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Recovered Paper Prices in the U.S. Spike in April

By Megan Smalley, Managing Editor, Recycling Today

The U.S. average price for OCC was at $24 per ton in the January buying period. Since January, OCC prices have jumped about 196 percent nationally, according to Fastmarkets RISI.

April 21, 2020 (Recycling Today) - Prices for all grades of recovered paper have surged up in response to short supplies caused in part by the COVID-19 pandemic.

Old corrugated containers (OCC) pricing was at all-time lows for most of 2019, averaging around $25 per ton for the latter half of that year. The U.S. average price for OCC was at $24 per ton in the January buying period. Since January, OCC prices have jumped about 196 percent nationally, Fastmarkets RISI reports in an RCP Special Report Story it emailed to subscribers April 16.

Other recovered fiber grades also have benefitted from stronger pricing. "The run-up on the price in the last 48 hours has been unbelievable," says a paper shredder based in the Upper Midwest as of the second week of April. "We were at 30-year lows, but for prices to double in 48 hours for scrap materials is unprecedented."

According to the email sent by Fastmarkets RISI April 16, its sources expect price increases for recovered paper to continue into the May buying period as well.

A few things have driven up prices, including slower generation of recovered fiber and increased demand from paper mills worldwide.

"Last month, export markets picked up," a broker in the Midwest says. "But we also saw generation start to fall off then. You also see [domestic] mills picking up production, needing boxes. Amazon, Unilever, Procter & Gamble have increased their purchases. It's a case of drop off in supply and a marked increase in demand."

A broker based in the South says he has noticed that grocers are baling more materials and residential recycling has picked up in some communities with stay-at-home orders in place because of COVID-19. However, he says generation of OCC from department stores and nonessential businesses as well as generation of sorted office paper (SOP) are down. Some residential recycling programs also have suspended operations temporarily in response to the pandemic, he adds.

SOP pricing is also on the rise — it surged $45 to $50 a ton in April, Fastmarkets RISI reported in the email it sent April 16.

Paper shredding companies aren't all seeing the benefit of the SOP price surge because of a lack of generation in March and April. Kari Tavola, president of Oakland, California-based Shred Works, says she has noticed much slower generation of materials since the start of the COVID-19 outbreak. "The whole Bay Area has a shelter in place order," she says, adding that a lot of tech companies are working from home, so less office paper is being generated by that business segment. "If a lot of people keep working from home, office generation will be different."

However, the paper shredder based in the Upper Midwest says his business has been fairly steady in March and April because his company serves many customers in the medical industry.