Paper Department

OCC Resurgent

The market for old corrugated containers (OCC) has been surging, with prices moving up almost weekly during the past several months. For many processors, the strength in the market has been enough to put much of the negativity of the past two years behind them.

A combination of sharply lower inventory levels, better than expected demand, sustained offshore orders and limited supply has helped propel OCC to price levels not seen in several years. Most packers and brokers feel that the strength in the grade has the legs to last for several more months. In fact, some vendors feel that markets could carry through the end of the year before there is any slowdown.

Reflecting the strength in OCC, most of the larger paperboard producers have announced higher prices for their finished product. These mills have cited higher raw material prices (OCC) as the reason for the price hike.

Inventory levels have fallen precariously low at some mills, with the July 4th holiday a time when some mills are threatened with running out of material.

The shortage of the grade has led more mills to start taking in greater amounts of mixed paper as an extender or replacement for the OCC.