Spend Matters welcomes this guest post by Monika Sosnowska of Mintec.
The recycling industry is constantly growing and helping to protect the environment. Many government actions have been taken to support this growth over the years. For example, last year the US expanded its single-stream recycling scheme to 80%, which makes it easier to recycle paper. Thanks to this kind of initiative, recovery rates grew about 15% in the last 10 years in the US, reaching 65.4% in 2014. The target is to reach 70% by 2020. The effort is definitely worth it. Specialists say that 1 ton of recycled paper saves up to 17 trees and as much as 185 gallons of oil!
There are many grades of recovered paper (waste paper designated for recycling). However, the grade most desired by paper producers is corrugated waste or old corrugated containers (OCC). This grade is usually collected from retailers, traders and the paper industry itself. OCC has low contaminants, making it easier to recycle, and the recovery rate as high as 89.7% (US, 2014). OCC is therefore the best feedstock for making new containerboards, which are used to produce boxes. We need a lot of boxes, as most of the commodities in the world require complex packaging and shipping-quality boxes.
Almost 40% of recovered paper is exported from the US, of which Chinese imports account for 70%. Since March this year, OCC prices have risen by nearly 20% and look like they’ll continue to head upward. This is because demand from China has increased since the end of the Chinese Spring Festival and the paper production plant maintenance period ended. Large Chinese paper producers, such as Nine Dragons Paper and Lee & Man Paper Manufacturing Ltd., have started preparing for the busiest box season, which begins in July. Imports of recovered paper into China were 2.56 metric tons in April, up 11% month-over-month. OCC alone was 1.39 metric tons, up 8% month-over-month.
Looking forward, the demand for recovered paper is likely to increase in the US domestic market but could decline in China. By the end of 2015, the US is expecting to add 1.0 metric tons production capacity of containerboard, as well as some new waste-based tissue paper machines. Both investments will need more recovered paper as a feedstock. In China, however, waste paper supply is expected to improve as the rainy season passes and the weather is more favorable for collections.