A study of a decade's worth of recovered paper pricing trends reveals that a few grades have received “upgrades,” and that the world has become a smaller place.
In a seminar presented at the Paper Recycling Conference & Trade Show in late June in Atlanta, consultant Bill Moore of Moore & Associates (www.MARecycle.com) offered an overview of historical scrap paper pricing that identified several trends.
For the past two years, scrap paper prices (using old corrugated containers, or OCC, as the benchmark grade) in Europe and North America have moved up and down largely in coordination. Pointing to a graph covering OCC pricing for the past two years on both continents, Moore remarked, “There are a lot of similarities there; 15 or 20 years ago that would not have been the case.”
The moving of the two markets in tandem is considered to be a sign that demand from flourishing new mill capacity in China is driving the supply-and-demand equation for scrap paper equally in Europe and North America.
Changes in pulping technology provide a critical reason why the fortunes of the old magazine (OMG) grade have changed dramatically over the past ten years. The use of flotation systems has made OMG desirable at many U.S. mills. Moore pegs 1996 as a year when OMG reached a point of being worth more than ONP (old newspapers), and has stayed there ever since.
Another grade that has fared well in recent years is mixed paper, which has had an upward arcing average since 1996, gaining ground on the relatively flat pricing of the sorted office paper (SOP) grade.
Again, China is seen as a key factor in this equation, as its mills are accepting mixed paper to supplement OCC and other grades that can at times be more difficult to procure.
Factors that will affect pricing in the near future, according to Moore, include North America’s, Europe’s and Asia’s ability to recover more scrap paper, and the operating rates of North American paper mills, which are finally beginning to move back up after experiencing a steady decline the past five years.
For a look at other trends, Moore advised attendees to consider his company’s “Globalising Recovered Fibre Markets” report, available through the www.globalrecyclefiber.com Web site.