Commodity Report

Throughout the past several months, a growing number of paper recyclers have been saying prices for many deinking grades and pulp substitutes have climbed too high too quickly. With the weak U.S. economy, many of the same recyclers say they fear a sharp price correction for office grades is on the horizon.

According to reports from different regions of the country, grades such as office pack, white ledger and pulp substitutes could see price declines of $50 per ton or more by the end of the year. "It wouldn't surprise me if [office grades] drop by $100 a ton by December," a recycler says.

A number of consumers of high grades have indicated that they wish to pay less for material this fall. With the overseas market quiet, these mills may secure the price reductions they have been seeking.

According to several recyclers contacted for this report, tissue mills, which are large consumers of many office grades, have excess capacity. These mills may view this situation as an opportunity to place orders for recovered fiber at lower prices.

In the Southwest, several mills in Mexico are exerting pricing pressure on the market. One recycler says mills are resisting higher prices, with some more aggressively purchasing wood chips in light of their overall abundance.

Prices for recovered fiber may be declining, but several recyclers say demand is still decent and movement remains steady. "Consumption is good," a paper recycler in the Southwest says. "Not great but OK." He adds, "I am hearing rumors that a correction of anywhere between $10 and $50 a ton is in the offing."

(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.)