Demand for most recovered paper grades has stayed strong into mid-April, and slight price increases in the domestic market and greater ones in the export market reflect that strength.
Bill Keegan, president of Shakopee, Minnesota-based Dem-Con Cos., says demand has been good for recovered paper as of early April.
“Demand has been steady, and I think that is reflected in the pricing,” he says. “Markets for OCC have been better than for mixed paper, but both are improving from last year.”
“There may be a little extra supply than demand, but everything seems to be in equilibrium.” – a broker based in the Midwest
Keegan adds that Green Bay Packaging, Green Bay, Wisconsin, brought new capacity online in mid-March, which he says might have helped to boost demand for recovered paper in the Midwest.
Green Bay Packaging announced that its first reel of paper was produced March 11 at its new mill in Green Bay, which consumes old corrugated containers (OCC) and mixed paper.
Mick Barry, president of Mid America Recycling, which operates a material recovery facility (MRF) in Des Moines, Iowa, says demand is strong for OCC and mixed paper. Given the domestic demand for both grades, he says he is surprised mixed paper prices have not increased much.
“There is a lot of demand for mixed paper,” Barry says, though the price of the grade has not risen in a couple of months. “It’s about $90 for a ton of OCC versus $45 for mixed. That’s a big difference. And mills are always asking for more mixed, but we've been constantly sold out of it.”
On the other hand, several mill operators say they think the domestic price of OCC increased a little too much in the April buying period.
“There was no reason to increase the price since the situation today is we have very high inventories and we’re oversupplied on OCC,” a buyer with a large mill network says. “Can that change this month? Absolutely. … But right now, there is a lot of available supply, and mill inventories are good.”
“Demand has been steady, and I think that is reflected in the pricing.” – Bill Keegan, president, Dem-Con Cos.
Export prices for most recovered paper grades jumped up again in the April buying period. A broker based on the East Coast says the gap between the domestic and export prices for OCC is big.
“In the years I’ve been doing this, I’ve never seen such a big disparity between domestic and export price for this long,” he says. “In the past, there have been run-ups where a snowstorm in the Northeast might cause mills to run low, so there is a big gap in price, but that often corrects itself in a couple of days. But, today, there’s consistently a big gap.”
The broker on the East Coast adds that demand for high grades, such as sorted office paper, also has been “steady and good” as of mid-April. He says, “As the economy comes back to life, demand for away-from-home [tissue] is getting stronger. Mills are producing toweling for places like airports. Demand is stronger.”
However, the buyer for the large mill network says away-from-home tissue markets haven’t quite returned to prepandemic levels yet. He says retail businesses have strengthened a bit to help increase away-from-home tissue demand, but there isn’t a crazy rush to buy toilet paper for home use that the industry saw last spring.
“Paper towel and bath tissue are still in demand, but there have been new entrants into the industry—new virgin players,” the buyer says. “Pulp has become a much bigger component for that. But the price of pulp is going up significantly … unbelievably so. Eucalyptus and softwood have gone up in price, and there are limited quantities of that. So, people are reverting to secondary fiber with that price differential.”
Considering recovered paper supply and demand overall, paper packers, brokers and mill operators alike say they generally are in balance as of the first week of April.
“[Supply and demand] were pretty much in balance,” a mill operator based in the South says. “I think [prices are] a little high domestic, but price is also more in balance.”
“There may be a little extra supply than demand, but everything seems to be in equilibrium,” a broker based in the Midwest adds.