A Temporary Bump

Office grades entered 2013 on a high note, though a number of recyclers question how long this high will be sustained.

In early January, demand for sorted office paper, coated book stock, hard white envelopes, manifold white ledger and other deinking and pulp substitutes increased. Several sources say interest from major consumers in many regions of the U.S., as well as in Mexico and Asia, have all helped boost price and increase demand. The improvement follows a desultory fall, when many of these same grades saw prices drop sharply.

Starting in late December and moving into early January, many paper mills that consume office grades were more aggressive with their recovered fiber purchases. In the Midwest and Southwest the improvement has been driven by stronger orders from Mexican mills. One source says Kimberly-Clark’s tissue mill in Mexico has contributed to the upswing in scrap paper demand from that country. The growth in demand had little to do with a strong increase in orders for finished products; rather, several Mexican mills had allowed their inventories to decrease as a tax strategy, sources say.

Many recyclers caution that this upturn in the market has run its course and add that price and demand may ease back, perhaps as soon as February.

One broker who sells a great deal of recovered fiber to consuming mills in Mexico says 2013’s high-grade paper stock markets may follow a similar arc as they did in 2012. Markets started last year with a roar, quieting to a whimper during the second half of the year.

The upswing at the start of this year, the broker says, is in advance of a potential dockworker strike at East Coast ports. Many consumers rushed to ship export orders in advance of the possible strike. However, recent negotiations may result in a new contract, which would prevent the strike and lessen the urgency some dealers and consumers are feeling.

(Additional information on secondary paper markets, including breaking news and consuming industry reports, is available from SDB’s sister publication Recycling Today at www.RecyclingToday.com.)