2006 PAPER RECYCLING CONFERENCE: Recycling in a Smaller World

An increasingly global economy is changing the face of the recovered fiber market, according to Bill Moore of consulting firm Moore and Associates, Atlanta.

Moore moderated the keynote session on the global nature of today’s paper market at the 2006 Paper Recycling Conference & Trade Show, held June 25-27 in Chicago. He told attendees that from 2000 to 2005, North America’s share of the recovered fiber going to China shrank from 80 percent to 46 percent. While North America is still supplying nearly half of China’s imported recycled fiber, other players have snapped up market share in recent years, including Western Europe and Japan.

Moore identified several factors driving the market for old corrugated containers (OCC), including China’s paperboard overcapacity and continuing shutdown of U.S. paperboard mill capacity. More than 2 million tons of capacity shut or is scheduled for closure in 2006 in North America, according to Moore.

R.S. Baxi of J&H Sales International Ltd. told attendees that the demand from China is be expected to continue because of the expanding paper production in the country in plants that rely mainly on imported material. He said production rates in China were nearly 20 million metric tons in 1995 and in 10 years are expected to reach 80 million metric tons. “As production continues, so will demand,” said Baxi. He also identified Japan as a key player in the Asian market exporting to China.

Steve Voorhees, CFO of Rock-Tenn Co., Norcross, Ga., identified increasing price transparency as another factor having a sizable impact on the way fiber moves around the world. He said that in the domestic market, the use of the OBM index decreases the importance of marketing somewhat.

On the consuming side, Voorhees said mill shut downs and increasing price volatility is putting North American mills under pressure, as is the competitive disadvantage recovered fiber faces against virgin material.

This domestic pressure is leading to an increasing importance of export markets, which is being fed by current strong demand from China, he added.

The advent of single-stream recycling is another factor changing the marketplace, according to Steve Wilson, director of marketing for the fiber group of Waste Management Recycle America. “The domestic industry is not as strong as it used to be,” he said, adding that consumption is shrinking while the sources of fiber are changing, with much more material coming from single-stream sources.

Single stream, Wilson said, has increased the volume of material collected, which in turn has lead to an increase in capital investment in facilities to make them capable to handle the influx of material.

According to figures provided by Moore, single-stream processing systems have seen a dramatic increase since 1980, and single stream and dual stream combined dominate today’s MRF processing systems.