Non-ferrous recyclers face transportation challenges
Demand for recovered paper remained very strong during the July purchasing period, pushing up prices for most grades in both domestic and export markets.
“Demand is really good,” says Bryce Stalcup, recycling operations manager at Iowa Scott County Waste Commission. “The values of cardboard and mixed paper are increasing. This month, it looks like prices will be in the $ 90 per tonne range for blended paper. We were selling it not too long ago for $ 2 a tonne.
Pete Keller, Vice President of Recycling and Sustainability at Phoenix Republic Services, adds that he has not observed any problem linked to the movement of recovered paper “with the exception of certain congestion of sea lanes” in certain export markets.
“The movement is good,” Keller says. “The markets seem to be good for a little while.”
The demand for packaging helps to support the demand for recovered paper. Kyle White, chief equity research analyst in paper, packaging and environmental services in New York Deutsche Bank Securities Inc., says strong packaging demand this summer is driving strong demand for old corrugated cardboard (OCC) containers in the United States, with containerboard factories running as hard as they can.
White says domestic containerboard factories consumed 22.8 million tonnes of OCC in 2020, representing a 4% year-over-year growth from 2019. Until May, he said the OCC consumption had increased 5.8% year-on-year compared to the same period last year.
He adds that OCC’s export demand is just as robust: US exports of this grade are up 18.4% year-on-year from January to April.
Strong demand kept recovered paper prices high this summer. White says the OCC averages $ 129 a tonne in July and has seen at least eight consecutive months of price increases. “We haven’t seen such a high price point since September 2017, before China’s import ban began,” he said.
While OCC’s supply is small relative to demand, White says it’s not a big concern.
“I guess there is still enough supply of OCC to meet domestic demand, given that there will probably be north of 10 million tonnes exported this year,” he said. “That said, I have seen reports from domestic containerboard producers looking for alternatives to fibers, with blended paper being a possible solution in some cases for the corrugated backing.”
Green Bay packaging (GBP), Green Bay, Wisconsin, opened its new paper mill earlier this year. The company tells Recycle today that he built this mill with flexibility in mind. Matt Szymanski, vice president of mill operations at GBP, says it can consume 60% paper composition mixed with 40% OCC composition. “He could also do 100% OCC. The plant is very versatile, ”he says.
Other factory projects proposed for work may consume mixed paper. According to a report published by the Northeast Recycling Council (NERC), Brattleboro, Vt., By mid-June almost every project on its list will consume OCC and mixed paper. NERC reports that NORPAC is converting its existing production capacity to manufacture linerboard, corrugated cardboard, bags and special kraft paper which will consume 400,000 tonnes per year of OCC and mixed paper and is expected to be completed in 2022. The same year, according to NERC, Kamine Development Corp. opens a plant in Tampa, Florida that will produce 400,000 tonnes per year of recycled pulp from OCC and mixed paper. Additionally, Atlantic Packaging Products will open a plant in 2022 in Whitby, Ontario, which will consume OCC and mixed paper to produce 400,000 metric tonnes per year of corrugated and linerboard.
Containerboard projects are also not expected to slow down.
“Demand has been robust, with unprecedented growth in carton shipments for an industry as mature as this,” White said of the containerboard markets. “According to Fiber Box Association, box shipments increased 8.2% year-over-year on a daily basis in Q2 2020, following a 5.5% year-over-year increase in Q1 2021 Having said that, I would assume this growth spike as we start to have tougher year-over-year comparables starting in the third quarter. We have already seen some slowdown as April was up 11.4%, May was 8.8% but June was up 4.6%.
He adds that he estimates that containerboard capacity will increase by more than 4% in 2021, with just over half being recycled containerboard and the rest being virgin kraft paper.
White concludes, “However, much of this increase is accelerating compared to capacity additions in 2020. In 2023 and 2024, we estimate that capacity will increase by around 2% each year, of which around 70% is cartons. – recycled crates. ”