PSI Meeting Covers the Gamut

During the recently concluded fall meeting of the Paper Stock Industries, a national chapter of ISRI, a host of issues were discussed. The meeting, held Nov. 8-11, had as its keynote speaker Pete Grogan with Weyerhaeuser. His presentation, “A New World Order,” touched on the growth in the Chinese economy and what it means for domestic paper stock dealers.

The burgeoning Chinese middle class is just one of the factors driving the growth in paper demand from China.

At the same time, while the U.S. continues to be a major source of paper stock for China, he also noted that Africa, with its wealth of natural resources, is becoming a major area for Chinese investment.

Turning to the domestic market, Grogan noted that while the collection of recovered fiber has been a fairly good success story, he estimates that there still is around 36 million tons of paper stock that isn’t being collected for recycling. Going further, he notes that roughly 51 percent of the office paper generated is not being recovered either. How, he asks, can this material be collected and recycled.

As for individual recycling programs Grogan cited the city of Philadelphia’s RecycleBank program, which is a coupon program that has generated a significant amount of interest.

Robin Weiner, ISRI’s executive director, points that Chinese demand for recovered fiber is expected to surpass 20 million tons of demand by the year 2010, a sharp increase from figures this year of around 12 million tons.

Currently there are some 6 million tons exported from the U.S. to China, making it the largest exported commodity from the United States to China. In her presentation, Weiner pointed out that China is a very important trading partner with the U.S. recycling industry, with about $2.3 billion in scrap paper and scrap metal exported each year from the United States to China.

For paper, around 6 million tons of scrap paper with a value of $500 million were shipped from the United States to China last year, making it the largest export commodity from the U.S. measured by the number of containers and traffic volume.

With China’s paper stock demand expected to grow significantly over the next five years, Weiner highlighted several goals the association is hoping to accomplish. As a first step in the process ISRI put together a mission to China, where several ISRI members were able to meet with various government agencies, paper plants, and other businesses that would benefit from greater cooperation.

Some goals that the mission hoped to accomplish were the following: develop and strengthen the relationship with Chinese government authorities; learn as much as possible about the recycling industry in China, as well as the laws and regulations that are to be compiled by ISRI members; provide business development opportunities for interested members.

In her concluding remarks, Weiner updated attendees on China’s AQSIQ policy. The net result of the first round of licenses resulted in about 4,000 applications received, slightly more than 3,000 licenses approved, and 686 of those licenses approved in the United States.

Also presenting during the International Forum at PSI was Francisco Amador, with Morgan Price & Co. His presentation looked at the opportunities possible in South America. While there are decent markets for a number of paper stock grades in South America, they are far smaller than the huge demand coming from China. Amador did point out that Venezuela and Argentina, two of the larger importers of recovered fiber, are areas that have high risk. For Venezuela, political issues seems to be one of the major factors, while for shipments to Argentina, a greater concern is receiving payment for the material.

While demand for recovered fiber from South American markets is far less than the top tier export destinations, there are some advantages to doing business with mills there. For one, the turnaround time for containers is far less than container shipments to China. While volume is far less, the ability to move containers quickly, instead of having to wait as much as three months to have the container reach the final destination, is one advantage. Also, while China has been a major buyer of many of the lower grades such as OCC and ONP, one of the more popular grades for South American buyers is sorted white ledger and sorted office pack.