Paper Waste : US: Price for recovered paper spikes

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As packaging demand continue to soar in the US, prices for cardboard and containerboard continue to rise.

Demand for packaging in the food and beverage, industrial as well as e-commerce sector has stayed strong despite the pandemic. With regards to the latter sector, a projected online shopping boom is set to amp up demand for corrugated containers (OCC) in the next 5 years.

These corrugated boxes refer to used containers or packaging made from unbleached, unwaxed paper with ruffled (‘corrugated’) inner lining-said corrugated materials (also known as containerboard) make up the likes of pizza or shipping boxes.

So far, a shortfall in the production of semi-conductor chips, an industry that helps generate a lot of OCC, has led to a shortage in available corrugated containers. Paper mills across the Midwestern US have offered to pay premiums on top of prices far higher than the national average to garner access to said corrugated boxes.

According to Cascades, a Canadian and US paper and packaging company, OCC prices during the first quarter of this year were 97% higher than during the same time in 2020, the demand for recovered fiber being stoked by pandemic buying habits and export demands.

China, previously having imposed a ban on recovered paper imports, is now helping to drive up OCC prices in the US.

The country’s full-scale implementation of its solid waste import ban as of January 1, 2021 served to slash the total amount of global waste and scrap paper as well as paperboard entering China. Yet said legislation does not affect the import of brown recycled pulp, which is derived from OCC and set to generate 5 million metric tonnes worth of demand per year by 2025.

The South and South East Asian market (counting countries such as South Korea, Taiwan, Indonesia, Thailand, India and Vietnam) serve to shore up further demand for OCC due to their persistent fiber shortages. (In July 2020, India imported 42,000 short tons of US OCC, the number rising to 170,000 in December of the same year. Vietnam saw the import of 92,000 short tons in July 2020, a figure reaching 208,000 short tons in December.)

Currently, mills in these countries are waiting for US prices to fall prior to making buying decisions despite their increased material demand.

A fall in price level, however, is unlikely given the 10-month price hike for the commodity in question.

Recovered paper demand is currently at 250 million metric tons per year and projected to gradually grow to 260 million metric tons by 2025.