US recycled paper market trends: What key challenges are impacting business?

In the latest “World Mirror on Recovered Paper” published by the Brussels-based Bureau of International Recycling (BIR), one industry veteran sums up the state of the North American market matter-of-factly, and the outlook is not very inspiring.

“The general state of the paper business is simply not pretty,” writes Myles Cohen, board member of Vipa USA Inc., part of Swiss trading company Vipa Group.

Cohen, writing on behalf of Vipa Group CEO Marc Ehrlich, says after several months of increasing or stable prices, the North American market softened in May and June as lower prices were recorded in almost all regions, particularly for old corrugated containers (OCC) and mixed paper but also for high grades.

"The general state of the paper business is simply not pretty.” – Myles Cohen, board member, Vipa USA Inc.

“Domestic mills in the [U.S.] are backing off their orders and are even trying to turn away contracted tonnage because of lower demand and, thus, higher recovered fiber inventories,” Cohen says.

He notes suppliers have said prices possibly could continue to deteriorate for the next few months, which has fueled nervousness.

Tariffs also have played a role, lowering consumer confidence in new expenditures related to employment uncertainty and inflation.

“This tariff-led reduction in consumer spending has become more apparent, creating a domino effect across the entire supply chain,” Cohen says. “Lower consumer expenditure ultimately leads to lower demand for paper packaging.”

This year also has been marked by shutdowns across the paper industry.

In May, Smurfit Westrock revealed plans to close four facilities, including a coated recycled paperboard mill and a containerboard mill, and Georgia-Pacific announced the planned closure of a containerboard mill in Georgia later that month.

Then, International Paper revealed in June a series of closures to take place over the second half of the year, including a packaging facility in Marion, Ohio, and a recycling facility in Wichita, Kansas—the latter prompting a recycling facility closure in nearby Wellington, Kansas.

Finally, in July, Cascades said it would shut down its corrugated medium manufacturing site in Niagara Falls, New York, as part of an optimization strategy.

“There have been permanent shutdowns at some huge paper mills,” Cohen says. “This adds to downtime and reduced capacity utilization elsewhere.

“These losses have been counterbalanced to some extent by new or resurrected mills, built as greenfield paper mills or older or shuttered mills converted to 100 [percent] recycled containerboard paper mills,” he writes. “However, it is unlikely this new capacity is making up for closures or downtime elsewhere.”

Francisco Donoso of Spain-based Dolaf Servicios Verdes S.L. echoes this sentiment, saying the market in the U.S. has been undergoing a period of “structural downturn” and weakening prices, marked by mill closures and “signs the bottom has yet to be reached.”

According to Donoso, the European OCC market displayed “mixed dynamics” during the early months of this year.

The month of May brought some stabilization as purchased volumes dropped sharply in line with mill preparations for summer shutdowns, while June and July were largely quiet, Donoso writes, with downward price pressure and high inventory levels.

“OCC inventories have grown,” Donoso says of the German market. “Several mills have planned production stops in July and August, whereas others [are] expected to continue operations with only a brief ... closure. ... Recycled containerboard prices have shown some resistance, holding steady in June before decreasing slightly in July.”

In Spain, despite rising domestic consumption, Donoso reports OCC prices remain under pressure because of increased imports and ample supply, while the market in Italy has been stable with no major increase in OCC availability.

“Operators have remained cautious in the face of international price trends, choosing to rely on high-quality industrial recovered material rather than overstocking,” he says.