Paper Department

Bottoming Out

Despite the relenting difficulties in paper stock markets so far this year, there seems to be a sense that markets are bottoming out. Prices for most grades are holding at their present level, with steady mill buying reported as a factor.

The old corrugated container (OCC) market is unlikely to drop much further. There are several reasons for this sentiment. Due to the low prices for OCC, generation of new supply has dried up. With less material available, what is being collected and processed is not having any problem finding a home.

Several reports note that a number of waste management companies are opting to curtail the amount of OCC that they are sourcing out for processing. Without any significant increase in price, it is likely there won’t be much of an increase in the new supply.

While the OCC market is holding at its present level, a promising sign on the East Coast, some say, is that the market is not being influenced by orders to China. OCC shipments to China off the East Coast have tailed off.

As difficult as the export market off the East Coast is, there could be some promising signs over the next several months. Even without strong orders from China, there doesn’t appear to be a backlog of OCC at most packing plants. When orders to China start to roll in, there could be a spike in prices.

On the West Coast, prices are slightly better than off the East Coast, although there isn’t much movement due to a general lack of export activity.

While OCC has been a slow grower for export orders lately, a grade that has been improving is mixed paper. Several sources note that demand for the catch-all grade has been moving up, albeit slowly. While mixed paper has been showing some modest strength, many grades of old newspapers (ONP) are flattening, with signs of further difficulties for the grade.

The ONP market also seems to be receiving a significant amount of negative attention by overseas mills filing claims. Over the past several months a number of paper stock exporters have been hit with claims. Several have questioned the timing of many of these claims, seeing a price negotiation ploy.