Pricing for most paper stock grades dropped precipitously during the fourth quarter of 2011. However, moving into the first two months of 2012, many paper recyclers say conditions are fairly stable for most grades of recovered fiber, with prices holding at their current levels. Lower grades, such as old corrugated containers (OCC), mixed paper and old newspapers (ONP), are on much better footing.
The decline in generation is helping to keep prices at their present levels.
While pricing may have found equilibrium, many paper stock dealers say they don’t expect a robust recovery in the near future. Demand from domestic and offshore sources has improved, though prices aren’t likely to show a significant upward climb in the first quarter of the year, one broker says.
The relatively good weather in the East during the first half of January has been contributing to the smooth movement of many recovered fiber grades. Typically, heavy snowfall cuts into the supply of material. But, with sources saying weather hasn’t yet been a problem, the supply of many paper stock grades has been fairly good.
OCC markets have improved as the dip in generation of new material was met with a modest uptick in demand. OCC prices surged in the Midwest and South recently, as two of International Paper’s Louisiana recycled board mills were running precariously low on inventory and entered the open market, aggressively buying OCC to meet their needs, according to reports.
ONP and mixed paper are seeing moderate rebounds in price and demand. The steadily improving U.S. economy has been driving markets for these two grades.
Some recyclers say they are commingling mixed paper and ONP at their material recovery facilities in light of the limited price differential between the two grades. A paper stock dealer in the Southwest adds that mills in Mexico are able to take in this mixed material and manually separate the two grades.
Despite better markets for ONP, the slump in newsprint demand has claimed another victim. British Columbia-based Catalyst Paper, which has struggled with slowing demand throughout the past several years, missed an interest payment in January. The company has applied for and received an initial court order under the Canada Business Corporations Act (CBCA) to commence the restructuring process with its note holders. The company also has filed for Chapter 15 bankruptcy protection in the U.S. Under U.S. bankruptcy laws, Chapter 15 grants a foreign company protection from creditors looking to seize its assets in the country.
On the East Coast, a large paper stock exporter says there is an increase in movement of OCC, mixed paper and ONP, primarily driven by modest growth in orders from China.
The high grade market also could show modest improvement during the first half of 2012. Office grades, coated book stock and pulp substitutes saw some of the sharpest price declines in late 2011. Moving into early 2012, several paper stock dealers say domestic consumers are returning to the market with slightly better orders.
(Additional information on secondary paper markets, including breaking news and consuming industry reports, is available at www.RecyclingToday.com.)