generated from curbside systems.”

The author is managing editor of Recycling Today and can be reached at msmalley@gie.net.

Customers who make the grade

In these rapidly changing markets, we’ve been focused on assisting our customers to upgrade existing plants while also commissioning new installations that have the flexibility to prepare for the future. Whether it’s a new system from the ground up or existing system enhancements, operators have many options to consider when trying to reach the market’s high purity standards.

Cleaning the paper

We are seeing a major increase in the use of optical sorting to clean up paper, like one of our northeastern customers who installed four new TOMRA optical sorters and our paper magnet for a recent plant upgrade. This customer had a wide range of objectives for its series of plant upgrades, but a critical mission was to clean up its mixed paper. The upgrade has allowed our client to produce some of the cleanest mixed paper and OCC we’ve seen from a MRF. The MRF is consistently below 2 percent on its prohibitives in its mixed paper.

Preparation is key

Intelligent separation (optical sorters, robots, etc.) plays a pivotal role in reducing labor costs and making clean end products.

But for any of this technology to be successful, the material that is fed to it needs to be prepared properly. Optical sorters like a steady consistent “diet” of homogenized, single-layer, similarly sized material. Proper belt speeds, sizing screens, 440 screens, ballistic separators, air systems and other equipment help to prepare the material.

One of our new “prep steps” is our unique sizing deck—a screening process that acts to size and prepare material for downstream separation equipment. This allows both positive and negative sorting processes to be done more effectively, resulting in cleaner material. It’s a true game-changer in plant operation.

DeftAir keeps things stable

Another key piece of preparation equipment is our new DeftAir wind system. DeftAir allows operators to dramatically increase paper quality with intelligent separation while maintaining very high production rates.

The system sits in front of separation equipment and blows a steady stream of air to stop fiber and other lightweight materials from floating as the accelerator belt reaches speeds of 1,000 feet per minute. The combination of stable fiber and high speed ensures the optical sorters achieve maximum sorting efficiency, while the system achieves high production.

Two of our customers on either coast have installed DeftAir to increase the accuracy of their opticals, and several more units are going in.

Battling the film epidemic

Many operators are still running plants designed 10 to 15 years ago for substantial volumes of ONP. The angled screens in these plants were simply not designed for the high volume of lightweight plastic bags seen in today’s stream. The result, endless wrapping and screen cleaning.

Our customers have been upgrading their primary screening packages to specially designed non-wrapping 440 screens for the past three years. We have installed these screens at 24 different sites across North America with more units to come. They decrease our customers’ screen cleaning time from hours per shift to just 5-10 minutes, and so far have gained our customers up to an 85 percent reduction in replacement star costs.

RoBB AQC

Van Dyk introduces a robot that combines camera detection along with NIR recognition to make the ultimate quality control machine. The combined technologies allow RoBB to make accurate sorting decisions even in less than ideal material streams. With a small footprint, the unit is easily integrated into any sort line. Robustly constructed arm makes up to 70 picks per minute and does not require daily replacement of parts.

Positive sorting

Realizing the challenges postconsumer recycling was facing, Republic Services wanted to take a new approach to the greenfield recycling facility it was building in Plano, Texas. The innovative plant design incorporates numerous elements to enhance flexibility while delivering cleaner recovered materials.

To achieve substantially cleaner materials, the Plano facility was designed to do most of its sorting positively. Pulling material out of the processed stream has helped tremendously to reduce prohibitives, especially in the paper grades.

“We’re very pleased with the results of the positive sorting we’re doing here in Plano,” says Operations Manager Guillermo Pabon. “Our material is exceptionally clean, and our customers are very happy with it.”

This allowed the plant to pass an independent, third-party audit that validated just 1 percent contamination in the dirtiest of the paper grades. The use of positive, intelligent sorting has made a tremendous difference in overall material quality.

Another element of the plant that delivers enhanced flexibility for Republic is the incorporation of four fiber bunkers—one for OCC and three others. “Having the four bunkers has been incredibly helpful for us,” says Pabon. “We’re currently separating OCC and three grades of mixed paper; a good, better, best. Because of the way this facility works, even the good consistently has less than 1 percent prohibitives, which is very clean.”

Enhanced material flow

Uniquely, the Plano recycling facility features just one incline screen in the entire plant, and it’s the non-wrapping 440 screen. The screen requires only five to 10 minutes of cleaning daily yet provides an exceptional initial material cut to feed the container and fiber lines.

Another feature of the plant that has been instrumental to its positive sort is the unique sizing deck. This deck better prepares material for intelligent sorting downstream by more effectively creating an even layer of similarly sized material.

"We’re getting exceptionally clean sorts and, again, our customers have been very pleased with how clean the material is.” - Guillermo Pabon, Republic Services

With an eye for efficiency, the plant also is designed with one-touch material handling. This is the case for recovered commodities and for system outthrows. The one-touch design also helps to reduce material contamination throughout the plant.

At the beginning of the container line, the system features the elliptical sorter to float off all film prior to introducing the stream to optical and magnetic intelligent sorting.

“We’re capturing PET, HDPE and PP,” says Pabon. “Three of our seven optical sorters are dedicated to this work. We’re getting exceptionally clean sorts and, again, our customers have been very pleased with how clean the material is.”

Finally, the end of the container line features a loop-track. This is designed so any material that might have been missed is captured and delivered to the appropriate bunker. “At the end of the container line, after the eddy current separator, our second chance line recirculates material to increase our recovery rates. This has proven very effective at reducing missed material,” adds Pabon.

Increased efficiencies

To create a true production environment, the plant also is designed with a mono-platform. All the sorters and the operations manager’s office are on a single level.

“We absolutely love the mono-platform design,” says Pabon. “From our operations cabin, we have a clear view of all the sorters, and it’s a key part of our employee safety protocol.”

The system also was designed to allow for direct baling of commodities that do not need to be processed. Each of the storage bunkers are able to feed either of the system’s two balers, providing complete redundancy.

Overall, the efficiencies designed into Republic’s Plano recycling facility make it a true plant of the future, one that has flexibility, high production and the ability to produce uniquely clean commodities.

Helping customers

Over the past year, Van Dyk also has been expanding our operations to better serve customers.

• Our new Norwalk facility has become fully operational.
• We’ve grown our customer-focused staff.
• Van Dyk University has held more classes.
• Van Dyk Direct has become the standard for many plant operators.

This past year saw the final move from Stamford, Connecticut, to our new, state-of-the-art 150,000-square-foot campus in Norwalk, Connecticut.

The new facility encompasses the technology and testing center; baler rebuild shop; the Van Dyk Direct parts warehouse; Van Dyk University classrooms; engineering and customer support facilities; project management and administrative offices.

We have added four new service technicians to support our growing installation base and an additional controls engineer to assist with our growing work on plant retrofits. An additional two project managers (increasing that department to six) help ensure the continued smooth installation of plant builds and retrofits.

Van Dyk University hosted 11 week-long training programs throughout the past year for baler and optical sorting training. Alumni from these programs have found increased independence in ongoing maintenance and, when necessary, repair of their equipment.

We’ve also seen a rise in the number of customers ordering replacement parts and service kits through Van Dyk Direct. Today about 70 percent of our customers use the online portal to quickly and easily order parts when they need them.

We have conducted over 20 tests in our Test Center. The majority of these tests are our customers bringing their own material to run on our continuous loop system, but we have also had consumer goods companies test for sortability of different packaging. These tests not only help our customers see potential results before purchasing equipment, and consumer packagers design more recoverable packaging, but they also teach us how to design new and better systems for our customers.