Paper Department

Markets Balance

Moving into 2010, most paperstock dealers say they are seeing fairly solid prices. Old corrugated containers (OCC), high grades, deinking grades and pulp substitutes all have fairly strong price levels. However, as is the case with many other secondary commodities, generation is off, and in some cases significantly.

One East Coast broker says pulp substitutes and deinking grades have been displaying significant strength recently. Following significant downtime, wood pulp prices have been on a tear. This has helped drive markets and prices for pulp subs and most deinking grades upward. 

Demand also remains fairly strong, with domestic and overseas orders plentiful. Orders into China are good, while domestic mills, despite their much publicized problems, are buying material.

However, inventory levels are depleted, with available tonnage off significantly leading up to Christmas. As a result, paperstock dealers have been battling over every available ton, which has helped keep prices up.

As of mid-December, recovered fiber dealers are expressing a mix of pessimism and cautious optimism.

In the Midwest, paperstock markets are holding their own. Price and demand are steady, though as in other regions of the country, tonnage is down significantly from the same time in 2008.

On the down side, mill closures continue to have a negative impact on the market. Recently, Smurfit-Stone, with headquarters in Creve Coeur, Mo., and Chicago, announced plans to close two of its mills—one in Montana and the other in Michigan. The closing of these two mills further shrinks the domestic end market for recovered fiber.

Markets in the South also are in good shape, with material flowing steadily to mills in the area. The recent opening of a mill in Louisiana by Pratt Industries, Conyers, Ga., has helped keep the brown grades moving at a steady clip in this region.

Several paper companies are in various stages of financial reorganization, though a number of sources mentioned that Smurfit-Stone has been buying significant tonnage throughout the country.

The uncertain future of Abitibi-Bowater, based in Montreal, is casting a pall over the recovered fiber market as the company works to restructure its business. Several recyclers say that if the Canadian government doesn’t assist the paper company, the largest newsprint producer in the world, then more newsprint capacity will be cut, exacerbating overall challenges for end markets in North America.

Finally, in what could be a significant change for the paper recycling industry, the domestic paper industry is seeking to extend the black liquor tax credit. A number of associations, including some recycling-related groups, such as the Institute of Scrap Recycling Industries Inc., have expressed opposition to this program. While the tax credit helped boost profits for a number of U.S. paper companies earlier this year, several paperstock dealers claim that many mills switched away from using recovered fiber as a result.

(Additional news about paper recycling markets, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)