AUGUST 2008

Recovered paper prices to hit record high

Prices for recovered paper will ascend to a new peak in 2009 following a sustained increase in paper and paperboard output and recovered paper consumption, says David Clapp, senior economist of recovered paper at Resource Information Systems, Inc. (RISI).

Clapp reveals his expectations for the recovered paper industry in RISI’s most recent quarterly World Pulp & Recovered Paper Forecast, identifying the West as the primary driving force behind the surge in output. The United States’ single largest export is waste paper, sending the majority of it — over nine million tons annually — to China.

China is the biggest buyer of recovered fiber in the world and is rapidly increasing their recovered paper mills’ capacities to meet the tremendous demand. Chinese recovered paper producer Nine Dragons plans to double its capacity to nearly ten million tons by 2009, while Lee & Man Paper strives to top five million tons in that same year.

Because of the soaring price of recovered paper, Clapp predicts producers will begin to seek out alternative sources of fiber and invest in virgin (containing no recycled fibers) pulping capacity. He believes that although recovered paper will still play a dominant role in papermaking, new investments into recovered paper will decelerate while other pulp options are explored. Clapp specifies, “Pulp sources like bamboo and eucalyptus in South Asia and Latin America and spruce and fir in Russia will be an increasingly attractive alternative to recovered paper as we move through the current decade.”