Still Waiting
March brings with it the start of spring, when the cold, often bleak winter starts to fade and both animals and paper plants start to come out of their winter hibernation. Paper stock dealers are hoping for a similar blossoming. After a relentless slide in price and demand for most grades over the winter months, many paper stock dealers are hoping to start seeing some modest signs of growth.
But unfortunately for an industry that has been feeling significant pressure on most grades as downtime continues to sweep the industry, any return to life is not likely to occur for several more months.
Bulk grades, principally old corrugated (OCC) and old newspapers (ONP), seem to be taking a major beating as of late. ONP has seen sharp price reductions due to significant mill downtime throughout North America.
Although generation has been declining as newspapers slim down, there still remains only minimal demand from potential consumers. Putting a further downbeat spin on the market, newsprint producers have been unable to push through any finished product price increases, making it less likely there will be any increase in ONP prices.
Prices for OCC, the key bellwether grade for most paper stock dealers, are expected to be flat at best. Vendors in the Midwest report experiencing recent incidents of orders for material being cut at the last minute.
With the supply of OCC declining, there has been some stabilizing of the grade, especially in coastal regions. Export orders haven’t yet picked up their pace, although there is a sense that demand will start to firm up this spring as some Asian mills, especially those in China, start to purchase greater amounts of OCC.
Lackluster markets for the material in the Midwest have hamstrung many suppliers lately.
The lack of end markets in the Midwest, as well as the distance from any export opportunities, makes it a more difficult situation for processors and brokers in that part of the country. An especially difficult situation is seen in the upper Midwest, where a host of the traditional buyers of OCC have sharply reduced their demand for OCC, as well as other bulk grades.
The markets in other regions are slightly better, although no one is reporting any drastically upbeat news over the next several months. However, there have been some vendors who see the potential of stronger movement later this spring.
CANUSA, HERSHMAN TO MERGE
Canusa Corp., Baltimore, and Hershman Capital Corp., Branford, Conn., have agreed to merge the Fiber Group of Canusa and Hershman Recycling, Inc. into a new company. The new company will be called Canusa-Hershman Recycling Corp.
Senior management will be co-headquartered in Branford and Baltimore. Ethan Hershman will be co-chairman and CEO; Bruce Fleming will be co-chairman; Jonathan Sloan will be president; and Todd Laggis will be CFO of the new company.
Hershman Recycling Inc., which operates from Branford and satellite offices in Texas and California, currently trades more than 25,000 tons per month of fiber and 1,000 tons per month of plastics.
Canusa’s Fiber Group, which operates from Baltimore and satellite locations in Boston, Buffalo, Montreal, Richmond, Va., and St. Albans, Vt., trades more than 30,000 tons per month of fiber and obsolete roll stock. Canusa operates paper stock plants in Baltimore and St. Albans. Both companies have numerous baler installations and joint-venture agreements with paper mills and generators of fiber.
The newly combined company expects sales in excess of $100 million annually. The merger is expected to be finalized during the second quarter of 2002. Specifically not included in the merger are Canusa’s Kraft Group, Capitol Fiber Inc., ANW Crestwood Inc. and Evergreen Fibres Inc.
"The trend of the paper industry has been for greater consolidation amongst the paper mills as well as the printers and industrial users of paper. It’s only logical that the vendors of recycled fiber would consolidate to meet the needs of a more demanding market place," Bruce Fleming remarks in regard to the Canusa-Hershman merger.
Ethan Hershman, who will be CEO of the newly combined company says, "Canusa-Hershman will be not only the largest independent fiber management firm east of Chicago, we intend for it to be the best."
STILL SHIPPING OUT
The export of recovered fiber appears to be one of the bright spots in a mostly downbeat market. While exports overall have been somewhat muted over the past several months, the most recent statistics from the U.S. Commerce Department show that over the first 11 months of 2001, the export of recovered fiber from the U.S. posted a 3.1 percent increase from figures the same time the prior year.
For the first 11 months exports stand at 34.924 million tons, compared to Jan.-Nov. 2000 figures of 33.853 million tons.
Although figures are up for the first 11 months, exports for November, the most recently reported month, dropped slightly from both the previous month as well as from November 2000.
The strength in exports is being attributed primarily to an increase in buying of U.S. recovered fiber by mills in China. Over the past several months, new mills have been opening up in the country, requiring increased amounts of recovered fiber.
PELTZ SELLS SHREDDING DIVISION TO IRON MOUNTAIN
The Peltz Group, Milwaukee, has announced the sale of its shredding division to Iron Mountain Confidential Destruction, a division of Iron Mountain Inc., Boston.
As part of the transaction agreement, The Peltz Group will provide brokerage services for Iron Mountain in some of the company’s markets.
"This is an important strategic initiative for The Peltz Group," says Brian Fielkow, the company’s chief operating officer. "We’ve spent several years building our core recycling and brokerage businesses and expanding our operations in that area – in fact, we’ve acquired four recycling businesses in the past four years. This transaction will allow us to take further steps to solidify our position as a leader in the recycling industry. We remain committed to our long-term investment in the recycling industry."
The Peltz Group handles more than 145,000 tons of recovered fiber paper per month. The company’s document destruction division had been known as Security Data Destruction.