The Climb Continues

According to recent figures from the American Forest & Paper Association (AF&PA), Washington, D.C., total consumption of recovered fiber in August reached 2.71 million tons, a 14 percent increase from August of 2009. Domestic consumption during the first eight months of 2010 is up 9 percent from the same period in 2009.

Paper stock exports increased by 5 percent in July from the prior month. However, the AF&PA reports, exports during the first seven months of this year are down 2 percent from the same period in 2009.

The strength in bulk grades such as OCC (old corrugated containers) and, to a lesser degree, ONP (old newspapers) also is helping the mixed paper market. Movement of the mixed paper grade was better than expected during the first three weeks of October. Several paper stock dealers say they expect mixed paper to remain in good shape going into 2011.

On the high end of the paper stock spectrum, several deinking and pulp substitute grades have been pulled up by higher pulp prices. While this has given some underlying strength to deinking and pulp substitutes, several brokers say consumers are starting to resist the higher pulp prices that are being pushed by producers. This is causing modest downward pressure on pricing through the rest of the year.

Offshore, reports indicate that Chinese buyers are trying to step out of the market, which is softening pricing for several pulp grades and higher end paper stock grades.

However, the price decreases are less than expected, and the floor price for deinking grades and pulp substitutes appears to be strengthening.

Finally, concerns about a drop in generation for many higher paper stock grades remain. During the past several months, a significant number of commercial printers have closed in light of slow demand. This has reduced the availability of many pulp substitute grades. Also, higher unemployment is curtailing generation of office paper, which is lessening the supply of recovered fiber available.

These trends will likely keep prices fairly steady to stronger during the next several months, sources say.

(More 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.)