US OCC price crashes for a third month in October and RCP landfilling emerges

Oversupply and weak demand saw US OCC prices craters by up to $45/ton and excess sent to landfills

Weak bulk grade demand, high mill inventories, and market-related downtime at major paper and board mills in the USA slashed US old corrugated container (OCC) pricing again in October, by up to $45/ton at the FOB seller’s dock.

This is now part of a combined $88/ton crash in OCC’s price in three months, according to Fastmarkets’ PPI Pulp & Paper Week Oct. 5 pricing survey and market report. Unchanged prices for all high deinking grades, pulp substitutes and mostly all groundwood grades remained in October.

Pricing for OCC, at a US average of $38/ton in October, fell $39/ton, or 51% month-over-month from September’s $77/ton average. This is the third straight month OCC pricing has decreased. In three months, pricing has plummeted by the $88/ton, or 70% since July, when OCC averaged $126/ton.

In one year, OCC’s US average has tanked nearly 77%. US OCC averaged $164/ton in October 2021, or $126/ton more, and had just ended an 11-month price run for the bulk grade until October of last year. It was a lack of mill demand in October 2021 that pulled down premiums that month.

One year later, and sluggish mill demand has been blamed for the drastic decline in bulk grade prices the last three months. Mills built up their inventories this summer, leaving fall demand in the shadows.

These markets are worse today vs last month because mills that had good orders don’t now.

“Their order books are down. I was told one of the mills plans on not running through the holidays. … That’s through their entire (mill) system,” one Chicago-based supplier said this week of paper and board mills in the Midwest and Southeast.

Mixed paper down to $0

Fewer orders for mixed paper pulled down pricing across the USA this month. Mixed paper pricing collapsed in October, to a high side of $0/ton as material is landfilled. Municipal contracts with cities and governments require sellers to move mixed paper in efforts to avoid landfills, shaking up deals.

Sellers in the East and Midwest that typically are paid for their mixed paper told of themselves paying to get mixed paper loads out of their plants.

The situation mimics much of 2019, when mixed paper pricing fell into negatives. So much so that the US averages for mixed in October 2022, at -$3/ton, is the same as the volatile, pricing-plunging year of 2019, which also saw mixed paper’s average at -$3/ton in October 2019.

Many contacts this week said the “chaotic” US recovered paper market was the “worst market” they’ve ever seen, pointing to 2008 and 2018/2019 as comparable volatile years. Compared with one year ago, mixed paper pricing has crashed more than 100%, vs the $96/ton US average mixed paper held in October 2021.

“Mixed is at $0,” a supplier in the Midwest said. “Landfill is getting it. … This cycle happened quickly.”

DSOCC down double digits – again

Export pricing decreased in a big way, too. Pricing fell by $25/ton FAS off both US coasts for mixed paper, to a high side of $30/ton FAS out of the New York/New Jersey ports, and to a high side of $25/ton out of the Long Beach/Los Angeles ports.

Continual soft export demand brought down pricing for export bulk grade tons, too. No. 11 US OCC and No. 12 double-sorted old corrugated containers (DSOCC) fell by $30-35/ton FAS in October. Out of the New York/New Jersey ports, No. 11 OCC dropped to a high side of $75/ton FAS, and No. 12 decreased to a high side of $85/ton. New double-lined kraft corrugated cuttings (DLK) fell to a high side of $110/ton FAS out of the New York/New Jersey ports.

October marks the third month in a row that bulk grades for export have had double-digit declines. Pricing fell $35/ton for No. 11 OCC and No. 12 DSOCC in August out of the New York/New Jersey ports and the Los Angeles/Long Beach ports, tumbled by $40-50/ton FAS in September, and by $30-35/ton FAS in October.

India’s buying from the US East Coast has remained mostly muted.

“Indian buyers have been sitting on their hands,” a major seller out of the New York/New Jersey ports said Oct. 4. Meanwhile, Southeast Asian countries including Taiwan, Thailand, Vietnam, Indonesia, Malaysia, and South Korea had demand for US tons in October, albeit at lower prices.

Off the West Coast, US OCC, DLK, and mixed paper pricing plunged by $25-30/ton FAS. Out of the Long Beach/Los Angeles ports, No. 11 OCC fell to a high side of $85/ton FAS, No. 12 DSOCC to a high side of $95/ton FAS, and DLK dropped to a high side of $110/ton FAS.

‘Thousands’ of OCC tons landfilled

Oversupply vs curbed demand sent recovered fiber to landfills in the last few weeks, buyers and sellers said. Multiple contacts said OCC in the Southeast was landfilled in Florida.

“You don’t have a choice,” a supplier to major containerboard mill contacts in the Southeast said of OCC this week. Hurricane Ian hit Florida on Sept. 30, and “a lot will go to landfill in the foreseeable future,” the contact said of raw material supplies in Florida.

All major containerboard mills have market-related downtime in October, according to contacts. This market-related downtime follows the slowdowns seen in September as well.

Domestic mills are pushing back even harder on taking any additional tonnage.

“They’re just simply not taking any outside of contract tons,” a mill contact said. “You can’t determine a domestic spot price because mills aren’t quoting a price; they can’t take tons at any price in most cases.”

This article was first published in PPI Pulp & Paper Week, the industry’s most trusted pulp and paper market news and prices for North America. Join paper industry executives, buyers, industry suppliers and financial institutions around the world and keep up to date on the latest market prices and information. Speak to our team to find out more and subscribe to our newsletters.

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