Facilities in the United States are overflowing with mixed paper as prices for this grade and for most recovered fiber grades plummeted in February. A material recovery facility (MRF) operator based on the East Coast reports that he has “thousands upon thousands” of bales of mixed paper stored in two plants. “We’re just putting it in every corner we can,” he says.
China has sustained its slow buying of U.S. secondary paper. The lack of orders has created an oversupply of mixed paper in the U.S., with prices plunging. The price out of Chicago to China is $0 per ton FAS (free alongside
“At some point in time in the next 30 to 60 days, prices are going to go up because [China is] going to need the corrugated,” the MRF operator says.
The Chinese government issued another 1.11 million metric tons of import licenses in the first quarter, according to RISI’s PPI Pulp & Paper Week. At this rate, 2018 import demand in China will be down 35 percent compared with the 2017 import totals, the publication notes. Forty-five mills have received import licenses so far in the first quarter of 2018, with 20 mills having been part of the latest round of batches, PPI Pulp & Paper Week reports.
As part of China’s Ministry of Environmental Protection (MEP) releasing a batch of early 2018 scrap materials import quotas, 96,000 metric tons of material were issued to a Nine Dragons Paper (Dongguan) Co. Ltd. facility in south China. Notes attached to those two quotas indicate permission or instructions to “change ports” or “change the mode of trade for general trade.”
The 26 paper import quotas total 272,000 metric tons in volume. That represents just 0.9 percent of the 29.2 million metric tons of recovered fiber imported into China in 2015.
PPI Pulp & Paper Week also reports that the Chinese government is expected to begin releasing second-quarter licenses in late March, according to some of its sources.
“U.S. suppliers hope for a larger allotment than in the first quarter, when the government released 26 percent fewer import licenses than it did in first-quarter 2017,” the publication reports.
While U.S. exporters are optimistic that Chinese mills will up their buying of recovered fiber, they are puzzled as to when the pickup will occur.
“We just don’t have any movement. It’s pretty bad out there from what I’ve seen, and the expectation is that it’s going to improve. I’m just surprised it hasn’t happened,” says the MRF operator on the East Coast, who exports a significant amount of material.
Another source on the East Coast adds, “China will come back and buy … [but] it’s not going to last very long.”
Exporters are looking forward to a new direction from the market after the Chinese New Year in February, says Ranjit Baxi, president of the Brussels-based Bureau of International Recycling (BIR), in the January 2018 BIR World Mirror on Recovered Paper.
The MRF operator says the current market for recovered fiber is concerning. “It’s crazy what’s going on in the marketplace,” he says. “I’d expect some of the big players like Waste Management and Republic to be impacted
Domestic pricing for mixed paper and OCC dropped across the board, while pricing for sorted residential paper and news (SRPN) saw declines on the West Coast and stability throughout the rest of the country. Sorted office paper (SOP) prices increased by $5 to $15 per ton. At a U.S. average price of $16.94 per ton,