Paper Commodity Report

Prices and overall market conditions remain strong for recovered fiber, but the industry is facing troubles moving its material on a number of transportation fronts.

One of the hottest topics of conversation—and biggest points of contention—for paper recyclers is the shortage of shipping containers. Some recyclers are reporting a lag time of two-to-three weeks to get containers to move material. Competition from other high-priced commodities, such as scrap metal, is contributing to the shortage, says one Midwestern recycler. "A lot of people are shipping scrap iron in containers, we’ve not seen that before, so that’s one of the reasons they’re scarce," he says.

Recyclers who find their overseas shipping options stunted by the container shortage are often having equally poor luck moving freight via land-bound means. Trucking is also less reliable lately, reports one recycler based in the Southwest. "Gas prices are still high, and trucking in general is harder to schedule," he says. "You’re planning much further out to get [trucks], with no guarantee."

Aside from frustrations on the roads and waterways, the market continues to enjoy strong demand and high prices, though prices for bulk grades seem to have leveled off some in April, sources say. "Paper markets are status quo," says one recycler. "It was a month of prices staying the same."

The weak U.S. dollar continues to keep export demand strong, particularly in Asian markets like China and India. While the talk of a U.S. recession continues, recyclers don’t see much effect on the paper market yet. Demand—both domestic and global—remains strong for products made from recovered fiber, particularly tissue-based necessities like paper towels, which keeps the market healthy. "As long as demand for those products remains strong, mills are going to keep going after the material," says one recycler.

Generation also remains robust. The American Forest & Paper Association (AF&PA) released a report at Paper Week in March, touting a 56-percent recovery rate for paper consumed in America. (More information on the AF&PA’s report is available online at www.afandpa.org.)

Recyclers say this increase is likely a result of the increased number of curbside recycling programs, which has in turn brought in more residential tonnage. The distinction is important, says one Southwestern recycler. "Some grades have pretty much maxed out, especially the high grades and deinking grades," he says. "What you’re seeing now is what they call commercial and residential mix. Cities are now collecting paper from homes—your direct mail, cereal boxes, newspaper—that was going to landfill…There’s not much more bookstock or hard white, though."

While collection and generation are trending up in general terms, recyclers report that generation patterns tend to slow somewhat over the summer, with schools out of session and office workers taking more vacation.

Even anticipating a slight slowdown over the summer, recyclers are generally optimistic about overall paper market conditions, thanks largely to such strong demand from overseas, which is expected to continue. "I’d say everything right now is good to very good," says one recycler.