Recovered Fiber: Working through the Worst of TimesBy Megan Smalley, Managing Editor, Recycling Today 
Many recyclers express that this summer's market conditions for recovered fiber have been some of the worst they have experienced in decades.
Oct. 24, 2019 (Recycling Today) - It's been the best of times for containerboard producers and the worst of times for recyclers and material recovery facilities (MRFs) trying to sell recovered fiber in 2019. “It all depends who you're asking,” says a broker in the Midwest. “Mills would say it's the best time — they have the best pick right now. If you're talking about a processor, these are some rough times because fixed costs in some cases and operating costs are exceeding revenue.” Old corrugated containers (OCC) prices experienced a long, slow slide downward from $105.84 per ton in November 2017 to a low point of $25 per ton in June 2019. Mixed paper prices declined sharply in the fall of 2017 and into the beginning of 2018. Since the middle of 2018, mixed paper prices have remained near $0 per ton. For containerboard mills, low secondary fiber prices have had positive effects on their bottom lines. “From a mill perspective, the decline starting in 2018 and continuing through 2019 has brought very good returns to the containerboard side of the business,” a national mill operator says. He adds that it's not just recovered fiber prices dropping; virgin pulp pricing also has dropped significantly this year, which has put pressure on sorted office paper (SOP) prices and demand. Adam Josephson, director and equity research analyst at Cleveland-based KeyBanc Capital Markets Inc., describes the market for recovered fiber as “weak,” adding that it's been weakening for a few years now. “The market started to go downward toward the end of 2017 when China turned much more restrictive on the recovered paper that it would import,” Josephson says. “And the market has been downhill since, but what changed perhaps a year or a year and a half after the China effect came into play was that the domestic market also started to weaken.” Many recyclers express that this summer's market conditions for recovered fiber have been some of the worst they have experienced in decades. “I've been through bad markets, but what's different here is that the millions of tons the global industry was shipping to China stopped,” says a broker on the East Coast. The complete story can be found on Recycling Today's website: Recycling Today. SOURCE: Recycling Today |