Chinese Taking 10-plus Days Off, Celebrating Moon Festival and Independence, Sept. 23 - Oct. 3

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

By Brook Edwards, Market Analyst, The Brown Sheet™

Sept. 27, 2010 - The month of October brings new market prices to the West Coast producers while the Southeast Mills seem to have gotten control of their spot market prices by increasing wood chip percentages being used.

Though inbound ships will be unloaded in China this week, production will slow and then come to a standstill in most of China's paper facilities starting next weekend due to the region's celebration of Moon Festival and Independence.

Due to the slowdown in China, both U.S. and European buyers will not be looking to acquire Spot Tons only dealing with contractual obligations in the container business. Southern California will ease pricing by $10 to $15 for domestic needs. It actually could be more for tons that are not under contractual obligation if the Seller wants or needs to ship. This will also take away from the Southwest and travel across to the Southeast where Mills have decided to increase percentages of wood chips to ease the market tension as they try to pull the reins in on the producers.

With the knowledge that is out informing producers, it is my guess that no panic selling will be found because the supplies are just not there with usage of recycled fiber up 8% this year and continuing strong. Remember, last year we had the heavy burden of the wood chip industry (black liquor) affecting a lot more of the western markets, and it enabled the subsidy program to greatly pressure the consumer grades or baled recycled fiber, keeping that material anywhere from $10 to $20 under value. Though the big mills such as IP are still running wood chips, they are not able to pressure the market as they did before. For the market to forcibly be taken lower, you would have to see substantial paper machines in strategic locations being idled, and no news of that is forth coming presently.

NOTE: During the month of October we will publish around the 13th to the 15th, and then publish again the 22nd to the 25th in order to give you an idea of how the "Re-Start Up" of the exports affect the pricing for the second half of October. Should you have questions or comments we would encourage you to write in.

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