In any commodity market, supply and demand are seldom in perfect balance. Trouble can arise when the scale tips too far in one direction, which is where some forecasters worry the scrap paper markets could be headed.
Presenters at the keynote session of the 2004 Paper Recycling Conference & Trade Show, held in late June in Atlanta, had different messages, but all revolved around the notion that recyclers would have plenty of job security in the years ahead feeding the world’s pulping machines and other scrap paper consumers.
Moderator Bill Moore of paper industry consulting firm Moore & Associates, Atlanta, set the stage by pointing out the dramatic increase in China’s use of scrap paper as a feedstock for its booming paper industry. China’s need for paper has brought its mill buyers to Japan, Europe and now North America to harvest an increasing share of each region’s recovered paper.
Henri Vermeulen of Kappa Packaging (who is also chairman of the European paper trade group known as CEPI), stated that it will be possible for the recycling industry to supply global needs, but that to explain how is similar to explaining how a bumblebee can manage to fly in defiance of the laws of physics.
In Europe, federally-mandated residential collection programs have produced considerable new supply, although Vermeulen noted that the world’s markets have absorbed this material as quickly as it has been produced.
Such collection efforts in China would be a logical next step to help supply meet demand. “At the end of the day, the market will find its own way no matter what every theory predicts,” Vermeulen stated.
Simon Davies, president-recycled fiber of Georgia-Pacific Corp., Atlanta, noted that those only vaguely familiar with the company probably think of it as a timber company, even though its containerboard and tissue segments are now “over 50 percent reliant on recycled fiber.”
Like Vermeulen, Davies pointed to the legislation that has driven European recovery rates, and also mentioned the single-stream methods that are harvesting more tonnage in North America.
Despite these successes, Davies pointed to economist Woody Brock’s “Chindia” description of the emerging middle class of 600 million consumers in China and India. “It’s a market the size of the EU and the U.S. put together—a huge emerging middle class that is driving consumption” of all commodities—including scrap paper.
Pieter Eenkema van Dijk, president of recycling equipment supplier Van Dyk Baler Corp., Stamford, Conn., predicted the trend toward fewer but larger recycling plants would continue in coordination with industry consolidation. He offered as proof: “We sell more and more large balers and fewer and fewer small balers.”
In North America, haulers continue to dictate the move toward single-stream collection. “Ninety percent of new large curbside sorting systems are single-stream systems,” he noted.