Many different viewpoints were presented at the 2018 RISI International Recycled Fiber and Containerboard Conference, held in December in Shenzhen, China, but a point of agreement concerned the redirection of global scrap paper flows, particularly for the mixed paper grade.
Bill Moore of Atlanta-based Moore & Associates provided on overview of how Chinese government policies created major changes to global recovered fiber flows in 2018, while Tang Yanju of the China Resource Recycling Association (CRRA) detailed efforts in China to recover more fiber domestically there.
Moore stated that despite the turmoil in recovered fiber markets caused by China’s restrictions, there was a consensus among many recyclers that “China’s new standard has been a good thing, despite the pain.”
While demand for and the price of mixed paper has “fallen significantly” because of the policy, Moore said “demand has increased for cleaner grades of recovered paper,” such as double-sorted, or No. 12, old corrugated containers (OCC) in the United States, and its European equivalent.
Japanese exporters have been winners, added Moore. “Their cleaner recovered paper is highly sought after by Chinese mills,” with demand rising by 40 percent compared to 2017. (This, added Moore, has caused supply and high pricing problems for Japanese mills.)
More than 2 million metric tons of mixed paper had been going to China annually, but “this has fallen to almost zero,” stated Moore. Also in the U.S., the market for No. 11 OCC has been soft since the restrictions were introduced, according to Moore.
“The price gap has really widened between No. 11 and No. 12 OCC,” said Moore, saying the premium for No. 12 clean OCC is similar to the prior difference between No. 11 OCC and mixed paper. Regarding mixed paper, Moore stated, “Even before China’s effective ban on imports of it, the grade bordered on chronic oversupply.”
In 2018, the mixed grade sank to a $0 per ton price level, with some mixed paper facing disposal rather than recycling. However, paper and board makers in North America have begun to respond to the circumstance, said Moore.
He cited investments by Pratt Industries and Green Bay Packaging in the United States; Cascades in Canada; and Bio Pappel and Copamex in Mexico as examples of measures being taken in North America to absorb mixed paper. (An overview of this activity can be found in this October 2018 Recycling Today feature article.)
The loss of mixed paper and some OCC shipments to China has resulted in renewed efforts to collect recovered paper there, according to the CRRA’s Tang. She said mill companies including Nine Dragons Paper Ltd. and Shanying International have invested heavily in recycling collection and processing plants in China to bolster their fiber supplies.
Tang said the CRRA has met with the Ministry of Ecology and the Environment (MEEE) in China to portray the positive role recovered fiber play in China’s economy, and to communicate that “there has been a bottleneck” for papermakers. “The MEEE is considering the impact on our industry” she told conference attendees.
The labeling of scrap materials as “solid waste” or “foreign garbage” remains a problem, said Tang. “We need to portray the difference between solid waste and recovered paper” she said of efforts by the CRRA and paper companies in 2019 and beyond.
The 2018 RISI International Recycled Fiber and Containerboard Conference was Dec. 5-7 at the JW Marriott Shenzhen in Shenzhen, China.