Research suggests low box demand to continue

Bulk grade pricing in many regions of the U.S. is on the rise as all eyes remain on the old corrugated container (OCC) market.

Several regions saw as much as $10- and $15-per-ton increases in bulk grade pricing and, according to Fastmarkets RISI’s Pulp & Paper Week monthly pricing report for April 5, OCC prices saw the first broad-based increase since September 2021, when the COVID-19 pandemic pushed pricing three times higher than it is today.

Every region in the U.S. saw at least a $5-per-ton increase in OCC prices save for the Los Angeles and San Francisco regions, which remained flat. The Northeast region saw the biggest increase, with $10-per-ton spikes in New England, New York and Buffalo.

However, the news is not all positive. Research by Adam Josephson, senior vertical expert at FreightWaves, a global price reporting agency and supply chain data provider, suggests the anticipated uptick in box demand that North American containerboard producers predicted in the first quarter of 2023 has not happened yet—and might not by the end of the year.

According to a FreightWaves survey of North American box makers, respondents say box shipments were “modestly lower” sequentially in the first quarter of the year compared with the fourth quarter, and they didn’t expect much improvement in April or thereafter. Josephson reports box shipments of those surveyed were down 12 percent from a year ago, noting “a steep decline appears nonetheless likely.”

He also points to a FedEx fiscal report from March as evidence of weaker goods demand. The company says ground shipments once again have decreased from quarter to quarter, down 11 percent and 9 percent, respectively, in its most recent fiscal periods.

The recovered paper industry still anticipates the effects of several large containerboard projects that have yet to come online or recently did.

About 2 million tons of additional recycled containerboard capacity is expected this year. Officials at Conyers, Georgia-based Pratt Industries recently previewed the company’s upcoming paper mill in Henderson, Kentucky, telling 44 News of Evansville, Illinois, the project is on track to start up this fall. Meanwhile, as of publication, Kingsey Falls, Quebec-based Cascades has yet to announce the start of its Bear Island Mill in Ashland, Virginia, which was slated to come online in March.

On the high grades side, sorted office paper (SOP) pricing continues its downward trend,  falling for the sixth straight month—down $10 per ton across nearly all regions and down 11.6 percent from a year ago. But while the trend appears disheartening, recyclers, at least to some extent, have anticipated this slump.

In talking to Recycling Today for a high grades report in March, Ron Gable, senior vice president of performance and operations at Ontario-based Proshred Security and Redishred Capital Corp., said, “The prediction was that we will fall back to a low watermark somewhere around Q2 of 2023, and that seems to be the direction in which we’re moving.”

Kathy DeLano of Dallas-based Texas Recycling noted at that time that more and more mills have been adapting their machines to use mixed paper rather than SOP, and price trends seem to support those findings. Mixed paper prices, while still down considerably from a year ago, have been steadily increasing since January.

“It’s kind of made high grades a little more competitive with low grades,” DeLano said in March.

Printing and writing paper shipments, similar to  box shipments, have been sliding since last fall, and figures from the American Forest & Paper Association (AF&PA), Washington, show the biggest year-over-year decline in months.

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In the AF&PA’s March 2023 Printing-Writing Monthly Report, the organization says total printing and writing paper shipments decreased 22 percent in March of this year compared with March 2022, surpassing what was previously the biggest decline when shipments decreased 15 percent in February compared with February 2022.

The report also shows U.S. purchases of total printing and writing paper decreased 19 percent in March compared with the same month last year, while total inventory levels remained essentially flat month over month. AF&PA says March shipments decreased in all three major printing and writing grades compared with March 2022, and net printing and writing paper imports decreased 30 percent.

“The shadows are still the shadows,” Gable told Recycling Today in March. “The things that were predicted with some degree of certainty are still there.”