High supply keeps OCC prices in check

The lowest prices for years and low demand from Asia have prompted stockpiling in the US and a growth in more domestic processing.

Recovered paper traders in the US in late July reported improved export orders for old corrugated containers (OCC) with modestly improved prices on both the East and West Coast. Meanwhile, OCC demand in the Midwestern states is beginning to improve due to buying for mill projects that are expected to come online in the coming months.

Despite that, however, domestic prices were not expected to improve in the short term. In fact, some traders have suggested that mills might try to slice a few dollars off what were already being seen as the lowest prices in 25 years.

Earlier in the summer, some paper recyclers said they were stockpiling OCC rather than selling at prices that averaged less than US$ 40 per tonne across the country. They expressed some confidence that prices might turn upward in August but in late July sources in most regions said mills were still loaded with OCC inventory, although there were some positive signs.

‘Things remain sluggish in the Southwest and prices could possibly go down another US$ 5,’ one broker said, adding that Mexican mills were unable to relieve some of the pressure. Meanwhile, office paper markets remained soft in July, with no improvements in sight, traders said.

The full paper market analysis will be published in the next issue of Recycling International.