Recovered paper pricing has been in a slump in late 2014 and early 2015, according to paper and recycling industry consultant Bill Moore of Moore & Associates, Atlanta.
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| Bill Moore of Moore & Associates |
Speaking to attendees of the Paper Recycling Conference India event, held in New Delhi in late January, Moore described a list of variables that affect scrap paper pricing, several of which may soon conspire to boost prices back upward.
Among the most important variables, said Moore, is the global economy, which in many places is healthier than current recovered fiber prices might indicate.
For some grades, the cost to recover additional tons can impact price, which Moore says is why old newspapers (ONP) and old magazines (OMG) grades have been faring better in late 2014 and 2015. Those two grades, said Moore, are in “chronically short supply” as print media circulation numbers in North America and Europe continue to decline.
A variable that is suppressing prices on the OCC (old corrugated containers) side of the market are low mill operating rates in the world’s largest containerboard production market—China. Moore said he foresees that China’s excess board mill capacity “will be soaked up [but] it will take a while.”
China’s excess capacity and a prolonged economic slump in Europe have been the biggest contributors to the current price slump, says Moore. He predicted, however, that “we are at the bottom end of the cycle. Prices will go back up.”
Rising prices, though, may not hit peaks that were as high as those in China’s fastest growth years of the previous decade, Moore commented.
Among the restraints are slower economic growth rates in China and the ability of mills in the United States Southeast to use wood chips if recovered fiber prices become impractically high.
Moore noted that both China and India will likely focus on increased domestic collection, as North America and Europe are “almost at maximum recovery.”
Among the other variables that will affect scrap paper pricing in 2015 and beyond, said Moore, are virgin pulp prices; ocean freight shipping costs; currency exchange rates; disposal (landfill) costs; and inventory levels at large paper mills.
Paper Recycling Conference India was held Jan. 29-30, 2015, at the Taj Palace Hotel in New Delhi.