In the April buying period, prices for all grades of recovered paper surged in response to short supplies caused in part by the COVID-19 pandemic.
The average U.S. price of old corrugated containers (OCC) increased in the April buying period to $71 per ton, according to Fastmarkets RISI’s PPI Pulp & Paper Week April 6 edition. Recyclers and brokers say OCC prices rose quickly, considering the industry experienced near-record-low prices for the grade in most of 2019.
“We were at 30-year lows, but for prices to double in 48 hours for scrap materials is unprecedented,” says a representative from a document destruction firm based in the Upper Midwest.
“Now is a bad time to take on a large export order and abandon [domestic] commitments for a few extra dollars; loyalty will mean something.” – a broker based in the South
A broker based in the South says he has noticed that grocers are baling more materials and residential recycling has picked up in some communities with stay-at-home orders in place because of the COVID-19 outbreak. However, he says generation of OCC from department stores and nonessential businesses is down. Generation of sorted office paper (SOP) also is down.
Kari Tavola, president of Oakland, California-based secure destruction firm Shred Works, says she has noticed much slower generation from offices since the start of the COVID-19 outbreak in the U.S.
“The whole Bay Area has a shelter in place order,” she says, adding that employees of many tech companies are working from home, so less office paper is being generated by that business segment. “If a lot of people keep working from home, office generation will be different.”
However, the representative from the secure destruction firm based in the Upper Midwest says his business has been fairly steady in March and April because his company serves many customers in the medical industry.
Paper mills in most parts of the world need recovered paper. “It’s pretty easy to sell right now with the shortage in supply, which is a change from the last 12 months when there was plenty available and difficulty finding markets,” a broker based in the Midwest says.
A mill buyer who wishes to remain anonymous says most of his company’s operating divisions are busy, including the tissue business, medium business and molded pulp operations.
“Since January, our mills have been running really well. We’ve had some typical downtime, but no market-related downtime,” he says.
While the increased demand is welcome, sources say they have experienced some challenges shipping to export markets in the April buying period because of container availability issues.
“We were at 30-year lows, but for prices to double in 48 hours for scrap materials is unprecedented.” – a representative from a document destruction firm in the Upper Midwest
Another broker who is based on the East Coast reports that some U.S. ports are restricting hours and days of operation because of COVID-19, as well.
For instance, while the Port of Baltimore is open, Ports America Chesapeake, which operates the Seagirt Marine Terminal at the port, closed that terminal April 8 and April 10 because of declines in international container volumes.
According to a news release issued by the Port of Long Beach in California, that port felt the economic effects of COVID-19 in March “with more canceled sailings and a decline in cargo containers shipped” through the seaport.
“The coronavirus is delivering a shock to the supply chain that continues to ripple across the national economy,” says Mario Cordero, executive director of the Port of Long Beach. “We’re definitely seeing a reduction in the flow of cargo at San Pedro Bay, but the ports remain open and operating, and we are maintaining business continuity.”
Exports to nations, such as India, that did not deem recycling or paper mills essential businesses during the April buying period also are challenging.
The broker based in the South adds that it’s important this season for suppliers to keep their commitments to domestic mills, especially those mills that stuck with them throughout 2019.
“Now is a bad time to take on a large export order and abandon [domestic] commitments for a few extra dollars,” he says. “Loyalty will mean something.”