Will mixed paper stay in the mix?

The mixed paper grade has presented an ongoing concern for 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 in the United States for mixed paper were -$3.

Bill Moore, president of Atlanta-based Moore & Associates, and Dan Gee, a senior associate there, offered a presentation on the topic at the Southeast Recycling Conference (SERC) Feb. 24-26 in Orlando, Florida.

Moore said the primary stumbling block to the demand for mixed paper comes in the form of high levels of non-paper 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

For many years, paperboard mills have used some level of mixed paper as a low-cost source of fiber, including at recycled-content 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 many domestic mills did not upgrade their stock preparation systems, according to Moore.

However, China had built mills that could use U.S. mixed paper. Ultimately, the result was that very little mixed paper was used by U.S. mills, with the exception of those built by Conyers, Georgia-based Pratt Industries.

With China’s new paper mills having new technology in place by the early 2000s that could accept lower grades of mixed paper, China’s demand grew stronger. This 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 grade, for the most part, excluding Pratt.

More recently, China has closed its doors on importing most recovered fiber commodities—particularly mixed paper. Thus, mixed paper bale demand has plummeted. Moore estimates at least 500,000 metric tons of baled mixed paper collected for recycling in the U.S. may have been landfilled in 2018.

Outlook for mixed paper today

While demand for the mixed paper grade is low, some countries are increasing their imports of the grade. Moore said 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 in Laos and Cambodia.

In North America, the consumption market is beginning to see some activity for the mixed paper grade. Moore indicated that all new board mill projects under construction in the U.S. are planning to use mixed paper in a range from the 10 to 50 percent level. He said many of these projects were originally planning on only consuming old corrugated containers (OCC).

Some domestic mill projects that offer optimism for recyclers that pack the mixed paper grade 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 quantities of mixed paper;
• Canada-based Cascades’ announcement to place a mixed paper system in its plans to convert its Ashland, Virginia, newsprint mill to a containerboard mill;
• Mexico-based Bio Pappel’s plans to install a mixed paper system in its conversions of the Port Angeles mill in the northwestern U.S.; and
• Mexico-based Copamex’s plans to set up a mixed paper system as part of its conversion project at a mill in Mexico.

Moore added that many other mills are considering ways to consume mixed paper. He said these projects require major capital expenditures, but the additional contaminants removal equipment is relatively low cost.

Although the demand for mixed paper is low today, Moore predicted 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 supply tightness that will cause some OCC buyers to look to other grades—including mixed paper.