Mid-December Pricing of OCC Backing Off Slightly

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

By Brook Edwards, Market Analyst, The Brown Sheet™

Dec. 17, 2010 - Market prices are softening going into Christmas, but the flow of OCC (Old Corrugated Containers) is still scarce enough limiting the amount the market will be able to fall. Exports out of Long Beach, California — the main market barometer — reached a high the first few days of December ($238) with the bulk of the bales trading at $235.

On the 15th of December the market for OCC out of Long Beach was $220 - $225, as export buyers have met their immediate quota. The U.S. Southeast is also starting to see more tons become available after topping $170 the first week of December.

More mills in the Southeast and Midwest are actually taking two weeks downtime and will not restart until after January 4, since little downtime has been taken this fall.

Sorted Newspaper is in high demand and trading where The Brown Sheet has it posted at the beginning of the month with no signs it will back off as corrugated has done.

When it comes to Curb and Mixed Paper, the bloom is off the rose for the remainder of December and the high premiums that have been paid for the last three months will disappear the last two weeks of the year. This is the one grade that you will see increases in supply over the last half of the month and there should be extra tons at the beginning of January since the speculators that will be buying for the last half of the month will concentrate on Clean Baled Corrugated.

Mix is an excellent product for many mills to run as a feedstock in their system providing they have the proper cleaning equipment if the spread is wide enough between OCC and Mix to counteract for the difference in yield. Don't worry, though, the buyers will be back, but as we end the year and start the New Year the difference in price between the two will widen by $10 to $15 per ton.

There are plenty of speculative buyers that will continue to buy OCC through December and warehouse material for what they see as higher markets to come in the first quarter of 2011. With new paper machines coming online in China the first quarter of the year, it appears to be a given that the Southern California export market will trade between $220 on the low side with $250 not out of the question after the Chinese New Year.

The Brown Sheet will stick with its lower prices for White Ledger and Clean Office Paper — just not enough foreign demand to help prop up U.S. domestic markets. This could change with winter storms in Europe and the U.S., but continued December storms should not immediately affect the office grades. The amount that was deducted on The Brown Sheet at the beginning of the month was the premiums that were not listed on Mill pricing Boards. Pricing being posted is what we feel the mills are actually advertising and paying to generators.

Overall, we have not lost our belief that the markets could level off and trade at current prices through the winter months. The softening appears to only be temporary and the market will resume to trade back toward its recent highs by mid-January.

For those of you who have been following The Brown Sheet since the beginning, this edition completes our fourth year of publishing prices. Though we have not always captured every region's immediate activity, we hope we have satisfied our readers with what we believe are current prices with premiums included.

The Brown Sheet does count on its subscribers to help keep us current with pricing, so we call on you to keep us advised as to what is happening in your neck of the woods.

We wish all a Safe and Happy Holiday Season.

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