Recyclers around the world have been affected by the government of China’s restrictions on imported scrap materials; but, in the recovered fiber sector, the foremost victims of the policy may ultimately be paper and board manufacturers and buyers in China. That’s according to speakers at the 2018 Bureau of International Recycling (BIR) World Recycling Convention & Exhibition, held at the Sofia Hotel in Barcelona, Spain, May 27-30. There, BIR President Ranjit Baxi told attendees of the Paper Division meeting that pricing for old corrugated containers (OCC) and other recovered fiber grades in China has skyrocketed, causing ripple effects in its paper industry.

Baxi of J&H Sales International, London, said with OCC pricing ranging from $440 to $480 per ton in China as of late May, “Chinese mills buy at these high prices,” and in turn finished containerboard prices in China are now hitting $700 to $800 per ton.


Purple circles: OCC. Black squares, mixed paper (54). Average U.S. dollars per short ton for open market purchases by mills for delivery in June as reported by RISI’s PPW Yellow Sheet June 6, 2018. Prices used with permission from PPW Yellow Sheet. Free trial available: www.risi.com/rt.

Indian and Association of Southeast Asian Nations (ASEAN) containerboard mills are beginning to take advantage of this situation by shipping finished containerboard to Chinese converters and box producers, Baxi said. “Should Europe be thinking of shipping finished corrugated to China?” he asked.

Per Chinese government statements, it wants to steer that nation toward secondary commodity self-sufficiency, but Baxi said it is unclear how long this will take. In the meantime, the government is pressuring China’s paper producers to keep their prices in check at the same time they are paying more for raw materials.

Baxi said experts believe Chinese imports of recovered fiber could drop by between 15 million and 17 million tons in 2018, after having reached nearly 29 million tons as recently as 2015. Import licenses issued up until the end of April were for a total of nearly 10.9 million tons, 50 to 60 percent of which have been used already, he said.

“I don’t know how the industry can afford to pay this high price for its raw materials.” – Dominique Maguin of France-based La Compagnie Des Matieres Premieres regarding the Chinese market

Dominique Maguin, chairman and CEO of France-based La Compagnie Des Matieres Premieres and a former BIR Paper Division President, said at the convention, “I cannot imagine the Chinese market being able to continue in that way. I don’t know how the industry can afford to pay this high price for its raw materials.”

Confusing for U.S.-based shippers is the status of U.S.-based China Certification and Inspection Group (CCIC) preshipment inspection offices and the future of that agency as well as China’s General Administration of Quality Supervision, Inspection and Quarantine (AQSIQ), which is reportedly being merged into China’s General Administration of Customs (GACC).

What is certain: Some stability has been found in pricing for recovered fiber grades traded in the U.S. The major secondary paper grades—mixed paper, OCC and sorted residential papers and news (SRPN)—saw steady pricing for the June buying period, with mixed paper and SRPN increasing $5 per ton on the West Coast, according to Boston-based research firm RISI’s June 6 PPI Pulp & Paper Week. Sorted office paper (SOP) jumped $10 across the board, except for on the West Coast, where it sold for $5 more per ton.

Some stability has been found in pricing for recovered fiber grades traded in the U.S.

Export pricing to China and Asia also increased. Mixed paper increased by $10 per ton FAS (free alongside ship, meaning the seller must deliver goods to a named port alongside a vessel the buyer designates) out of ports in New York, Los Angeles and San Francisco/Oakland. Pricing for this grade out of Chicago didn’t move, however. OCC to Asia increased by $5 per ton out of New York and by $1o per ton out of Chicago and the West Coast; SRPN pricing rose by $15 per ton off the West Coast and by $25 per ton out of New York; and SOP gained $5 and $10 per ton out of New York and the West Coast, respectively.

China‘s import restrictions and uncertainties caused by changing trade patterns are among topics to be discussed at the 2018 Paper & Plastics Recycling Conference Europe Nov. 6-7 in Prague. For details, visit http://paperplastics europe.recyclingtodayevents.com.

*U.S. dollars per short ton for open market purchases by mills. Domestic prices are FOB seller’s dock for delivery in June as reported by RISI’s PPW Yellow Sheet June 6, 2018, while export prices are FAS port of origin. New York includes ports in northern New Jersey and LA includes Long Beach and LA ports. Prices used with permission from PPW Yellow Sheet. Free trial available at www.risi.com/rt.