Prices have remained strong throughout the summer, and sources say the market is likely to continue in a similar pattern for the near future.
"It’s pretty strong right now, and that’s kind of unusual," says one recycler located in the Southwest. He says the price strength isn’t necessarily tied to seasonal variation on the calendar either, but is being driven by worldwide economic trends. "You have a global supply and global demand that has dictated how strong markets are," he says. "So all over the world, you’ve got people wanting material."
This high demand has kept inventories low, prices strong and recyclers and packers happy. "The demand is there and demand is just driving the market," agrees one Midwestern packer. Overseas demand is still a major factor, the packer continues, with much of it coming from China, which is now less than a year away from the 2008 Olympic Games in Beijing. However, the packer adds that India cannot be ignored on the world fiber scene. "I don’t think China is the one driving the market as much as India is right now," the packer says. "Their economy is very strong worldwide, and that’s where a lot of paper has been heading off to, holding that pricing."
Active export markets really make all the difference, according to the packer. "We keep waiting for the doors to close and the prices to drop," she says.
The market for old newspapers (ONP) has remained fairly steady, though there continues to be some long-term concerns. Total construction spending in the U.S. dropped 0.3 percent in June, according to the most recent statistics released by the U.S. Census Bureau. The weak housing market means less demand for ONP from insulators, a major consumer of the grade.
ONP is also facing the same concerns as the newspaper industry that generates it, according to a Midwestern packer. "The news is going in the other direction," she says. "It’s harder to find than OCC (old corrugated containers)." She continues, "We are trying to encourage everyone to get news into the recycling streams. News is facing difficult times."
The packer reports hearing from sources in the regional newspaper industry that subscriptions and circulation numbers are down. "That’s a long-term trend that’s going to transition," she says, adding that packers and recyclers are looking to diversify with other grades to protect themselves from a dip in the ONP market. "It’s tough times on demand and supply. The smart guys are transitioning to different grades to accommodate that," she says.
(Additional news about paper recycling markets, including breaking news and pricing, is available online at www.RecyclingToday.com.
CASCADES ACQUIRES MICHIGAN MILLCascades Inc. has entered into an agreement with Honeycomb Products of Michigan (HPM) to acquire the assets of HPM’s honeycomb board mill located in Grand Rapids, Mich.
The acquisition makes Cascades Specialty Products Group the second largest manufacturer of honeycomb board in the market and increases its "green" industrial packaging product line, which is made entirely from recycled paper.
"This transaction fits perfectly well with our strategic plan," Mario Plourde, president and COO of Cascades Specialty Products Group, says. "Through its enviable geographical positioning, the acquisition of the HPM plant will facilitate our efforts to penetrate the U.S. market. Furthermore, the quality of HPM’s products, its strong management team and its continuously improving performance offer strong support for improving and sustainable profitability."
End-markets for honeycomb products include furniture and household appliance packaging and the transportation industry.
Cascades is based in Kingsey Falls, Quebec. Founded in 1964, the company produces and markets packaging and tissue products. Cascades employs more than 14,000 employees. More information is available at www.cascades.com.
CARAUSTAR POSTS LOSS FOR SECOND QUARTER
Caraustar Industries Inc. has announced that sales for its second quarter of 2007 were $235.6 million, a decrease of 10.3 percent compared to sales of $262.7 million for the same quarter in 2006. Included in the second quarter 2006 sales were $21.4 million related to the company’s Rittman, Ohio, and Sprague, Conn., coated recycled paperboard operations, both of which were exited in 2006.
The second quarter 2007 loss from continuing operations was affected by non-cash asset write-offs of $1 million, or 2 cents per share, related to the sale of the Mooresville, N.C., converting location and $0.7 million, or 2 cents per share, in severance and unemployment taxes.
Total paperboard controlled volume for the second quarter of 2007 decreased about 87,000 tons, or 26.7 percent, compared to the second quarter of 2006. In the past year, as a part of the transformation plan to rationalize underperforming assets, the company exited its Sprague and Rittman mills, and closed its Lafayette, Ind., and Reading, Pa., mills. Those four mills, in aggregate, sold 78,800 tons in the second quarter 2006. Excluding these mills, total paperboard controlled in the second quarter 2007 compared to prior year decreased 8,200 tons, or 3.3 percent versus an industry decline of 6.3 percent. The rationalization of 10 converting facilities (two folding carton and eight tube and core plants) during the same time also adversely affected volume. Gypsum facing paper volume, including volume at the company’s 50 percent owned unconsolidated Premier Boxboard Ltd. LLC joint venture, declined 27.9 percent compared to the same quarter last year, as the demand for wallboard continued to be soft. Offsetting this shortfall, production at the gypsum facing paper mills exceeded the prior year’s, as the company leveraged its flexibility in producing other grades. Quarter-over-quarter, mill margins increased $16 per ton as a fiber cost increase of $38 per ton was more than offset by higher selling prices of $43 per ton and lower fuel and energy costs of $11 per ton. Tube and core margins remained relatively stable compared to the same period last year.