Anticipation — Of What Is to Come?

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

By Brook Edwards, Market Analyst, The Brown Sheet™

Buyers and mill managers are pro-active for the first week of December

Dec. 6, 2010 - As the Americas prepare to enjoy the Christian Holidays rapidly approaching, the only recycled fiber markets backing off are the tissue mills, who have an abundant supply of raw material on-hand and inside their warehouses. Speaking with foreign buyers at the beginning of November, word is they had no real orders for quantity purchases of WL (White Ledger) and limited amounts of SOP (Sorted Office Paper) and this has carried forward into December. You will see the price sheet marked with red as The Brown Sheet reports pricing for post-consumer office grades domestically off 5 to 15 percent depending on the grade and its proximity to offshore orders.

But, when it comes to the staples of the recycled fiber industry there are more than enough buyers replenishing their daily tonnage uses as they fear the unknown winter that takes place across the northern half of the United States and most of Canada.

The anticipation of a continued flat economy for the first quarter of 2011 — meaning generation will probably follow past years trend of off 30% from production of the prior quarter — will keep pricing at an even level even though there will be more mill downtime for finished product inventory adjustments. The second publication of January will remind you of the upcoming Chinese New Year, which will slow port purchases. But prior to that, purchases should remain firm as chinese mills try to get material unloaded on a JIT basis and those ships reloaded for trips back to foreign ports — most ocean shipping does not enjoy the 10-day break.

Near-term Outlook

So look for continued strength in the basic commodities of OCC, Curbside Co-Mingle (Hard Mix), Soft Mix and DLK (Double Line Kraft) as we work our way closer to the holiday week of Christmas to New Year. ONP (Old News Paper) is also seeing a few clicks up as the cellulose manufacturers advertise their products to make old homes warmer and save on heat bills. Cellulose has been suffering with the building of new homes at a standstill, but the beginning of winter always brings a flurry to insulate existing homes. With more ads running online, newspapers are not up to their normal 3 inches thick for the Sunday Edition.

The next edition The Brown Sheet will be out December 20, and we will try our hardest to get a handle on how many domestic mills will take downtime that could affect your shipments the last week of the year.

Remember, it is always good to sell when the market is unusually strong. It is suspected that the Midwest and Upper East will schedule downtime, while the Southeast continues to do its thing. The Southwest will also probably lose some ground the last week of the year or just the inability to order trucks for pickup.

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