Paper

OCC Sends Out an SOS

Not much relief is in sight for the hard pressed old corrugated (OCC) market. Prices continue to erode throughout the country. Downtime at mills appears to be the biggest culprit, although slack offshore orders also are creating many of the problems.

Moving into late September/early October, most paper stock dealers feel the best case scenario is for a comeback early next year. By that time it is hoped much of the downtime will have taken place. Meanwhile, board mills typically run better schedules during the early part of the year, while supplies of OCC are at lower levels.

Presently, downtime is being extended, with some reports of certain mills looking to take machines off line on a regular basis through the rest of this year.

One key factor that could help spur OCC markets earlier than next year would be the stronger presence of the export market. While this area helped spur markets earlier in the year, over the past several months Asian buying, once fueled by strong orders into China, has declined.

The Mexican market, a good release valve for the Southwestern U.S., also has been curtailing its purchases of OCC, creating reduced demand. Sources at several Southwestern paper stock operations note that one Mexican paper company is pushing out its payment period as a way to stem the flow of fiber to its mills.

(FibreMarketNews.com is an electronic publication covering the paperstock markets and paper recycling industry.)