Bio Pappel starts plant in Lebanon, Indiana

Mexico City-based recycled-content paper producer Bio Pappel S.A.B. de C.V. has started operations at its new corrugated conversion plant in Lebanon, Indiana, through its subsidiary U.S. Corrugated Co. According to a news release from Bio Pappel, this is its sixth U.S. industrial unit.

In a statement issued to the Mexican Stock Exchange, the company says the startup in Lebanon is part of its international expansion plan. Bio Pappel says it also plans to construct two industrial plants in the next three years in Tizayuca and Monterrey, Mexico.

Miguel Rincón Arredondo, president of Bio Pappel, the largest manufacturer of paper and paper products in Mexico and Latin America, says North America is the best place for the company to invest and grow as a result of the recently passed U.S.-Mexico-Canada trade deal.

ISRI to develop protocol for product recyclability

The Institute of Scrap Recycling Industries (ISRI), Washington, says it is developing a recyclability protocol and certification system for paper-based packaging products entering the recycling stream. Once developed, the protocol will be expanded to other products made from recyclables.

The protocol and certification will be phased in over the next year, ISRI says. Working with Moore & Associates, Atlanta, as a third-party consultant, ISRI is undergoing a thorough review of existing certifications and standards to aid in the integration of the protocol with applicable programs. This will be followed by a survey of material recovery facilities (MRFs) nationwide to gain an inventory of packaging that is recycled from the standpoint of materials and shape and size, as well as regional variances in technology and capacity. With the data, the certification protocol, including testing methodologies and procedures, and the application process for obtaining certification will be developed, ISRI says. The process for obtaining certification by brands will be fully documented and transparent.

“Under the current system, there is no standard to determine a product’s recyclability from beginning to end, which is an obstacle for increasing packaging recycling rates,” says ISRI President Robin Wiener. “Products are labeled recyclable that are not, consumers are confused, and the residential recycling stream is weakened by excessive amounts of products and materials that do not belong. Having one, universal determination for recyclability created by the recyclers that collect and process the material, in coordination with the mills that consume it, will be an enormous step forward in the evolution of recycling.”

She adds, “Once in place, the recyclability protocol will assist packaging manufacturers in understanding what is and what is not recyclable, especially in the design stage. This will lead to a revolution in design innovation as more brands seek ways to not only use recyclable content in production but meet consumer demands for easy-to-recycle goods. As more products are developed with recycling in mind, consumers will rediscover recycling and the vast benefits it provides.”

Among the many things that will be taken into consideration are industry expertise on material supply, processing and demand challenges and needs; ISRI’s Design for Recycling initiative, which encourages manufacturers to factor in a product’s recyclability in the design stage; and the role of the ISRI specifications, which are used globally to buy and sell recyclables.

ISRI says it will consult with the American Forest & Paper Association, the Foodservice Packaging Institute, The Recycling Partnership and other stakeholders during the development of the protocol and certification.

Domestic prices for most recovered paper grades declined in the June buying period. The U.S. average price of old corrugated containers (OCC) fell from $104 per ton in the May buying period to $73 per ton in June, while the national average price of mixed paper remained steady at $11 per ton in May and June, according to Fastmarkets RISI’s PPI Pulp & Paper Week June 5 report.

A broker on the West Coast says some domestic paper mills paid huge premiums for OCC in early May—as much as $110 per ton over Fastmarkets RISI’s PPI Pulp & Paper Week pricing. Yet those premiums were gone by the middle of May, he adds.

By early June, recyclers reported that many domestic mills were at capacity, and some had to take downtime that was initially scheduled for earlier in the year.

“There is risk that recycled fiber consumption in the away-from-home [tissue] sector could be smaller than it was before the pandemic.” – Sanna Sosa, principal consultant, AFRY Management Consulting

“Paper mills ran through the pandemic, and they have caught up now,” a material recovery facility (MRF) operator in the Midwest says. “Right now, corrugated is in bad shape. It could go down another $30 next month.”

“All of the big premiums are gone,” the broker on the West Coast says. “People are back to getting whatever they get in whatever areas they’re in. If you don’t have relationships in the domestic market, you’re probably having to resort to export at whatever price you can get export.”

He adds that some paper mills in Asia have increased their orders for OCC and double-sorted OCC from the U.S. in June in response to the lower prices.

Although OCC is struggling in domestic markets, the MRF operator in the Midwest says mixed paper seems to be moving better in June. He expects mixed paper to be in demand “until corrugated drops down to the value of mixed.”

