Recyclers See Light at the End of the Tunnel

Primary paper producers may have been less than upbeat about the near term market for their industry. However, paper stock dealers are expressing a growing optimism that the drought suffered by many in the industry is starting to lift.

While no one is willing to state it definitely, it appears that more dealers feel that markets are becoming prime for a bounce. The question is how high the bounce will be. And further, while there have been some mention about the generic “second half of the year,” more dealers are expressing the opinion that some grade could snap back much sooner; and the bounce could be sharp.

Granted, forecasting the paper stock market, like any other commodity, is a guessing game. By predicting any improvement can trip up many vendors if a bet results in a significant loss.

However, during the AFPA’s annual Paper Week meeting, a host of paper stock dealers say they are seeing signs of an imminent turnaround d for some grades. Terms such as “increased inquiries, shortages, “ and “pent-up demand” is sprinkling the conversations of more dealers. Adding to the overall upbeat tone, much of this optimism is not limited to a particular region, rather from sources throughout the country.

A grade that is generating more buzz has been old news, especially No. 8 deinked news. The grade had been hammered hard as the slump in the economy curtailed demand from newsprint mills. However, more sources are saying that the sharp decline in generation of ONP is coming while a number of mills are looking to increase their supplies. Some regions are indicating that prices could start to firm up by next month, with the possibility of sharply higher prices in the upcoming months.

On the offshore side, there also has been some strengthening in the export market, according to a number of East Coast vendors. This region is where much of the “increased inquiries” are coming from. Although a significant number of sales have yet to be converted, it looks as if some offshore mills are expected to start buying more material in the coming months.

The Mexican market also is ramping up its orders for No. 8* news, which is benefiting many handlers of the grade in the Southwest.

Another grade generating some better than expected demand has been coated book stock. Prices have moved up over the past month as demand improves.