Paper Recycling Conference: Clouds Move into the Forecast

Despite a tough fall 2011 season, strong global demand for recovered fiber should continue to underpin scrap paper prices, according to paper industry consultant Bill Moore of Moore & Associates, Atlanta.

Moore, who, along with his colleague Peter Engel, presented a seminar at the 2011 Paper Recycling Conference in late October, called export demand “the most important variable” in determining paper stock prices in both 2011 and the foreseeable future.

When monthly export tonnage changes rapidly—when it falls or rises in the 20 percent range—Moore and Engel said the correlation is clear that paper stock prices will then fall or rise two or three months later in response to the export volume shift.

Moore called the recovered fiber market in the summer of 2011 “an over-heated market” and said in those situations “the market looks for a reason to correct.”

Despite the dramatic price correction in the fall of 2011, Moore says his consulting firm does not see a correlation between this present price drop and what occurred in the fourth quarter of 2008 and the first quarter of 2009. His disclaimer, however, is that if either China or the United States runs into deep economic trouble, paper stock markets will share the pain.

The importance of the Asian export market also was evident in regional pricing information gathered by Moore & Associates. The company’s study of long-term average old corrugated container (OCC) prices in different regions of North America found that OCC prices in California (near the most active ports to China) were typically $11 per ton above average, while prices in Eastern Canada were $6 per ton below average.

Moore’s seminar also touched on the disappearing supply of ONP (old newspapers) in the United States, with available ONP supply (assuming full recovery) having fallen from 17.4 million tons in 2002 to a projected 9.2 million tons in 2011.

ONP has become a grade “chronically in short supply,” Moore noted. The amount of ONP shipped may not have declined as dramatically, but only “because of other things getting into ONP” shipments, Moore commented.

The 2011 Paper Recycling Conference, partnered with the PSI (Paper Stock Industries Chapter of ISRI), was held Oct. 23-25 in Chicago.