Waste Expo: Paper Trail

Global demand has created a strong market for recovered paper, with increasing production numbers and prices worldwide, according to George Brabec, a brokerage manager for Weyerhaeuser, who spoke on a panel addressing paper recycling trends at Waste Expo, which was recently held in Chicago.

“It’s been a great couple years in paper markets,” he said, adding that recent years have brought dramatic changes in the way paper is traded around the world.

Not only are prices up, but recycling rates are at record highs, Brabec said, citing the recent figures released by the American Forest & Paper Association (AF&PA) that reported a 56-percent recycling rate, meeting and surpassing the association’s goal of 55 percent early. Brabec said a new goal of 60 percent has been set for 2012. “The goals are obtainable,” he said. “The paper is there.”

While the market has been strong, certain economic conditions on the horizon do pose threats to future growth, Brabec said, including rising fuel costs and high rates for container shipping. “At one time, the U.S. provided about 71 percent of China’s fiber needs,” he said. “Now, that’s about 45 percent.” Brabec said China is turning to other countries to supply recovered fiber because of the dramatic increase in container rates.

Transportation issues have lead to some volatility in the market, but conditions are expected to remain strong, he said. “We have never seen a better time than right now for paper markets,” he said.

What volatility the market has experienced has been upward, added Bill Moore of Moore & Associates, Atlanta, who also served on the panel. Moore addressed several different grades of recovered paper, adding that one of the biggest changes the market has seen recently is the increase in value of mixed paper. “Mixed has changed,” Moore said, adding that at one time, the grade’s price ran at 20 percent to 30 percent of the price of old corrugated containers (OCC). Now, mixed trades from 50 percent to 60 percent of OCC. In Europe, the price can be even higher, sometimes as high as 80 percent, he said. Domestic mills may still have a difficult time using mixed paper, but export demand has fueled its growth, Moore said. “We used to avoid mixed paper—today, it’s a grade you pack on purpose.”

Across the market, Moore said prices should be expected to soften slightly later in 2008, although the slight correction will be nothing like the price plummet the market experienced in the mid-90s.

Waste Expo was held May 5-8 at the McCormick Center in Chicago. More information is available at www.wasteexpo.com.