U.S. carton shipments increased, but paper mill shutdowns continued, causing waste paper exports to plunge in the first three quarters!


As the end of the year approaches, carton shipments by paper companies begin to increase, but there are still plenty of reports of downtime at major paper mills. In this coming year, there have been as many factory closures and shutdowns as there have been factory openings, and companies across the paper industry are hoping for an increase in demand.https://www.risedongsheng.com/

Since the start of the year, Viselok, American Packaging, International Paper, Grave, Domtar and ND Paper have all announced production closures in response to a challenging market, with demand for packaging cartons reaching an unprecedented 10-year low. "The three paper giants supply most of the paper material to the industry, and each player manages supply and demand in their own way," said Ryan Fox of Bloomberg at the Paper and Plastics Recycling Conference in October. "International Paper has been extending downtime at its plants; Viselok has announced a permanent closure, while American Packaging's new Valula Washington facility has also announced a permanent idleness."

While downtime at the three companies has decreased quarter by quarter, their respective economic downtime remains severe compared to a year ago. Memphis, Tennessee-based International Paper's third-quarter downtime decreased "substantially" compared to the previous quarter, improving the company's operating costs, but downtime at its containerboard business remained at 458,000 tons, down from 622,000 tons in the second quarter but up from 398,000 tons in the third quarter of 2022. It was the fifth consecutive quarter of downtime at International Paper's containerboard business.

Mark Sutton, chairperson and chief executive of International Paper, said on the company's third-quarter earnings call: "Two quarters ago, I had no idea that we would still be in this demand environment and go through this recession."https://www.risedongsheng.com/

In previous earnings reports, Mark Sutton had said that International Paper would not close permanently, but in late October, the company revealed that it would close its containerboard plant in Orange, Texas (which consumes recycled fiber), thereby reducing International Paper's containerboard capacity by 800,000 tons per year.

"I think what has changed is the depth and duration of this recession," Sutton said of the shutdown. "It's not like anything we've seen since we established our industrial packaging business in the mid-2000s. We also have a long-term plan for that business, and in some cases, the type of containerboard we need to produce in the future is not the same as the containerboard we produce today. We're taking advantage of this opportunity to do a reset, and then we have to find the right time to invest in the future, but that's where the change comes in."

Atlanta-based Viselok, the largest consumer of recycled fiber in North America, consumed 5.50 million tons in 2022 and had 391,000 tons of economic downtime, the highest for the year and the fourth consecutive quarter of the most downtime, equal to more than 200,000 tons of capacity, according to its sustainability report.https://www.risedongsheng.com/

In worse news, the quarterly containerboard report from the Washington-based American Forest and Paper Association showed factory inventories at 370,500 tonnes at the end of the third quarter, 11.6% lower than at the end of the third quarter last year. At least, international paper officials are not entirely discouraged, especially as OCC prices continue to rise.

According to Fastmarkets RISI's Pulp and Paper Week on November 6, the national average price for OCC was $75 per ton, the result of an eight-month price increase from the beginning of the year, when prices were $29 per ton, up nearly 159% compared to the same period last year, while mixed paper prices were essentially flat at $34 per ton.

"You have to see an improvement in demand to see a shift in the market; we've seen that," International Paper's senior vice president of containerboard and recycling, Jay Royal, said on the earnings call. "The supply-demand imbalance is still there, but that's changing, both because of the actions being taken on the supply side... and because of the improvement in demand. So for now we think demand has bottomed out. The outlook is even more encouraging. We'll see where it goes from here."

Separately, China purchased just over 500,000 tons of U.S. fiber in the first nine months of this year, ranking ninth, according to the U.S. International Trade Commission. That total is down 13.8 percent from last year and a significant drop from nearly 4.80 million tons of U.S. waste paper purchased by Chinese factories in 2020. With several Chinese factory companies already expanding into Malaysia and Thailand, Chinese papermakers are likely still buying the increased purchases from those two countries, but South East Asia is seeing growing production.

Overall, the top 10 importers of US waste paper have fallen about 13 per cent in the first nine months of the year so far, with data for the past nine months showing double-digit declines in material demand this year in several of the country's main export destinations.

India remained the largest importer of US waste paper this year, purchasing 1.90 million tonnes in the January-September period, according to the Paper Branch (PSI) of the Washington Society of the Waste Recycling Industries (ISRI). However, the figure was down 27 per cent compared to purchases by Indian buyers in the first three quarters of 2022. US global exports of waste paper totaled 9.90 million tonnes in the first nine months of this year, down 17.5 per cent from the same period in 2022, according to the US International Trade Commission. These exports were down 32 per cent year-on-year to $1.87 billion.

Of the 10 major destinations for U.S. waste paper exports this year, only Thailand reported a net increase in imports. This year, China maintained its position as the second-largest importer, receiving about 1.70 million tons between January and September, up nearly 26 percent from the same period in 2022. The small increase in summer imports appears to have faded. According to PSI, U.S. waste paper exports rose 0.6 percent month-on-month in July and 9.4 percent in August, but fell 0.7 percent in September, just above 1 million tons. U.S. waste paper exports fell 8.2 percent year-on-year in September.https://www.risedongsheng.com/

Other countries in the top 10 export destinations include Mexico, the third-largest importer, which received nearly 1.40 million tonnes of US waste paper in the January-September period, though this figure is down 21% so far this year. Malaysia is almost on par with imports, with nearly 810,000 tonnes of material from the US down just 0.7% so far this year.

For all of 2020, Thailand and Malaysia together purchased about 965,000 tons of U.S. waste paper. This year, that figure has surpassed 2.49 million tons, an increase of 158 percent in three years. Although China sometimes bans all grades of waste paper from entering through its ports and imposes strict specifications on the rest, it still has a presence in the U.S. export market.

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