OCC (purple circles); Mixed (2)/Mixed Paper (54) (black squares); *Average U.S. dollars per short ton for open market purchases by mills for delivery in February as reported by RISI’s PPW Yellow Sheet Feb. 6, 2017. Prices used with permission from PPW Yellow Sheet. Free trial available: www.risi.com/rt.

The year continues to be a positive one for secondary fiber, with each of the major recovered fiber grades purchased domestically increasing in price in February, with old corrugated containers (OCC) and mixed paper again setting records in the last month.

In addition, export prices to China jumped by a range of $10 to $27 per ton for these scrap paper grades, with OCC pricing increasing $23 or more per ton FAS (free alongside ship, meaning the seller must deliver goods to a named port alongside a vessel designated by the buyer), according to the Feb. 6 PPW Yellow Sheet from Boston-based research firm RISI.

A broker based in the Northeast says “very strong” demand domestically and overseas has contributed to pricing increases. “Containerboard manufacturing rates are over 97 percent in the U.S., and this creates strong demand,” he says.

Mixed paper’s pricing boost to $89.17 per ton in February is nearly double the February 2016 figure of $46.39. This is the fourth consecutive month that grade has set a new high in pricing.

OCC pricing jumped $20 or $25 per ton in the nine U.S. regions defined by the PPW Yellow Sheet. In fact, all major recovered fiber grades purchased domestically did not drop in terms of pricing, which also is true of the export market, where pricing climbed relative to January for every secondary paper grade.

The surges in secondary fiber pricing have come as a surprise to some industry veterans. Speaking at the 2017 Paper Recycling Conference India, held in Mumbai in February, Bill Moore of Atlanta-based paper recycling consulting firm Moore & Associates, who has been tracking recovered fiber pricing for years, said prices for OCC and other scrap paper grades in the closing two months of 2016 and in January 2017 rose “as high and fast, almost, as I’ve ever seen.”

Reviewing the OCC price over the past two decades, Moore said, “When you match it to global GDP (gross domestic product) you get a reasonable correlation.”

Mixed paper has been rising along with OCC and even narrowing the spread in its value against OCC, Moore said. He said mixed paper, which often is used as a substitute for OCC when the market heats up, was trading at 76 percent to 79 percent of OCC’s value in early February, higher than the more common 65 percent figure.

For mill buyers in India and beyond, 2017 may well go on the books as a year of high feedstock prices, Moore said. “All recovered paper grades, with the exception of mixed paper, are for the most part supply short in the developed regions of the world,” he stated. “In general, [2017] trend line pricing for all grades is up going forward, although the market is starting to get to a top.”

*U.S. dollars per short ton for open market purchases by mills. Domestic prices are FOB seller’s dock for delivery in February as reported by RISI’s PPW Yellow Sheet Feb. 6, 2017, 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.

Beyond India and pricing, export volumes to other Asian markets, including China, Indonesia and Vietnam, are likely to continue to grow in 2017, according to Ranjit Baxi, president of the Bureau of International Recycling (BIR) in the organization’s January 2017 BIR World Mirror on Recovered Paper.

The demand pull from China, where containerboard mills have been running strong, “is still substantial,” says an exporter based in California.

Hong Kong-based containerboard producer Nine Dragons Paper Ltd. announced in January that the company expects to increase its profits by “not less than 45 percent … due to stable growth of revenue of the group.” In that same news release, Nine Dragons identified the “continual improvement of packaging paper market conditions in China.”

Back in the U.S., an explosion at a containerboard mill killed three workers and caused the mill to close for an additional couple of weeks. Lake Forest, Illinois-based Packaging Corp. of America (PCA) released a statement Feb. 8 detailing an explosion at its DeRidder, Louisiana, paper mill. The incident involved annual repair work being performed on piping in the pulp mill area, the company says.