More Recycled Fiber Available, But Strong Demand From Domestic Buyers
Baled OCC, Old Corrugated Cardboard, in 44,000-lb Loads
By Brook Edwards, Market Analyst, The Brown Sheet™
Jan. 10, 2011 - It will take a close watch in the coming weeks as the gradual upturn in the economy starts to possibly produce more recyclable fiber. Some buyers in the industry are already seeing it happening within the same region, meaning one geographical area is recovering faster than others just 100 miles away and producing slight overages of baled corrugated.
At the same time this extra product is being produced, it seems local buyers are taking it in because they do not know if recyclers are able to continue to gather it in or will the increases in unbaled supply be negated by winter storms in North America? It is just another factor for mill teams to determine: should we continue to overbuy our daily usage?
Being somewhat familiar with Midwest & Eastern U.S. winters, I know from the past that a lot more recyclable items somehow materialize on transfer station floors when there is ice and snow storms and it is co-mingled with MSW (Municipal Solid Waste) and ends up landfilled. Now that the commodity prices are much higher, can recycling managers make it a point with their trucking fleets that this does not happen as much as it has in the past? If so, the gradual increase in the amount of fiber being generated and the need for it as a raw feed product — both domestically and internationally — could offset what is believed will be a consistent and increasing demand after the Chinese New Yearís Celebrations ends.
For those of you who are unfamiliar with the Chinese Holiday, it starts on Feb. 3 and runs for 10 days. 2011 is the year of the Rabbit, which is supposed to be a year to catch your breath and calm your nerves so if that actually happens could that let some of the air out of the ever expanding Chinese Economy? If so, this increase in corrugated cartons needed to be recycled could be the end of the run-up for the market even though there could be solid demand. Mills have no idea other than reviewing historical trends this is the time of year when supplies usually shrink, so they are keeping their warehouses full of raw product at current prices.
This is also the time of year when "snowbirds" (people in the U.S. north head south for the winter months) cancel their newspaper subscriptions and less ONP (Old Newspaper) is filling the recycling bins. This shortage is mostly in the market and has been for the last 60 days, but clean ONP is still strong and no easing of prices for any of the newspaper grades is on the foreseeable horizon.
Itís really too early to tell what February will have for us but neither side sees the bottom following out of the market just because exports are limiting in their ability to buy at the end of January. As always, this will be continued.
Seems this writer had more questions than actual answers in this edition of The Brown Sheet, about what is to come.
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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.
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SOURCE: The Brown Sheet