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November 2004

Paper Recycling Increases Along with Prices
by Brian R. Hook

The amount of paper recovered from recycling each year is on the rise, along with prices of recycled paper fiber. Simon Davies, president of recycled fiber at Harmon Associates in Jericho, New York said the higher prices are driving a greater level of recycling.

“If the prices are high — more will get extracted,” said Davies. “If the prices are low — more will go into the landfill.” Harmon is the procurement arm of Georgia-Pacific (G-P), the largest user of recycled fiber in the U.S. G-P is a manufacturer of tissue, packaging, paper and building products headquartered in Atlanta.

Currently about 50 percent of the fiber procured by Harmon goes to G-P, where most of it is used in tissue mills. It sells the rest of the fiber on the global market. Davies said the higher prices are hitting the bottom-line at G-P and other manufacturers.

Prices for the grades of fiber purchased by Harmon have increased by around $20 a ton this year. Davies predicts that paper generation will improve through the fourth quarter, which will cause prices to flatten or fall a bit. “Once we get into the first half of next year we will probably see fiber prices, generally, improve again,” said Davies.

Boosting the supply of fiber, more than half of all paper in the U.S. was recovered last year, according to the American Forest & Paper Association (AF&PA), a national trade association based in Washington D.C. for manufacturers of pulp, paper, paperboard and wood products. 50.3 percent of paper consumed or 49.3 million tons was recovered in 2003, an increase of 69 percent since 1990, when only 33.5 percent was recycled.

AF&PA reports that approximately 339 pounds of paper for every person in the U.S. was recovered in 2003, up from 233 pounds per person in 1990. Nearly 80 percent of all paper mills in the U.S. use recovered paper to make everything from newspapers and corrugated boxes to paperboard packaging and office paper. Recovered paper represents 37 percent of the raw material to make new paper and paper products.

While paper recycling has increased, recycling of other products has either peaked or dropped. Recovery of aluminum beverage cans fell to 48.4 percent in 2002, according to the Container Recycling Institute in Arlington, Virginia. In 1992, the rate stood at 65 percent. Glass beverage container recovery peaked in 1998 at 31 percent, according to the Glass Packaging Institute in Alexandria, Virginia. The rate has since slipped.

The recovery rate for plastic containers has also tumbled from 22.1 percent in 2001 to 19.9 percent in 2002, according to the National Association of PET Container Resources, in Charlotte, North Carolina. The latest rate is half the rate of 39.7 percent in 1995.

By weight, more paper is recovered from municipal waste streams for recycling than all glass, plastic and aluminum combined, according to the AF&PA. More paper is recovered for recycling than dumped in landfills. Americans recycle 270 million pounds of paper every day. Every ton of paper recovered saves 3.3 cubic yards of landfill space.

AF&PA reports that in 2003, recovery of old corrugated containers rose to a record high of 75.8 percent, recovery of old newspapers rose to a record high of 73 percent, and recovery of office papers rose to a record high of 48.3 percent. AF&PA defines “recovery” as paper that is recycled at domestic mills, exported or used to make new non-paper products. Paper that is recovered but not utilized is not counted.

The extra fiber supply is being matched by strong export demand, said Stan Lancey, chief economist at AF&PA. Exports to China increased by more than 60 percent last year, he said. “China is developing very rapidly in a lot of areas and they are putting in a lot of recovered paper capacity, especially in the packaging side.”

The increase in exports is making it a bit tougher for domestic buyers of recycled paper. Lancey said that he hopes that the recycling industry will continue to meet the extra demand by increasing the amount of paper recovered. With that in mind, AF&PA has announced a goal to recover 55 percent of all paper consumed in the U.S. by 2012.

“We are hoping to collect more from offices, where the recovery rate isn’t as high as some other areas,” said Lancey. More could be collected from residents, for example, where the main thing currently being collected is newspaper. But he said that recovery could be expanded to include other grades of paper, such as mail and boxes.

The Grossman Group — a broker and service provider to the recycling and hauling industry, based in Columbus, Ohio — is working on developing new fiber. It often deals with contaminated products and works with mills that are willing to clean the fiber.

Steve Grossman, president of The Grossman Group, said that when the recovery rate increases there is more paper available for both domestic and foreign mills. “If you can start to recover new fiber… then you are really performing a wonderful task and this is fiber that can be used as the domestic and foreign mills grow,” said Grossman.

Grossman said that the price of fiber is strictly based on supply and demand by region and the markets are subject to change on a monthly basis. He said with a strengthening economy and the growth of new mills, the industry is going to see higher prices of fiber. When the economy goes down and the development of new mills drop, the prices of fiber will also go down. “Right now, the price is good,” Grossman said.

He added that the price of recycled paper fiber is high enough right now that there is enough money for the separators, haulers and paper mills. “I think it is at a good point right now where everyone can make money,” said Grossman.


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