However, with some businesses ramping up in the Midwest and stay-at-home orders loosening, he adds that mixed paper generation was down slightly in early June. He says some industrial and commercial generation came back, but he doesn’t expect long-term generation to return to prepandemic levels. “We fully expect long term that, of what we lost [in commercial generation], we’ll probably never see again, not because of lost accounts, but because it never will be generated again,” he says. “[Some] businesses have discovered working from home is not that bad and is cost-effective. At the end of the day, I think we’ll get less commercial-created corrugated moving forward.”

During the Institute of Scrap Recycling Industries (ISRI) Virtual Event: Spotlight on Paper webinar June 3, industry consultants shared that the tissue side of the pulp and paper industry has remained strong during the pandemic.

“At the end of the day, I think we’ll get less commercial-created corrugated moving forward.” – a MRF operator in the Midwest

“The retail sector or at-home sectors performed solid during COVID-19 and even to date as we see grocery stores with empty shelves,” said Jose Gonzalez, a senior principal at Stockholm-based AFRY Management Consulting.

While demand for tissue products in general is rising, away-from-home tissue products likely will struggle. “There is risk that recycled fiber consumption in the away-from-home [tissue] sector could be smaller than it was before the pandemic,” Sanna Sosa, a principal consultant at AFRY Management Consulting, said during the webinar.

She added that the pandemic could adversely affect demand for recovered fiber among containerboard plants. “Even before the pandemic, there were a lot of concerns among analysts and in general that there might be overcapacity developing in the North American containerboard market,” Sosa said.

Yet, demand from recycled pulp producers is rising. Joe Pickard, chief economist and director of commodities at ISRI, said recycled pulp exports have increased about 75 percent in the first quarter of 2020 compared with the same time in 2019 based on figures compiled from the U.S. International Trade Commission.

Both Gonzalez and Sosa were optimistic about opportunities for recycled pulp production to consume recovered paper. Gonzalez reported that about 4 million metric tons of recycled pulp capacity have been added globally since 2019.

Scrap recyclers would largely agree they were dealing with better circumstances in June compared with April, but aspects of the market point to a manufacturing and household consumer recovery that does not have the feel of being V-shaped.

After ferrous scrap prices rebounded in May, triggered largely by inadequate supply, recyclers raised their scale prices to draw in a little more scrap. They were rewarded in June, however, with prices that were largely stagnant and concerns that prices will retreat further in July.

June Fastmarkets AMM ferrous scrap pricing displayed mixed signals. Prompt scrap, as measured by the No. 1 busheling Midwest Scrap Index price, rose for the second straight month, gaining nearly $14 per ton in value.

“Manufacturing is slowly ramping up; scrap intakes have improved approximately 5 percent month on month.” – a scrap recycler in the Southeast

Recyclers on the Pacific Coast also received higher bids in what was previously a moribund market. Export prices off the West Coast rose by nearly $40 per ton in late May and early June, according to Fastmarkets AMM.

Prices for obsolete grades in the Midwest and export bids on the East Coast were more stable. Domestic mills were able to shop for shredded scrap and No. 1 heavy melting steel at yards with adequate inventory. On the East Coast, demand was muted by India’s two-month lockdown.

A recycler in the Southeast is reluctant to call demand robust. He says, “Manufacturing is slowly ramping up; scrap intakes have improved approximately 5 percent month on month.”

A recycler in the Great Lakes region says, “We are seeing an improvement week after week. Things are becoming quite busy, but the stamping plants are still slow to resume.”

While scarcity of supply had been the main market driver in April and May, the recycler in the Southeast cites weakness on the domestic demand side as playing a role in the stalled June prices and any potential July price slump.

He characterizes domestic steel mill demand as weaker than expected and credits a stronger export market as being helpful in finding a home for the newfound supply that is hitting shredder yards.

The recycler’s characterization of a weak steel industry pulse in the United States was backed up by the American Iron and Steel Institute (AISI) output figure for the week ending June 6.

The Washington-based AISI says the less than 1.2 million tons of steel made that week represents a 0.9 percent drop from the prior week. The decline follows small weekly gains exhibited in the final two weeks of May.

Compared with 2019, the landscape looks bleak. Output for the week ending June 6 was down by 36 percent compared with the same week in 2019. Year to date, about 17 percent less steel has been made in 2020 compared with the first five months of 2019.

