OCC declines for third straight month in North America

Supply-demand imbalance is causing decreased pricing, export imbalance between East and West Coast

Supply-demand imbalance has decreased pricing for US old corrugated container (OCC) in every region for the third consecutive month at the FOB seller’s dock in January, according to Fastmarkets  January 6 pricing survey and market report.

The $5-10 per ton decline at the start of 2022 follows a $15-20 per ton drop in OCC pricing at yearend 2021, and a mostly $10 decrease nationally in November 2021. Prior to this softness, OCC saw an 11-month pricing run that hiked up the bulk grade to its fourth-highest pricing in 30 years in September 2021 at $167/ton.

At $130 per ton in January, OCC’s US average has fallen $7 per ton, or 5%, month-over-month from December’s $137/ton. In one year, OCC’s national average has risen $57 per ton, or 78%, vs January 2021’s $73 per ton average.

After a pricing pause in December, sorted office paper (SOP) has hiked up again, by $10 per ton at the FOB seller’s dock in January across the board. An uptick in demand, especially from Georgia-Pacific mills, pushed up pricing.

Unexpected mill downtime in January

On the OCC front, some mills told Fastmarkets this week that they were turning away OCC tons, while contacts in the Northeast and in California confirmed that they have additional OCC tons in warehouses. Unlike fourth quarter 2021, downtime at most all OCC-consuming mills was not planned for January, according to contacts. USG’s mill in Otsego, MI, is to take downtime from January 22 to February 23, according to multiple contacts.

Pratt Industries’ recycled containerboard mill in Valparaiso, IN, has been down all this week due to a gearbox failure that has that mill processing mostly only new double-lined kraft corrugated cuttings (DLK), according to multiple contacts.

In addition to Pratt’s demand, multiple sellers and buyers told of a steady DLK market that held pricing in January, save for pricing declines on the West Coast this month.

“Double-lined is still in demand and still needed. … We are getting calls nearly every day needing double-lined,” a seller said.

There’s a bigger demand and need for double-lined than OCC. The mills that need double-lined need double-lined. … They need the cleanliness of DLK.

Pratt was said to be moving its OCC and mixed tons to its Wapakoneta, OH, recycled containerboard mill, contacts said. One OCC supplier said that they had “noticed no cutbacks” at Wapakoneta despite this reshuffling of tons on Pratt’s end.

“Instead of pulping mixed paper and water, they’re buying DLK and using water-free pulping to break it down and use it in their system so they can still make boxes,” a contact said Jan. 5 of Pratt’s Valparaiso setup this week.

Mixed paper prices fall

Mixed paper pricing fell across the board again in January, by $5 per ton at the FOB seller’s dock, save for the Pacific Northwest, with curbed domestic demand. However, additional export demand, especially from India, as well as some supply being landfilled due to a lack of labor in some domestic regions, prevented mixed paper from falling further.

East Coast exports to India are rising

Export mixed paper pricing increased on the East Coast with India’s demand, up by $5 per tonne to a high side of $125 per tonne FAS.

Further, all export pricing increased on the US East Coast with increased demand and pricing from India.

Export pricing for No. 11 OCC and No. 12 double-sorted old corrugated containers (DSOCC) jumped up by $5 per tonne FAS out of the New York/New Jersey ports, to a high side of $200 per tonne, and $215 per tonne, respectively.

SOP export pricing increased for the fourth straight month. Pricing increased by $20 per tonne out of the New York/New Jersey ports to a high side of $300 per tonne, and by $10 per tonne to a high side of $275 per tonne out of the Los Angeles/Long Beach ports.

Without exaggerating, it seems like India is the only market buying off the East Coast,” a major seller said on January 5.

“Southeast Asia is not very aggressive”, the source continued.

Off the West Coast, where India does not pull tons, pricing fell for mostly all recovered fiber grades. The yearlong-plus shipping struggles persist, from empty vessels being shipped back to China to a lack of workers and equipment that are stalling movement.

Bulk grades fell by $10 per tonne at the Los Angeles/Long Beach ports. At the Los Angeles/Long Beach ports, OCC No. 11 fell to a high side of $175 per tonne, and fell to $190 per tonne for No. 12.

“Freight has become the No. 1 driver on price,” a seller said January 5.

In the USA, buyers and sellers said mills are eating the freight rates. On the waters, the costs are split in many cases, major exporters said.

West Coast export prices decline, ports are struggling with equipment shortages

Multiple major exporters reported again considerable pricing declines for the Oakland port vs the Los Angeles/Long Beach ports, and pricing in January 2022 reflects this pricing drop. While the Long Beach port has seen a surge in ships sitting on the waters in the last year, the Oakland port has experienced an even greater shortage of equipment, bookings and containers, according to contacts.

Major sellers and buyers of recovered fiber in the last six months have either avoided the Oakland port altogether, are still working on months-old orders, and all have seen pricing decline dramatically. What was a typical $5 spread between the two California ports today is a $25 spread, according to buyers and sellers.

A major buyer said to Fastmarkets on January 5, “For Oakland, it’s a different story. Booking is still really bad. … If you have the booking these days, you can call any price … but you have to have workable bookings. … We haven’t gotten anything from Oakland in many, many months. Still working on old orders from four months ago because we can’t cancel them.”

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