Pricing for recovered paper increased for most grades in March in North America as both domestic and export mill demand outpaced supplies, forcing mills to source other grades to fulfill orders, and tightening markets even more. US average pricing for all recovered fiber in March is well above year-ago levels, and also increased month-over-month in March from February for all grades.
The hot high grades deinking market has not cooled down into March, and pricing for the white grades increased by double-digits again after February’s $10-20 per ton increase, according to Fastmarkets’ PPI Pulp & Paper Week Mar. 4 pricing survey and market report.
On the brown side, maintenance downtime is planned this month for the two largest containerboard producers in the USA, mostly in the US South, and one in the Northeast region, contacts told P&PW.
Downtime in the Southeast for both International Paper (IP) and WestRock added to that region’s softness, contacts said, and pricing for US old corrugated containers (OCC) fell by $5 per ton at the FOB seller’s dock in March to $145-155 per ton at the FOB seller’s dock. OCC pricing in the Southeast also fell in February by $5 per ton. Both IP and WestRock had announced on their recent earnings calls that they had planned maintenance downtime in the first quarter, with WestRock saying it would be about 150,000 tons of downtime.
Save for the Southeast, OCC’s premium held in March at $25-40 per ton, according to buyers and sellers.
At $128 per ton, OCC’s average has climbed 60%, or $48 per ton, in one year vs March 2021’s $80 per ton US average.
Steady movement of OCC in the Northeast, Southwest, and Midwest held pricing for the bulk grade in these regions. Although WestRock’s large Solvay recycled containerboard mill is to take downtime this month for at least one week, possibly two weeks, and slowed its OCC buying, contacts said export demand in the Northeast, and other mill demand in the region held OCC pricing in March. In the Northeast, pricing for OCC in March is at $135-145 per ton.
In the Pacific Northwest (PNW), contacts said mill demand added another $5 per ton at the FOB seller’s dock to OCC’s price, increasing it to $95-105 per ton. Mills are running well in the PNW, and sought tons with their increased demand.
Pricing for OCC also increased by $5 per ton in the Los Angeles and San Francisco regions, with export OCC prices raising in both those areas as well.
In the Midwest, multiple contacts said Graphic Packaging had upped demand for OCC in March as that mill has ramped up faster than anticipated. Graphic started up its new 500,000 tons per year coated recycled board (CRB) K2 machine in Kalamazoo, MI, the first week of February, and is running at 1,000 tons/day. Several contacts said Graphic expected to reach 1,000 tons per day by June, but already has hit that mark the first week of March.
Graphic’s hand was the strongest in the Midwest this month, according to sellers, but the mill maintained prices month-over-month and pricing held in this region. OCC’s price is at $150-160 per ton in the Midwest in March. The mill company continues to run its Battle Creek, MI, CRB mill that it plans to shut this summer, and will keep its Middletown, OH, CRB mill in operation.
“Graphic is driving it right now,” a supplier said of OCC’s demand in the Midwest.”
Without question, they are out there trying to secure tons contractually and spot tons.
“They’ve done a good job of getting a good base.”
Bulk grades increased by $15 per tonne out of the New York/New Jersey ports, pushing up No. 11 OCC to a high side of $230 per tonne FAS, No. 12 double-sorted OCC (DSOCC) to $240 per tonne FAS, and new double-lined kraft corrugated cuttings (DLK) to $275 per tonne FAS. Mixed paper increased $10 per tonne to a high side of $155 per tonne FAS.
Off the East Coast, sellers said they have monthly shipments to India, South Korea, Taiwan, Vietnam, Thailand, Malaysia, and Indonesia. Malaysia and Vietnam have banned mixed paper this year, and multiple sellers told of some confusion shipping to Malaysia as that country figures out its new inspection rules that it is to implement, mirroring those of Indonesia, which require breaking bales and additional steps to pass the process prior to shipping. This extra process adds a premium to trades, major exporters said.
“Malaysia … (is) figuring out the whole inspection process,” a major seller off the West Coast said this week. “(You’re) less inclined to get a rejection on OCC, so people are starting there.”
Some contacts expected that the mixed paper bans may cause some increased OCC buying in Vietnam and Malaysia. Last year, Malaysia joined the Top 10 exporter list for US recovered fiber, importing 773,784 tonnes of US recovered paper in 2021, nearly 90%, or 694,560 tonnes of OCC.
West Coast pricing also saw gains, with bulk grades up by $10 per tonne out of the Los Angeles/Long Beach ports, increasing No. 11 OCC to a high side of $195 per tonne FAS, DSOCC to $205 per tonne FAS, and DLK to $210 per tonne FAS.
Mixed paper and No. 56 sorted residential papers and news (SRPN) also hiked up on export with more demand in March. Out of the New York/New Jersey ports, mixed paper popped up $5 per tonne to a high side of $155 per tonne, and SRPN increased $15 per tonne to a high side of $160 per tonne FAS. Off the West Coast out of the Los Angeles/Long Beach ports, those prices increased by $5 per tonne for mixed to a high side of $95 per tonne FAS, and by $5 per tonne for SRPN to a high side of $125 per tonne.
On the domestic front, SRPN increased by $5-10 per ton at the FOB sellers’ dock in every US region, except for a hold in the PNW where contacts reported no movement in SRPN or mixed paper pricing this month.
At a $98 per ton US average, SRPN pricing has more than doubled in one year from the $48/ton it averaged one year ago in March 2021.
Mixed paper pricing, at a $69 per ton US average in March, also has more than doubled in one year from its $32 per ton average in March 2021. Pricing for mixed in March held in the Midwest, South, and PNW and increased by $5 per ton at the FOB seller’s dock in the Northeast and Los Angeles and San Francisco regions.
SRPN pricing and demand increased as some mills that cannot process mixed paper are capable of using SRPN in their furnish.
A SRPN supplier said:
The places we’re selling to cannot handle mixed paper.
The continued, “They require a certain quality, and as the generation of 56 continues to drop, they’re panicking and losing their minds. We can’t find enough.”