PAPER RECYCLING CONFERENCE: OCC Close-Up

As the largest recovered paper grade accounting for almost half of the tonnage in the world market, old corrugated cardboard (OCC) received special attention during a post-conference workshop following the 2005 Paper Recycling Conference and Trade Show.

Bill Moore and Peter Engel of Moore & Associates presented the workshop “OCC Close Up: A Comprehensive Analysis of the Grade,” June 28-29 in Atlanta. More than 50 people attended the program, which covered information about supply and demand trends, export and import trends, pricing, procurement and quality issues, among other topics.

North America is expected to remain the biggest exporter and China the biggest importer for the next five years, according to figures provided by Moore.

U.S. exports of OCC have been steadily increasing for 10 years, according to Moore. Today, nearly 48 percent of U.S. OCC exports go to China, a trend which has been driving the market for the past few years. China’s lack of virgin forests and recent manufacturing boom have created an atmosphere of excessive demand for recovered paper and an increasing level of consumption that is expected to continue through 2010, according to Moore.

Asia and the Pacific region are also increasing capacity for recycling all grades of paper, while North America is losing capacity, according to figures provided by Moore. A decline of capacity for old newspaper (ONP) in North America is in part because of per capita newspaper readership shrinking. The drop in OCC recycling capacity is because of a decrease in manufacturing in the United States. “We’re not making the goods that need to be packaged,” Moore said.

Increasing energy costs were among the variables discussed that could put downward pressure on OCC pricing in the near future. Moore acknowledged that more variables existed that could bring prices down, while few would put upward pressure on price.

Quality concerns have been growing, especially regarding wax contamination. “Wax has been a tremendous issue for a number of years—a killer for the mills,” said Moore. Wax is particularly prevalent in tonnage from supermarkets. Moore said a number of manufacturers are exploring substitutes for wax to combat the problem with contamination.

According to Moore, quality of U.S. OCC is declining in contaminants and fiber strength, but that less reliance on straw and bamboo pulp and better Asian mill stock preparation have lead to the improvement of OCC quality from Asian boxes.