As US recycled content rises, some big board mills want long-term, high-premium deals; OCC up in West

Discover how rising recycled content demands in the US are shaping the future of paper and board production, and the impact on old corrugated containers (OCC) prices

Some major producers that started up new and converted paper and board machines in the last year-plus, as well as the largest containerboard makers in the US, are still paying hefty premiums to secure old corrugated containers (OCC), and they sought more mixed paper as supply constraint concerns continued midyear. Contacts told Fastmarkets’ PPI Pulp & Paper Week this week that mills run by International Paper (IP) and Pratt Industries, among others, are “looking for long-term agreements with an elevated premium attached” for OCC orders.

The hefty premiums have stuck for much of this year, having shot up around this time last year as new capacity started up.

What was a historical $10-20/ton premium surged to more than double that, even triple and quadruple at $60/ton or more in some major trades.

This time last year, OCC at the FOB seller’s dock traded at prices that today are premiums on top of traded prices. In June 2023, OCC in the Northeast, Midwest and Southwest stood at $50-55/ton at the FOB seller’s dock, and at $55-60/ton in the Southeast. Today, those prices are the premiums on top of the US FOB seller’s dock average of $106/ton in June 2024.

While some high premiums remain, mills aren’t being shy about tacking on more dollars to ensure tons flow into their mills. Premiums mostly held into June, with most market players saying OCC’s premium today is $35-45/ton, some at $30-40, and others below and above those rates. The highest premiums are in the South.

These higher premiums come after five 100% recycled-content containerboard machines started up last year in the US (four) and Canada (one). Also, next year or in early 2026, Graphic Packaging plans to startup a large coated recycled boxboard machine in Waco, TX.

July 4th buildup

Mills, at the same time, are preparing for the Fourth of July national holiday and securing stock for that week. Coming out of the Memorial Day holiday, containerboard and paper and board mill contacts said their raw material stocks were “healthy” this week, while they build up bulk grades and mixed paper for the 4th of July. With the holiday on a Thursday, mills will receive and load trucks, and run as typical, on Friday, July 5.

“We have decent inventory coming off the (Memorial Day) holiday, and we’re going to try to build inventory more this month because we’re going into the July 4th weekend,” a mill contact said this week. “We’re not expecting any downtime.”

Downtime, tighter freight lanes

US OCC prices for domestic mills held steady again in June in the East and South as mills came out of their spring maintenance downtime, some with hiccups, and others with planned downtime in June.

Spring maintenance and market-related downtime at some major producers, including at ND Paper’s No. 25 PM at its Wisconsin mill, occurred in May and is to again play out in June. This downtime helped to stave off pricing rises for the most part in June for bulk grades.

Also, mills said they have closed off some freight lanes to avoid higher premiums, and are securing tons more in their own regions again, unlike in months past when mills in the Southeast, for example, bought bulk grades in the Southwest to bypass the soared premiums in the Southeast.

Truck availability is abundant, contacts said. Typically truckers focus on agricultural orders at this time of year, and recovered fiber market players pay higher rates to secure trucks among high competition. This June, buyers and sellers said freight rates are reasonable and “we’re not having any issues with trucks,” as one supplier said in the Pacific Northwest.

Prices for bulk grades improve in the West

 Increased demand on the US West Coast for OCC and new double-lined kraft corrugated cuttings (DLK) again popped up prices for the two grades, by $10/ton at the FOB seller’s dock, as buyers face tight supplies and slow to steady export demand in June, according to P&PW’s June 5 pricing survey and market report.

Buyers and sellers in the Pacific Northwest (PNW) and California said demand improved as mills slowly stock up for the Fourth of July holiday, and “all PNW mills are hungry this month,” as one contact said on June 5. Mills in the Northwest are so short on available tons that they reached down into the California market seeking more bulk grades for June orders.

OCC at $106/ton average, up 125%

The West Coast increases put OCC at $95-105/ton in the Los Angeles region, $90-100/ton in the PNW, and at $80-85/ton in the San Francisco region. For DLK, prices increased to $90-95/ton in San Francisco, to $105-115/ton in Los Angeles, and to $110-120/ton in the PNW.

Pricing for OCC remained unchanged in June at $110-120/ton at the FOB seller’s dock in the Midwest, Southeast, and Southwest regions, as well as at $105-115/ton in the Northeast region.

OCC’s US average increased $3/ton month-over-month to $106/ton in June from $103/ton May. In one year, OCC average national pricing soared, from a $47/ton US average in June 2023 to the $106/ton this month, a rise in one year of $59/ton, or 125.5%.

Generation of OCC is still tight, although an influx of grocery tons were told of across the US after the Memorial Day holiday. Some, such as Amazon Fresh, Target, and Aldi, have publicly said recently that they planned discounts on some food items.

Mixed paper’s $10/ton rise

 Mixed paper prices added $10/ton in June from the month prior off the West Coast, increasing prices to $65-70/ton in the PNW, $60-65/ton in Los Angeles, and $55-60/ton in San Francisco.

In the PNW, Norpac especially sought mixed paper in increased volumes for June, contacts said. Buyers faced softer supplies.

“Norpac is the most aggressive domestic mill,” a PNW contact said, of buyers. “They continue to adjust their formulation to consume more (mixed) with the shortage of OCC.”

Despite demand from major producers for June, mixed paper prices held firm in the Northeast, Midwest and South as downtime pushed back on some volumes and as slight increased generation month-over-month occurred, contacts said.

We’ve seen a little bit of a pickup after the long (Memorial Day) weekend.

“We’ve seen a little bit of a pickup after the long (Memorial Day) weekend,” a contact that owns residential recycling plants said this week.

Groundwood prices up some

 Domestic demand for coated groundwood sections maintained pricing for June orders in most regions, save for $5-10/ton climbs off the West Coast to $105-115/ton at the FOB seller’s dock in the Los Angeles/San Francisco region and to $60-65/ton in the Pacific Northwest.

No. 56 sorted clean news (SCN) prices also inched up off the West Coast, by $5/ton, and were unchanged in every other region. Prices improved to $165-175/ton in the Los Angeles/San Francisco region and to $110-115/ton in the Pacific Northwest. The once hot insulator demand cooled down for midyear orders, contacts said.

Want to dive deeper into paper packaging market developments and industry trends? Speak to our team today and find out how we can help you stay ahead of the competition.

What to read next
Can the food export market and shifting consumer habits help sustain Brazil's paper packaging sector, defying domestic challenges?
Fastmarkets (Random Lengths) plans to formally launch the industry’s first daily price assessment for Southern Yellow Pine #2 2x4 (eastside) on Thursday 8 August along with more than a year of pricing history.
Steel industry participants in the United States are unclear whether Brazilian slab imports will be exempt from the 25% tariffs under Section 232 that will be levied on Mexican imports for steel that is not melted and poured in Mexico, the US or Canada, sources told Fastmarkets on Wednesday July 17
Fastmarkets is inviting feedback from the industry on the pricing methodology for European Packaging Paper and Board as part of its announced annual methodology review process. This consultation, which is open until August 31, 2024 seeks to ensure that our methodologies continue to reflect the physical market under indexation, in compliance with the International Organization […]
In the methodology price specifications, the shorter names PIX Testliner GCC and PIX Fluting GCC will be used instead of PIX Containerboard Testliner Delivered GCC USD/tonne and PIX Containerboard Fluting Delivered GCC USD/tonne. No other changes have been made to the index methodology. For comments and queries, please email, indicating “PIX Packaging GCC” in […]
Fastmarkets advises that, as of Wednesday July 10, certain monthly North American ferrous scrap assessments had yet to be settled.