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The US recovered fiber sector remains a mixed bag, with prices for bulk grades humming along as white grades toppled yet again.
US old corrugated container (OCC) average pricing inched up for the fourth month in a row in July. Lacking generation for bulk grades and firm mill demand has maintained movement of OCC and new double-lined kraft corrugated cuttings (DLK) this summer.
Pricing for US OCC held steady in most US regions. According to Fastmarkets’ PPI Pulp & Paper Week July 6 pricing survey and market report, prices increased by $5/ton at the FOB seller’s dock in the Southwest and by $5/ton in the Los Angeles and San Francisco regions. DLK pricing also hiked up $5/ton at the FOB seller’s dock in the same regions.
The US South region again was cited as the strongest for mill demand this summer. The increase in OCC pricing in the Southwest, supported by added demand from mills in Mexico especially, put that region on par with pricing for mills in the Southeast, where OCC remained unchanged in July, according to contacts.
Mixed paper prices mostly held across the US, except for a $5/ton fall in the Pacific Northwest at the FOB seller’s dock. Reduced export orders for mixed paper left distressed mixed paper tons in the Pacific Northwest at decreased pricing, contacts said.
Mills came out of the Fourth of July holiday with inventories “stable” as one mill contact said in the Midwest, and “just fine” as one mill contact said in the West.
Sellers in most regions said they traded the same volumes of OCC month-over-month into July, except for in the South where additional tons were secured.
Mills in the South were described as “hungry” and “searching” for OCC and DLK.
Downtime in July is to occur at all three paper machines at Graphic Packaging’s large mill in Kalamazoo, MI, the first 10 days of July, as well as at mills owned by Sonoco and Greif, among others. Packaging Corp of America’s (PCA) Jackson, AL, mill was said to have stocked up on raw material so that the mill was reportedly “full,” contacts said this week.
New recycled containerboard and new paper machine capacity startups this year reportedly are running “much better” in June and into July, according to contacts. From Atlantic Packaging’s Whitby, ON, 400,000 tons/yr mill to Domtar’s 600,000 tons/yr Kingsport, TN, mill, contacts described how the new capacity projects have worked through their hiccups and have had more consistent production runs as of late. Cascades’ new startup at Bear Island in Ashland, VA, sought out more DLK, sellers said, while ND Paper’s Biron, WI, conversion had “pretty aggressive” demand for OCC orders for July.
In Henderson, KY, suppliers said that Pratt Industries has started to seek out raw material to stock up for an Oct. 1 startup.
“With Pratt getting prepared to fire up their Henderson mill, we’re starting to see a little bit of activity,” a contact said of mixed paper demand.
Mill demand for OCC and DLK has faced fewer supplies. Generation of bulk grades remains tight as it has every month so far this year. Supplies from retail and grocery as well as distribution centers and automotive plants have fallen through June, according to contacts.
The lack of generation has motivated mills to seek tons so as to ensure enough raw material furnish going forward.
“Retail generation is down,” a seller in the East said.
Americans are spending money on traveling and staying at hotels instead of buying stuff from Amazon. That translates to fewer boxes at home and fewer boxes shipped to stores.
The curbed supplies vs mill buying has beefed up premiums for OCC. Still, pricing remains well below year-ago prices when heightened containerboard mill demand moved up prices a $126/ton US average in July 2022.
Compared with one year ago, average US OCC pricing in July 2023 vs July 2022 has decreased 61.1%. OCC’s average one year ago was just $3/ton off from the year prior, when in July 2021 national average pricing for OCC was $129/ton. Pricing for OCC has declined 62.01%.
The average OCC price this month is closer to July 2020 three years ago, when OCC averaged $54/ton. Mills were facing the effects of Covid-19 in July 2020 that year, from piled-up OCC in warehouses to declining OCC prices without mill demand. The US recovered paper market made a swing one year later, when paper markets were hot with pricing increases in July 2021.
Having ironed out most of the supply chain shakeups caused by the pandemic, mills are now dealing with fewer available supplies. However, transportation has improved, and freight rates, as well as fuel surcharges, have fallen this year compared with one year ago, especially in the height of the Covid-19 pandemic when trucking and rail availability tanked and rates surged.
One mill contact in the East said this week that compared with July 2022, when fuel surcharges peaked, prices are down 20% in one year.
“Transportation has been improving and continues to improve,” a large mill contact said. “A lot of it has to do with the economy.”
This article was taken from PPI Pulp & Paper Week, our newsletter for pulp, paper and packaging market news and prices for North America. Speak to our team to learn about our news and market analysis, prices, forecast and more.