Editor’s Note: The following comments are an excerpt from the fifth edition of a comprehensive report now published by RISI (and formerly published by EU Consulting and Moore & Associates). More information on the complete report, titled “Outlook for Global Recovered Paper Markets,” can be found in the sidebar “The Full Story”.
The world recovered paper market will continue to evolve rapidly, and sometimes chaotically, over the next five years.
After faltering in 2009, world recovered paper usage is predicted to jump in the upcoming five years. The projected upswing in the world economy will boost paper and board demand.
At the same time, recovered paper will continue to increase its share of the world furnish mix in light of investments in new recycled capacity, resulting in demand for recovered paper advancing at a faster pace.
A DEVELOPING SITUATION
Developing regions of the world will generate all of the growth in recovered paper demand. China, by itself, will account for nearly three-quarters of the worldwide expansion.
Developed world regions, on the other hand, will use less recovered paper in 2014 than in 2008 as a result of a drop in paper and board output.
The vast majority of recovered paper demand will be generated in the packaging area, especially containerboard. Old corrugated containers (OCC) will continue to be the dominant grade in the recovered paper market, reflecting both the strong growth in containerboard demand and further advances in papermaking, which will allow a greater share of containerboard output to be based on recovered paper.
Both mixed paper and high grades will register faster growth than OCC, though, as papermakers have to reach further into the waste stream to meet their needs.
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The Recycling Today Media Group has announced that its 2010 Paper Recycling Conference & Trade Show, scheduled for June 13-15, 2010, is returning to downtown Chicago. The Marriott Chicago Downtown Magnificent Mile hosts the event, which includes a variety of educational sessions as well an exhibit hall featuring products and services for professionals in the paper recycling industry. Celebrating its 11th year, the annual Paper Recycling Conference is among the largest paper recycling sector gatherings. Attracting attendees from all continents, participants represent recovery/recycling companies, paper mills, the government sector and other links in the recovered fiber supply chain, including brokers. “The event has always been the premier networking and business conference in the industry,” says Recycling Today Media Group Publisher Jim Keefe. The 2010 event features a program focusing on many aspects of recovered paper markets, including a look at how the industry has been affected by the recent economic slump. It also features workshops on residential recycling, commercial recycling, transportation and operations. Brian Taylor, editor-in-chief of the Recycling Today Media Group, says, “Knowing that most mixed post-consumer streams consist of at least 50 percent fiber, we’ll be offering specific programming for MRF operators, haulers and government recycling officials in 2010.” The Paper Recycling Conference continues its tradition of cooperation with industry associations, including event co-sponsor the Paper Stock Industries national chapter of the Institute of Scrap Recycling Industries Inc. (ISRI) and the American Forest & Paper Association. Programming and registration information is available at www.PaperRecyclingConference.com. – Zack Lloyd |
Chinese demand for recovered paper will continue to outstrip domestic supply, despite the best efforts of papermakers and the government to increase collections. The big problem for China will remain that a huge amount of paper packaging is sent out of the country and must be collected in the regions of the world where it ultimately is consumed.
The share of domestic collections within total Chinese recovered paper consumption will rise in the next five years, but not enough to keep imports from expanding rapidly.
EXPORT PATTERNS
The burden of supplying the voracious growth in Chinese recovered paper imports will continue to fall on the developed world.
North America will remain the major net exporting region, but Chinese papermakers will have to reach further into the waste stream and into the center of the region for material.
Europe also will supply more recovered paper to the world market, with both Japan and Oceania registering substantial trade surpluses, also.
The limits of what can be recovered from the waste stream will be tested in developed world regions, despite continuing government efforts to remove paper from the waste stream.
Recovery rates in the developing regions of the world remain substantially lower, where collection efforts are inhibited by paper and board being diverted to alternative uses such as packaging and hygiene, along with collection systems being underdeveloped.
Not only are higher recovered paper prices on the horizon, they are here already. The steep drop in prices at the end of 2008 has proved to be ephemeral. Strong demand from Asian papermakers, particularly in China, pulled prices up rapidly throughout 2009.
Further increases appear to be inevitable, as papermakers will have to dig more deeply into the waste stream. This means more costs associated with processing lower quality material and expanding the geographic range of the procurement process.
| The Full Story |
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The newest “Outlook for Global Recovered Paper Markets” report is now available from RISI Inc., Bedford, Mass. The report is marketed by the forest products research firm as “the most comprehensive and indispensable analysis of global recovered paper markets available.” Topics addressed in the RISI study include: • Recovered paper demand by major grade for 119 countries, with remaining countries included on a regional basis; • Recovered paper demand based on paper and board production by nine major grades, with furnish mixes estimated by grade for wood pulp, non-wood pulp and the four major grades of recovered paper; • Recovery of paper and board for recycling by the same major grades of recovered paper and for 119 countries; • Major factors affecting recovery rates around the world, including government legislation and voluntary programs on the part of the paper industry; • Prices of bulk grades of recovered paper on a delivered basis to the United States, Western Europe and China, prices of higher-quality grades on a delivered basis to the United States and prices of market wood pulp included to further the analysis of high-grade pricing; and • Estimated recovered paper consumption for the major consumers in Asia, Europe and North America and estimated recovered paper supply by major suppliers in the same regions. RISI refers to the report as a detailed analysis that includes historical data from 1992 to 2008, estimates for 2009 and forecasts for 2010 to 2014. Those interested in more information or in purchasing the report should visit www.risi.org. |
It would appear that the supply side of the recovered paper market will see a lot of activity during the next five years. Rising recovered paper prices, along with huge increases in demand, imply that larger companies will both be needed and be interested in the supply side of this market.
Also, consumers of recovered paper will be extremely interested in securing their supply sources in this type of environment, or at least forging strong relationships with suppliers. Mergers and acquisitions should be an active field in this industry.
The report was prepared by a team led by Rod Young, now chief economic advisor and formerly CEO of RISI, an information provider to the global forest products industry based in Bedford, Mass. Young can be contacted at ryoung@risi.com.