The future looks good for the recycled paper market. While prices may be down from earlier this year, prices are still higher than last year. Plus, exports remain strong.
“Every year China and India want more and more of our waste paper,” said Chip Dillon, an analyst at Citi Investment Research in New York. He said exports are driving prices.
Dillon said export demand for recycled paper is growing by around 10 percent a year. “We certainly aren’t consuming 10 percent more paper a year,” Dillon said. Demand for recycled paper in the United States is only growing around 1 or 2 percent a year at the most, he said.
“We’re collecting what we practically can,” Dillon said.
“The only way you’re going to induce more collection is for prices to go up.”
Old newspaper (ONP) prices were $107 a metric ton in May, compared to $71.50 a metric ton in May of last year. ONP reached $125 in March. It’s a similar story with old corrugated container (OCC) prices, which hit $108.50 a metric ton in May, compared to $76 during May 2006. OCC prices reached $144 in March, according to research by Citi.
Out of all the paper and paperboard made in the United States last year, 54 percent was from trees, or virgin fiber, Dillon said. Forty six percent was made from recycled paper.
North America has the world’s largest supply of both tree-based and recyclable softwood fibers, according to research by Citi. But fiber-deficient areas like China are where new paper producing capacity is being built. The topography of the land in Asia does not lend itself to substantial softwood timber growth, which is necessary for virgin containerboard production.