Waste paper market: Economic fluctuations have revolutionized the carton paper industry!

The third quarter of 2023 brought continued economic challenges, causing another paper company to close a recycled fiber plant, joining the handful of companies that did so earlier this year, but the waste paper market is currently showing signs of positive change.

OCC Markets: Export Competition Stimulates "Pricing Pressure"

For some end users, such as International Paper, a large mill operator, buying OCC at a higher price and paying more for energy made the cost more expensive throughout the quarter. The company expects higher OCC costs to lead to lower earnings in the next quarter.

Plant operator Cascades has noticed a similar increase - on an earnings call on November 9, company president Mario Proud said OCC prices (at an average of $59 per tonne) were up 26% from the previous quarter (at $47 per tonne). But he noted that average OCC prices were down 46% (at $109 per tonne) compared to the same period last year. "The export market in the OCC market was more active in the third quarter, with increased exports from Asia leading to some pressure on pricing, and seasonal waste paper production remained good, albeit at a slower pace than in recent years."

He said Cascades has not had any problems meeting the needs of its operations and that its OCC generation has increased as its Belle Isle, Va., recycled fiber business expands. Proud described a different picture of white recycled paper grades, such as the office paper his company uses in large quantities. Prices in the third quarter (averaging $151 per ton) were down 22% from the previous quarter ($193 per ton) and 42% from the same period last year ($260 per ton). "In the long run, there will be a structural decline due to the market supply of lower-generation paper," he said.

shutdown and restart

Plant operator Greve is closing its containerboard plant in Santa Clara, California, that uses recycled fibers. According to the product specification sheet, the plant makes recycled corrugated base paper, recycled topping board, and more. Company spokesperson Struth noted that the plant has an annual capacity of 88,000 tons. Greve notified state regulators of the closure in September, noting that 74 employees were laid off on Nov. 15.https://www.risedongsheng.com/

The company said in a statement to Silicon Valley Business Journal that falling containerboard prices, rising raw material costs, and an expected decline in containerboard demand contributed to the decision, which it described as a permanent closure. 

Elsewhere on the West Coast, American Packaging announced in May that it would idle its paper mill in Wallula, Wash., which uses recycled fibres, and add more recycled feedstock capacity in 2021. Now, the company has reinstated a paper machine to make veneer board, though it is not clear whether the machine uses recycled fibres. Company executives say that decision is being driven by growing demand, and they expect the machine to return to operation throughout 2024.

"If there was no demand, we wouldn't be talking about restarting the Walula mill," Tom Hasperser, executive vice-president of corrugated products at the US packaging company, said on the company's October 23 earnings call.

Views on recycled raw materials

Mark Corzan, chief executive of American Packaging, discussed the company's interest in recycled materials, which he said the company had invested heavily in over the past decade. He noted that in addition to the Walula plant, the company also has recycled fiber capacity in Derry, Louisiana, Jackson, Alabama, and Cones Mills, Tennessee. But he stressed that the recycling project was driven primarily by an interest in diversifying raw materials.

"We took advantage of that," he said of recycled feedstock on the earnings call. "It did give us some opportunity to adjust the cost of waste paper, the time of year and availability." But he predicted that in a decade the company's feedstock balance would be similar to what it is today. In other words, don't expect a big shift toward recycling from U.S. packaging companies.

It's a different story for Graphic Packaging, whose CEO Michael Doss on Oct. 31 described the company's enthusiasm for increasing the use of recycled materials, an interest driven by consumer trends. He noted that a new 550,000-ton recycled paperboard machine in Kalamazoo, Michigan, has added 70,000 tons to the company's coated recycled paperboard capacity since the program's launch in 2019. He also mentioned Graphic Packaging's current investment in recycled paperboard capacity at its Waco, Texas facility, announced earlier this year, and he estimated the total investment in the two facilities at $1.70 billion.https://www.risedongsheng.com/

Michael Doss said that Graphic Packaging's new coated recycled cardboard product, "PaceSetter Rainier", was launched in August and launched on the market in October. This new grade of the highest quality recycled cardboard will enhance the consumer packaging experience of coated recycled cardboard into the food, health, pharmaceutical and beauty product application fields. Doss said these efforts reflect the trend of "growing consumer demand for recycled material packaging".

Separately, Viselok sold its uncoated recycled cardboard mill in Chattanooga, Tennessee, in the fourth quarter. The company also sold its uncoated recycled cardboard mills in Eaton, Indiana, and Aurora, Colorado, during the fiscal year, the company said in its annual 10-K report released Nov. 17. The company currently uses about 60 percent virgin fiber and 40 percent waste paper fiber. All of its plant operations consumed 1 million tons of waste paper fiber in the fourth quarter, according to the annual report.https://www.risedongsheng.com/

Georgia-Pacific announced a $150 million investment to produce retail consumer paper at its Halsey, Oregon, paper mill. Carrie Fogelsow, a spokeswoman, confirmed that the plant uses waste paper fiber as part of its fiber blend at the Halsey plant, but declined to disclose the grade or quantity used. The investment will increase the plant's capacity, with the new capacity expected to come online in 2025.