A Spotlight on Ferrous webinar hosted by the Institute of Scrap Recycling Industries, Washington, in mid-May reviewed market conditions at that time and offered thoughts on where the market could be headed.

Spotlight session moderator Brandi Harleaux, chief operations officer at Houston- based South Post Oak Recycling Center, said, “I think in some urban locations, you may see continued peddler traffic for those that have yards, even though things have slowed down. And for some, the flow didn’t slow down maybe as much as they anticipated it slowing down. For some, it’s been steady—but a slower steady.”

Blake Hurtik, an editor at Argus Media, said, “Because of the lockdowns and lack of manufacturing activity, we’ve seen much-reduced supply of prime scrap.” He said this led to Argus’ price for No. 1 busheling increasing in May “on average by $36 per gross ton, month over month.”

Looking ahead to the summer, Hurtik said he expects the ferrous scrap market will still be supply-driven “with all eyes on the auto sector” and whether factories in that segment will generate scrap and consume finished steel.

An early June online Bureau of International Recycling Ferrous Division meeting included commentary from division board member Zain Nathani of the Mumbai-based Nathani Group. He provided an update on India, which was the second-largest importer of ferrous scrap by volume in 2019.

He said India is “finally starting to open up” after “a very hard lockdown since the middle of March.”

Regarding the severity of that lockdown, the entire nation of 1.4 billion people had “zero auto sales” in April, Nathani said. “You can just imagine the impact on all the downstream sectors,” he added, mentioning manufacturers of auto components and steel as well as recyclers of ferrous scrap.

“It has been very tough,” he concluded. “The next few months, it’s going to be extremely challenging, especially if [COVID-19] cases go up.”

Brand commitments to increase their use of recycled plastics may be insufficient in light of the pandemic if not supported by recycled-content legislation that encourages investment in reprocessing capacity, according to speakers at the Bureau of International Recycling (BIR) Global eForum on plastics. The Brussels-based organization hosted the webinar June 10.

BIR Plastics Committee Chair Henk Alssema of Vita Plastics, based in the Netherlands, said, “Our industry is facing a lot of problems for the moment,” brought on by the uncertainty surrounding Brexit, the U.S.-China trade war and the coronavirus pandemic. He said demand was “very weak” for recycled plastics, with “huge stocks hanging over the market.” Alssema also pointed to a “lack of liquidity” in the recycled plastics sector.

Sally Houghton of the Plastic Recycling Corp. of California, which is based in Sonoma, said the plastics recycling sector has been hard hit by the pandemic. She added that repercussions that have arisen from shelter-in-place orders throughout the United States have been “extensive,” with redemption centers in states with bottle bill laws closing for a time, reducing supply.

“There needs to be some incentive to encourage end users to use recycled content. We need some firm pull-through of demand.” – Sally Houghton, Plastic Recycling Corp. of California

Additionally, extremely low virgin resin prices have left reclaimers struggling. “The margin between virgin and recycled is very tight at the moment,” she added.

“Lower grade plastics have been very hard hit,” Houghton said, adding that they are struggling to find domestic and export markets.

Plastic reclaimers and the redemption centers that help to supply them “might not recover from the effects of the pandemic without relief” from the government, she said. “There has to be legislation; there has to be government intervention. The recycling industry is on its knees. There needs to be some incentive to encourage end users to use recycled content. We need some firm pull-through of demand.”

Clément Lefebvre of Veolia Propreté France Recycling, Paris, described the current market as a “nightmare,” adding that low crude oil prices have had a significant impact on the plastic recycling sector, reducing demand and putting pressure on pricing. He described price and demand for recycled plastics in Europe as “very low,” adding that some feedstocks are in short supply because a number of sorting centers have closed to reduce the spread of the novel coronavirus.

In this environment, he said, “If you produce high quality, you have a chance to make money.”

Steve Wong of Hong Kong-based plastic recycling firm Fukutomi Co. Ltd. said recycled plastic demand in China has been “quite low,” and export of this material is 25 percent that of normal levels because of lockdowns in other countries. The cut in oil production has helped to support pricing for oil and prime plastics, with pricing increasing 20 to 30 percent for some prime resins.

Wong said supply and demand always seem to be mismatched in the recycled plastics sector, adding that demand needs to be broadened beyond natural polyethylene terephthalate and high-density polyethylene. “We need to extend that to other polymers and colors.”