How are Things in your Neck of the Woods?

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

By Brook Edwards, Market Analyst, The Brown Sheet™

Nov. 22, 2010 - As the United States heads into the first major fly holiday of the season, domestic mills are not worried about running low on fiber even though the season has not brought forward a bountiful (burdensome) supply.

It is hard not to dwell on the past when economies at this time of year were robust, producing a lot of baled fiber and you really had to know people in order to move loads at posted prices. I do believe from talking with both buyers and sellers of the industry that there is still a supply not actively being marketed that is awaiting the return of the Chinese from their forced national work slowdown to clean up the air (smog) for the Asian Games. It seems that fiber producers who traditionally bale for export have learned to keep the warehouse padlocked and are not divulging what is or is not available as they have confidence that by not pressuring the domestic market with material, they can keep the price abnormally lofty when compared to years past.

Who can say what is to come as the world still is apparently taking its lead from the North American Economy? As an analyst I have to believe that it is possible to level out and trade fiber at this plateau until the supply returns, which might be farther down the road than one would have thought. Each month shows minor improvements in just about everything with the exception of unemployment. The "haves" are no longer sitting on their hands waiting for better times, they are actually spending money now which is reflected in the ever so slow economic rebound. We hear so much about the "have nots" (unemployed and under-employed) that it influences our call of the market, thinking paper mills cannot continue to sell finished fiber.

The price for any particular commodity is still based on supply and demand, (Economics 101) and apparently there is enough demand to trade bales of fiber at what some might refer as artificially elevated pricing levels. But all commodities are up — from food to metals — so the fact that normally the fiber market would be tanking at this time of year actually has no bearing on today’s prices. Higher grades do seem to be under pressure and pricing should reflect easing of office grades the first week of December, but not by many percentage points.

More mills will work than will close for the Thanksgiving holiday, so domestic buyers will be aggressive in their purchases the first three days of the week knowing what is not loaded on a truck by Wednesday noon will not get loaded until 5 days later.

Corrugated and Mixed look to hold their ground for December price postings. Exporters will be back into the market the week of December 6 and they will be bidding on fiber wherever they can find equipment available for transport — equipment = empty 40-foot containers.

The Brown Sheet is not changing pricing and we will stick with our November 1 prices, noting a little lack of demand on SOP & WL from North American Domestic End Markets.

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