How to Read the Monthly Recoverable Paper Price Watch Sheet
Usa OCC prices hit a iv-year loftier
Box demand and low supply drive all RCP prices higher for 3rd month in a row.
Past: Megan Workman, price reporter, Fastmarkets Woods Products
For the third consecutive month, U.s. recovered paper pricing has increased in every domestic region for all grades. High demand and low supply shot up old corrugated container (OCC) pricing by $twoscore per ton at the FOB seller's dock in the South. The Baronial rise is the 10th month in a row for US OCC pricing hikes in North America. It is the 8th directly month of increases for high deinking grades and pulp substitutes.
OCC's national average, at $159 per ton at the Fox seller'due south dock in August, is at its highest pricing indicate in iv years. This month marks the seventh month in 4 years that OCC's US boilerplate has surpassed $100 per ton, and the third calendar month in a row since July's $129 per ton and June'southward $109 per ton.
Average pricing for OCC in Baronial has increased $30 per ton compared with July'due south $129 per ton. Information technology is up 174% compared to August 2020.While all U.s. mills go on to have demand for majority grades. According to Fastmarkets sources, one of the largest consumers of recovered fiber sought tons off both US coasts for its mills in the US interior. This action competes with the export market to keep tons domestic.
Premiums for OCC take nigh doubled month-over-month in some trades, at $lx-70 per ton, with $100 spot premiums on height of the listed price besides. This is dramatically to a higher place what typically had been $10-xx premiums in the domestic Northward American market over the past ten to fifteen years.
In improver to major US mills seeking OCC tons, sources said mills in United mexican states were pulling tons from the US Midwest via truck and paying premiums, upwardly to $forty per ton. Typically, Mexico buys near exclusively from Texas.
Several major mill contacts that produce containerboard reported they are struggling to keep up with corrugated box demand. This box need began a celebrated run in June 2020 during the pandemic. Need will proceed to be historically high due to tape shipments and the influence of e-commerce.
Box demand is driving DLK prices upwards likewise
DLK (new double-lined kraft corrugated cuttings) pricing has hiked up even more than OCC due to tightness in supply and upped demand. The integrated mills similar IP and WestRock have been internalizing their DLK this summertime, equally lack of supply has get apparent, our contacts said. With boosted buyers like insulators, who keep to come upwardly brusk on quondam newspaper supplies, seeking DLK tons, demand outweighs supplies today.
IP and WestRock are the two largest containerboard producers in North America. Their combined containerboard capacity is nearly 55% of full United states containerboard capacity. Usa containerboard production this twelvemonth is on track to almost 40 million tons.
DLK's US average pricing, at $174 per ton, is at its highest boilerplate in four years. In Baronial 2017, DLK averaged $177 per ton, and hasn't seen the $170-ton range since. Pricing for DLK this twelvemonth is on a 10-calendar month run-upwardly, like OCC.
Multiple contacts said the spread between OCC and DLK widened with this tightness. Our reports signal the spread betwixt OCC and DLK widened in every US region.
Mixed paper hits second-highest boilerplate ever
This demand for bulk grades has affected mixed paper as well. Many contacts told of additional mills buying mixed paper in August that cannot secure enough OCC. Georgia-Pacific was one major factory that had more demand for mixed this month due to tight OCC supplies.
At $94 per ton in August, mixed paper's US average hit its 2d-highest boilerplate ever (second just to $96 per ton in March 2017). March 2017 was the but month mixed paper's average has e'er topped $xc or more prior to this August's $94 per ton boilerplate.
A lot can modify in a yr. Involvement in mixed paper has increased along with the additional OCC in packs. Mixed paper is browner because of increased due east-commerce sales and and more people working and shopping from home in the terminal year due to the pandemic.
Multiple recycling institute and mill contacts say they accept invested in equipment to better process mixed paper.
Mixed paper quality is a concern this summer. This has mostly been driven past a labor shortage at cloth recovery facilities (MRFs), according to contacts. 1 major MRF contact said this week that, in one state, information technology is brusque lxxx drivers, affecting collections, and that mixed newspaper loads take been rejected due to quality. With fewer sorters on the line, contacts said mixed newspaper quality admittedly has suffered in some cases.
Yet, one contact said they are investing in new optical sorting equipment that will aid them avert labor shortage challenges and volition create a cleaner mixed pack. The contact said the investment has increased its sale toll of the constitute's mixed paper past more than 2-times what it sold mixed newspaper for prior to new equipment.
No matter the grade, sellers told our Fastmarkets reporters they cannot find enough material to fill up orders.
"I'm curt on everything," said a major seller in the Midwest. "We try to get our suppliers to ship what they normally ship, simply they don't have what they normally ship. In that location's people selling off to another mill for an extra $15-twenty."
Export pricing is up and transportation remains a struggle
All recovered fiber pricing increased on the export side as Bharat holds off on some buying from the United states in Baronial while buyers in Southeast Asia, Europe, Mexico, Canada, and Cardinal America continue to secure tons. India has go the pricing leader in 2021 since China's ban on global recovered cobweb took effect in January 2021. Buyers in India purposefully avoided buying US tons at the starting time of this month to avoid additional pricing hikes.
August bulk grades are upward $5 per (metric) tonne off the US East Coast. India predominantly buys tons from Us East Coast ports, and its curtailed demand again tightened the spread between the US coasts. Because China'due south waste paper ban at present in effect – and China historically pulled a bulk of tons off the US Westward Coast – pricing for the W Declension vs East Coast flipped this yr.
US OCC pricing increased by $x per tonne for No. xi Us OCC to a high of $230 per tonne FAS out of the New York/New Bailiwick of jersey ports, and to a high of $225 per tonne FAS at the Long Beach/Los Angeles ports. No. 12 double-sorted OCC (DSOCC) rose by $10-15 per tonne out of the New York/New Jersey ports to a high side of $245 per tonne FAS, and to a high of $240 pe tonne FAS at the Long Beach/Los Angeles ports.
"Indian mills are having a hard time justifying buying at current levels," a major seller said to Fastmarkets reporters in August. "Indian mills are resisting electric current prices and are waiting for signs if the market/prices may have peaked. While we are able to sell OCC No. xi at $305-$310 and DSOCC No. 12 at $320-$330, volumes are reduced."
FAS pricing for DSOCC is up $75 per tonne since January from the United states E Coast, and up $80 per tonne off the US Due west Coast.
Land and body of water transportation challenges both continue to affect recovered fiber movement and add fuel and freight costs. Exporters said express bookings and struggles at ports remain.
The Covid-19 pandemic's Delta variant is too adding challenges at ports. "The problem is not and so much at the product facility where mills have some control such every bit distancing and decision-making the shifts separation, but information technology is more about transportation," a major recovered paper heir-apparent said. "We are changing our loading speed considering we might have also many containers stuck at port upon arrival. That tin can be very costly."
To stay on top of the latest trends and market shifts, visit our pulp, paper and packaging insights hub.
Originally published in Fastmarkets Forest Products PPI Lurid & Paper Week. This article has been amended for brevity.
Source: https://www.fastmarkets.com/insights/us-occ-prices-hit-a-four-year-high
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