Paper

So far, the New Year has shown little change in the struggling recovered paper market. Prices and generation are low, and those inside the industry report few bright spots in the down market.

"We’re in a deep freeze," says one Midwestern recycler. "News is weak and hard to move. OCC (old corrugated containers) is weak and hard to ship at all. One of our brokerage customers has dropped the price of OCC so much that the delivered price is less than the freight to get it there."

"Right now, if you are able to move material, that is a bright spot," says a recycler based in Texas. He reports that high grades and deinking grades have been moving, but at extremely weak prices. "For other grades, like OCC, it’s just slowed to a trickle," he says.

The faltering global economy has all but silenced demand for many grades of recycled paper, both domestically and abroad. "Christmas sales were down; it was pathetic," says the Midwestern recycler. "There’s not an area of the economy that’s being spared."

According to the National Retail Federation (NRF), holiday sales declined 2.8 percent—marking the first time holiday sales have dropped since the NRF started tracking the data in 1995.

The dismal retail performance reflects an overall lack of demand for goods. For paper recyclers, that translates into a lack of demand for boxes and the corrugated medium needed to produce them.

The leading end markets for ONP (old newspapers) have fared no better. Declining demand for newsprint from the troubled newspaper industry in the United States has been well documented. However, that’s not the only difficulty, with a lagging construction sector chipping away at demand from insulators. "You need insulators buying news," says the Midwestern recycler. "And while those with existing homes sometimes put in additional insulation, the biggest consumer of new insulation is new housing, and new housing is non-existent."

The Texas-based recycler adds that there has been some export activity, as overseas buyers take advantage of low freight rates. "However, that doesn’t necessarily mean they are doing new business." He says export destinations are more likely stockpiling material.

Paper isn’t the only suffering recyclable commodity, which is making the downturn just as hard on recyclers who handle multiple materials. "Plastics, metals, paper—they’re all suffering," says the Texas recycler. "It’s just a matter of hunkering down. You can still take advantage of opportunities as they come up—it’s not all doom and gloom. You just have to look at the business with a keen eye."

Sources say it could take some major macro-economic change for the paper market to start to bounce back, which means the industry could be in for lean times for a while. "It’s going to take manufacturing. It’s going to take people going out and doing things, people traveling again to get the movement going," says the Texas recycler. "If people stay home and do nothing, they’re not buying, so there’s less demand for boxes, tissue, etc. It’s amazing how markets connect."