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March 24, 2006

STABLE AND STEAD

Following several months of falling prices, the recovered paper market has evened out in early 2006, with old corrugated containers (OCC) hovering around $45 per ton.

Oversupply has kept the OCC market depressed, sources say, with no signs of a shift in the near future.

In addition to the low, but stable, price of OCC, other grades remained relatively steady throughout the month of January and into early February, which comes as something of a surprise to some in the industry. "This time of year, it’s sort of common for prices to be moving up for bulk grades, but we haven’t seen that," says a broker on the West Coast. With plenty of paper to go around, prices have been on the low side. Material has been moving, but slowly.

One contributing factor could be that most regions have experienced a fairly mild winter so far, which has been helping collections.

One source reports that this is the case in the Northeast, where community collection programs that are usually stalled by snow this time of year have been up and running like normal.

This is true for curbside programs as well as for drop-offs, says a Midwestern packer. "People are going to the drop sites—if it were 20 below, they wouldn’t be," the packer says.

Inventories of old newspapers (ONP) are particularly high in New England, one source reports.

A source in the Southwest reports that high grades in his region may have dropped slightly in price, while deinking grades have remained practically unchanged.

Sorted office pack (SOP) has seen strong volumes with end-of-the-year cleanouts taking place. Prices have taken an expected hit, although about a month earlier than usual, says a Midwestern packer. Sources say SOP prices should be expected to stay low in the coming months as tax season approaches in the United States, and people prepare to purge old files, flooding the market with material. "Volumes will just be unbelievable," one source says.

Overall, material is moving, just not at any great pace, sources say. While there may not be aggressive demand, there’s been no hiatus in buying either.

Export activity has been equally stable, with the Chinese continuing a pattern of quiet, steady purchasing. Mexico also continues to buy U.S. scrap paper at a steady rate.

Trucking issues continue to pose problems for the industry, although they have eased up slightly. While the cost of trucking is still high because of soaring gas prices, trucks are at least more available lately, says one Midwestern packer. While the competition for trucks during the holiday season may be over, a source in the Southwest reports that there is still competition for trucks in that region with hurricane cleanup efforts still in full swing. Trucks are available, he says, but they need to be scheduled two or three days ahead of time.

Out on the West Coast, the industry is still struggling with the Pier Pass program, which was implemented in the summer of 2005 to try to ease shipping traffic in the ports of Los Angeles and Long Beach. Under Pier Pass, pier operators charge shippers fees for moving material during peak hours.

One source reports the system still has some bugs to work out. While many of the high-volume shippers are shipping in off-peak hours, some steam line offices aren’t open or staffed at night, which creates problems if everything doesn’t go smoothly. A source reports that some of the smaller companies with fewer containers to ship are just shipping during the day and paying the fees.

(Additional news about paper recycling markets, including breaking news and pricing, is available online at www.RecyclingToday.com.)

GROSSMAN GROUP OPENS PAPER RECOVERY PLANT

The Grossman Group has opened a new paper recycling facility in the Columbus, Ohio, area. The facility will service solid waste handlers, as well as companies generating old corrugated containers. The announcement follows two years of planning by the company and the Solid Waste Authority of Central Ohio (SWACO). The new facility is located at an idled waste-to-energy plant.

The company’s new Fiber Recovery Facility is servicing haulers of commercial trash and private companies that generate scrap cardboard. "The Grossman Group’s main objective is to remove as much waste from the waste stream and reclaim as much fiber as possible from loads that normally would be dumped in the Franklin County Landfill," says Steve Grossman, president of The Grossman Group.

"As we focus on green business development in Columbus, it is great to see companies like The Grossman Group already creating jobs and improving recycling to keep material out of our landfill," says Columbus Mayor Michael Coleman. "This project is win-win-win, for the company, for the city and for SWACO, as we all try to do more to protect our environment and build new green industries in Columbus."

Material processed at the facility comes from two main sources. One source is from existing and developing accounts of the Grossman Group and Universal Paper and Plastics Inc., the company picked by The Grossman Group to operate the facility. These commercial accounts may qualify for the 90 percent Cardboard Direct Account Program.

The second is from accounts developed by SWACO that qualify for the Select Load Program, resulting in a reduction to tipping fees of up to 25 percent.

"We are pleased to lease The Grossman Group this facility to continue the company’s long history in the Columbus area," Mike Long, executive director of SWACO, says. "It will enable them to grow the business and help SWACO as we continue to search for new ways to reduce the reliance on our Franklin County Landfill."

The facility expects to recycle approximately 30,000 tons of paper per year. For the first three weeks of operation, the facility received 1.2 million pounds of material and trash, which it processed into 980,000 pounds of clean paper and shipped to paper mills throughout Ohio.

The Grossman Group Inc. is a broker and service provider to the recycling and hauling industry

CARAUSTAR ANNOUNCES PRICE INCREASES

Caraustar Industries Inc., Austell, Ga., has announced a price increase on all uncoated recycled paperboard grades and mill converted products.

Prices will increase by $40 per ton, according to a press release from Caraustar.

The price increase is being implemented in two stages. The previously announced and implemented $25-per-ton energy surcharge was converted to a $25-per-ton price increase, effective with orders shipped on or after Feb. 10, 2006. An additional $15-per-ton price increase will be implemented effective with orders shipped on or after March 10, 2006.

The increase is in response to energy-related costs, according to the press release.

Caraustar is a manufacturer of converted recycled paperboard and serves recycled boxboard product end-use markets, such as tubes, cores and composite cans; folding cartons; gypsum facing paper and specialty paper products.

More information is available at www.caraustar.com.

SONOCO HIKING PRICES

Paper Recycling Conference & Trade Show

To learn more about the recycled paper markets, plan to attend the Paper Recycling Conference & Trade Show,visit www.RecyclingTodayEvents.com.

Sonoco has increased prices for its paper-based, engineered carriers (tubes and cores) and related specialty products by 6 percent in the United States and Canada, effective with shipments made on or after Feb. 20, 2006.

"Price increases and energy surcharges implemented by producers of uncoated, recycled paperboard during the fourth quarter of 2005 and into 2006 continue to negatively impact our manufacturing cost structure. Additionally, our converting operations have been forced to absorb widespread inflation in virtually all production cost components, including adhesives, packaging, production supply items, utilities and employee related costs. Our aggressive and ongoing productivity improvements have been unable to fully offset these cost increases," says John Colyer, division vice president and general manager, Industrial Products – North America. More information is available at www.sonoco.com.