OCC, ONP Firming Up

Old corrugated and old news could see some significant upswing moving into March. There appears to be significant upward pressure, with signals that demand from a host of domestic, Canadian and offshore orders will drive the market for the grade.

Several reports from vendors throughout the country indicate prices could move up by at least $10 a ton, with some vendors feeling mill prices could climb by as much as $25 a ton. One Midwest vendor says generation is down and some mills in the upper Midwest are calling, looking to get any OCC available. He adds that some mills he has not spoken to in months are calling, looking for fiber.

While the strength in markets is helping drive demand for fiber, there is a longer-term trend developing: consolidation in the paper and paperboard industry.

Over the past several months a number of sizable deals have been put together, reducing the number of large paper companies. This, some vendors fear, could allow more mills to dictate prices for the recovered fiber. At the same time, with fewer buyers in the market, there is a better opportunity for mills to control the operation schedules of their mills.

The recent deal by Smurfit-Stone Consolidated to acquire St. Laurent Paperboard makes Smurfit-Stone, already a large paperboard producer, an even bigger consumer.

At the same time, a number of paperboard mills are opting to close less-efficient mills and plants. The ability to control the flow of material will likely have a negative effect on paper stock dealers.