Southeast Recycling Conference: The Push for Paper

Paper mill production may have flat-lined in North America, but new papermaking capacity in China is a very real factor in the markets for recovered fiber in 2007.

In a review of recovered fiber markets presented at the Southeast Recycling Conference & Trade Show, which took place in mid-March in Orange Beach, Ala., paper industry consultant Bill Moore of Moore & Associates, Atlanta, said recent boosts in pricing can be tied to both supply and demand factors.

On the supply side, winter weather and a retail segment that is tapering off post-Christmas have helped dry up the supply of many key scrap paper grades.

This is occurring at the same time when existing mills in China are ramping production back up after their Chinese New Year slowdown and when several new mills there are attempting to stock up inventory.

According to Moore, more new recycled fiber papermaking capacity is scheduled to come online globally in 2007 than in any other year in the 2005 to 2009 time span.

Any of these new mills that accept old newspapers (ONP) are entering an already tight market. “That supply is already pretty well spoken for,” Moore remarked.

Supplying the grade has become problematic for North American recyclers because the growing Chinese demand is occurring at the same time that U.S. newspapers are getting both thinner (post-Christmas) and while the trend continues toward smaller page sizes. As an example, Moore noted that the new Wall Street Journal format, which debuted January 1, uses 15 percent less paper per sheet.

Old corrugated containers (OCC) are also enjoying strong global demand, resulting in per-ton pricing that has risen from the $78 range in November of 2006 to $110 in some March trading, according to Moore.

“The Chinese demand is real,” Moore said of OCC, and in recent weeks it has occurred at the same time when generation in the northeastern United States decreased by some 15 to 25 percent, largely because of a series of snow and ice storms.

Mixed paper has followed the upward trend along with OCC, with the grade trading closer to $70 per ton in early March after resting in the $50 per ton range in late 2006.

As with the other grades, Chinese buying is the dominant global factor, and it is massive enough to reach into every market region. “It’s a fundamental change, from regional markets to globalization of the market in the past 20 years,” Moore remarked.

China’s importing of recovered fiber has risen from 5 million tons in 1990 to 35 million tons in 2005, and could reach up to 70 million tons by 2012. “That’s incredible,” stated Moore. “It really drives our market.”

The Southeast Recycling Conference & Trade Show, hosted by the Southern Waste Information eXchange Inc., took place March 11-13 in Orange Beach, Ala.