According to the pricing survey and market of fastmarkets risi, the 11 month price rising trend of old corrugated boxes (OCC) in the United States stopped in October. The reason is that the demand of U.S. factories fell partly, which depressed the national average monthly month on month of OCC in the United States.
The national average price of OCC in the United States was $164 per ton in October, down $3 / ton from the high of $167 per ton in September. The previous peak of OCC 167 USD / T in September was the fourth highest in the 30-year average level of the United States. Compared with the same month a year ago, the average price of OCC per ton in the United States increased by $106, or about 183%, from $58 in October 2020. Since the beginning of this year, the average price of OCC has been US $91 per ton, an increase of 125%, higher than the average price of US $73 per ton in January.
Compared with October 2020, the average price of OCC, mixed paper, box board scraps and DLK in October 2021 increased by more than 150%. The average price of mixed paper in the United States is $98 per ton, up 300% from $24 per ton in October 2020.
In addition, the average price of waste paper of each grade in the United States is increasing year by year. For high deinking grade, another rise in October raised the average price of classified office paper to US $164 per ton, one of the highest prices in two and a half years, and the average price in May 2020 was US $170 per ton. The price of deinking grade has increased for 10 consecutive months.
According to relevant people, compared with the tight supply, the continuous rise in the demand of domestic factories and historic corrugated boxes in the United States in the past 11 months has continuously raised the price. Although the demand of American factories continued until October, the current “panic purchase” has subsided. Generally speaking, most paper mills consuming OCC maintained healthy inventory in October.
The downtime of some large paper mills has also partially weakened the demand for paper. Green Bay packaging, international paper and westrock shut down in September, which transferred their original OCC tonnage to other buyers. Since this year, the integrated plant that has been digesting DLK internally has brought these original tonnage to the market, thus increasing some supply to the market. These DLK tonnage are welcomed by other major buyers. “Due to the shortage of SCN, we are looking for alternative fibers and have to use different types of materials to keep the plant running,” said a buyer.
Graphic packaging will start its new $600 million and 500000 ton / year recycled coated box paperboard machine at the company’s factory in karamazu, Michigan on November 1. After fully put into operation in 2022, the new machine is expected to recycle and use about 500000 tons of waste paper every year. At present, the plant has reserved enough OCC raw materials for operation on November 1.
The seller also said that they had signed a long-term contract for up to three years to lock in the price. An OCC supplier in the Midwest said that they had confirmed the three-year contract, and the OCC premium was as high as $35 per ton. In the past 25 years, the OCC premium sold by domestic paper mills in the United States has been almost entirely US $10-15 / ton. “It’s crazy,” the seller said of OCC premium. “I just think it’s because the long-term plant capacity in the next 3-5 years and the recovery of OCC can’t keep up with the development of the plant.”
Several relevant people said that the upcoming capacity of the United States is the primary consideration, and supply concerns still exist. According to relevant research, from 2022 to the end of 2023, a total of 3.1 million tons of new capacity will be added each year. Of the 3.1 million tons of production capacity, 2.397 million tons are made of 100% recycled paper. These six capacity increase projects will be launched from the second quarter of 2022 to the end of 2023. Among them, five are in the United States and one is in Canada.
Derek mahlburg, director of graphic paper and packaging in North America at fastmarkets risi, said that it is this more capacity that may increase the carton board inventory of the carton factory, thus increasing the demand for OCC. Mahlburg delivered a speech at the 36th fastmarkets risi North Merrill Lynch products conference held in Boston on September 27-29, and warned that there were still “huge risks” in the surge of OCC prices.
Hannah Zhao, an economist at fastmarkets risi recycling paper, said at the North American conference that the recycling share of carton board capacity will also increase globally. She said that waste paper is used as raw material in the box board production capacity, but the share will increase from 77% in 2020 to 78% in 2023. This increase is to maintain the tension in the global OCC market.
In the United States, the demand for OCC is obvious. It is said that OCC reported a premium of US $30-40 per ton in most transactions in October, and a few reported a premium of US $50-70 per ton. OCC’s premium reached US $70 per ton for the first time in August. This high premium continued until September. The trading volume decreased in October, but some transactions still maintained this level.
SCN also has a premium. The tight supply of SCN allows buyers to try to use other recycled fibers in their ingredients to keep the machine running, including DLK and some high-grade paper. “Even non-traditional consumers are using (high deinking level),” said a person with a Midwest factory. Finally, the pull of export trade also increased the stable demand this month.
It is said that due to the prevailing demand in India in October, the prices of No. 11 OCC and No. 12 double sorting old corrugated boxes (dsocc) remained unchanged, but the prices in Southeast Asian countries did not rise. Mexican and Canadian paper mills continued to import waste paper from the United States, and Mexico paid a high premium ratio. Contacts said that Grupo gondi’s demand for U.S. OCC in October was the same as that for most of this year. The price of New York / New Jersey Port of OCC 11 remained at a high level of $235 per ton, that of dsocc 12 was $250 per ton, and that of Los Angeles / Long Beach port was $225 per ton for OCC 11 and $240 per ton for OCC 12.
Mexico also has some demand for deinking grade. Increased demand in India helps to improve the pricing of classified office paper (SOP) exported from the east coast. This demand pushed up the New York / New Jersey pricing of SOP by Fas $10 per ton to a high of $270 per ton.
In China, shipments from Southeast Asian countries are in tons, and the factory’s energy-saving efforts have led to a slowdown in production in many industries, including packaging. “At present, the average downtime is about 5-7 days,” said a major exporter. “We don’t know how long it will last. The downtime will affect China’s packaging demand market.”
Post time: Oct-28-2021