Export Demand Came Roaring Back After the Chinese Holiday

Baled OCC, Old Corrugated Cardboard, in 44,000-lb Loads

By Brook Edwards, Market Analyst, The Brown Sheet™

Oct. 18, 2010 - The main players holding non-committed tons ready to ship saw an opportunity to take advantage and added some raw cost inflation to the Recovered Paper Markets last week. It was actually perfect timing by a few to force the market higher with the same demand and supply amounts many mills say we had as we completed September.

Domestic mills were stammering and were buying no more than needed for the first 10 days of October awaiting the return of the Chinese (the regional celebration of Moon Festival and Independence) to see how aggressive they would be.

Large multiple facility buyers were not at all in favor of the other market reporting agency saying the demand for OCC and MP as of October 1 was $20 higher than it was just the day before, but they had been low for quite sometime so maybe they were just adjusting to what other trade publications had the market at. In fact, The Brown Sheet had reduced the overages being paid in the Midwest by $10 as mills had quit buying spot loads the last week of September. Spot pricing to fill shortfalls in raw material supply is a big factor in determining prices for the next month especially when the spot pricing is rising the last few days of a month.

As sellers and producers awaited the return of foreign buyers to see what direction in particular the Chinese were going to go, it did not take long for them to give in at Long Beach and start purchasing container loads $15 higher than where they had left it prior to their twelve-day holiday. Export buyers quickly found out that the Port of Long Beach and the Pacific Northwest were going to be the two influential hubs to load ships from, and Oakland was dropping back to $15 under Long Beach, dealing with container and transportation issues.

So here is where The Brown Sheet found pricing Friday afternoon, October 15th. After listening to the mill side when writing our last newsletter on September 26, we are hesitating to believe anything with the exception of the export prices that are being reported from Southern California and the Pacific Northwest. In this issue, more than any in the past, the basis for determining pricing will simply be ...use Long Beach's Prices and back out freight costs all the way East to Ohio to determine where domestic mills are trading.

For the Eastern Ports who were not on Holiday, the market will not reflect as much of a mid-month jump.

The Southeast is a market all to themselves. As long as rain does not force pulp men out of the woods they should run along at a smooth pace edging up or down as the demand for their finished product calls. No major mill has announced multiple mill downtimes for inventory correction, so until Christmas vacation we should not see that affecting pricing. If it does at that time you would have to factor in that the Chinese will probably take all offers if the market drops off $20 nationally.

About The Brown Sheet™
The Brown Sheet is a brief bi-monthly newsletter that focuses on the recycled fiber market and provides recycled fiber producers with the knowledge they need to negotiate fair terms and prices for their baled product.

The Brown Sheet reports price changes for corrugated and low-grade fiber products and explores current and future markets.

For further informmation on the recycled fiber market and recovered paper pricing, please visit The Brown Sheet website at: The Brown Sheet

SOURCE: The Brown Sheet