Paper Department

Strength in OCC

he much-anticipated strength in old corrugated container (OCC) markets is generating a fair amount of optimism for paper stock dealers. Prices have noticeably improved, while movement, demand and supply could help push OCC prices even higher over the short term.

The more optimistic vendors cite several reasons. While OCC generation has declined, a noticeable increase in offshore shipments has created some sharpening strength over the past several weeks.

Although some of the trends taking place right now may ease back, more than a few paper stock dealers expect to see continued strengthening over the next several months.

April OCC prices at the mill have moved up $10 in most regions of the country. Further, several vendors expect to see additional price increases over the next several months as domestic mills enter the market in larger degrees to buy more OCC.

Sources in the Midwest, South, Northeast and Southwest all have noted an improving environment for OCC. There have been some scattered reports of domestic mills running short on supply as many of them opted to move toward a just-in-time inventory approach to material.

The condition of the market, some note, is similar to the environment of the mid 1990s, when shortages of OCC resulted in a rapid price spike for OCC, as well as a host of other grades. Vendors contacted stress that they hope the price doesn’t spiral out of control as it did when OCC topped $200 per ton last decade, creating a frenzy throughout the country as paper stock dealers bid up prices.

One dealer in the Southeast says that lately he has been getting more calls from brokers and mills than he has over the past two years.

While OCC prices have been moving upward, the generation of supply still lags. Over the past several years, as the OCC market slumped, some waste management companies either opted out of handling OCC altogether, or scaled back their collection.

Other grades, including some de-inking grades, also have been solidifying, with modest optimism appearing to grow over the past month. Sorted white ledger, office grades and coated book stock all have been holding up fairly well as of late. Movement of these grades also has improved lately, with the offshore market being one of the major drivers for the material.