The mixed paper grade has been an increasing concern among recyclers in recent months. The average value of this grade has been exceptionally low throughout all of 2018 and into 2019. According to Fastmarkets RISI’s PPW Yellow Sheet report on Feb. 5, average prices were -$3 for mixed paper.
Bill Moore, president of Atlanta-based Moore & Associates, and Dan Gee, senior associate at Moore & Associates, presented on this topic of increasing concern during the Southeast Recycling Conference (SERC) Feb. 24-26 in Orlando, Florida.
Moore reported that the primary stumbling block to the demand for mixed paper are the high levels of nonpaper contaminants in mixed paper bales. Moore added that mixed paper “won’t always be no cost,” but he said it could take years before the market for mixed paper is robust again.
Looking at history
Historically, paperboard mills have always used some level of mixed paper as a low-cost source of fiber, such as recycled paperboard mills, containerboard mills, roofing felt mills and brown toweling mills. Yet beginning with the rise in the collection of residential mixed paper in the mid-1990s, the quality of the grade began to deteriorate, and domestic mills did not upgrade their stock preparation system, Moore reported at SERC. However, China had built mills that could use U.S. mixed paper. Ultimately, the result was that very little mixed paper could be used by U.S. mills, with the exception of Pratt.
By the early 2000s, China’s new paper mills offered new technology that could efficiently process lower grades of mixed paper, Moore added. Also, China’s growth and demand were both strong, which increased the prices of mixed paper even though the quality of the commodity was declining. Thus, U.S. containerboard mills could not compete, for the most part, with Pratt excluded.
As a result, China had changed the mixed paper dynamics rapidly in that era.
Today, China has closed its doors on importing most recovered fiber commodities—particularly mixed paper. So, mixed paper bales have much less demand than usual. Moore estimates that at least 500,000 metric tons of baled mixed paper collected for recycling in the U.S. were landfilled in 2018.
Outlook for mixed paper today
While demand for the mixed paper grade is low, some countries are increasing their imports of mixed paper. Moore reported that countries such as India, the Philippines and Indonesia are importing mixed paper. Also, he said more capacity is expected to be built to consume mixed paper in Southeast Asia, specifically Laos and Cambodia.
Domestically, the consumption market is beginning to see some activity for the mixed paper grade as well. Moore reported that all new board mill projects under construction in the U.S. are planning to use mixed paper at about the 10 to 50 percent level. He noted that many of these projects were originally planning on only consuming old corrugated containers (OCC).
Some domestic mill projects that offer optimism for U.S. recyclers include:
• Pratt Industries’ construction of a new mill in Ohio that could consume upwards of 200,000 tons per year of mixed paper;
• Green Bay Packaging’s plans to replace its mill in Wisconsin with one that will consume higher qualities of mixed paper;
• Cascades’ announcement to place a mixed paper system in its plans for converting its Ashland, Virginia, newsprint mill to a containerboard mill;
• Bio Pappel’s plans to install a mixed paper system in its conversions of the Port Angeles mill; and
• Copamex’s plans to place a mixed paper system in its conversion project.
Moore added that many other mills are considering ways to consume mixed paper. He said these projects require major capital expenditures, but the additional detrashing equipment is relatively low cost.
Although the demand for mixed paper is low today, Moore concluded that he anticipates the U.S. mixed paper market will recover over the next two to three years as a result of mill conversions, export market growth, recycled pulp investment, improved supply quality and long-term OCC demand.