Corrugated Waste Prices Recover from Lows

Spend Matters welcomes this guest post from Verity Michie, data analyst at Mintec.

Corrugated waste, or old corrugated containers (OCC), is a grade of recovered paper that, when recycled, is used to make packaging boards. It is easy to recycle and U.S. recovery rates reached a record 93% in 2015. The U.S. is the second largest exporter of recovered paper, accounting for around 34% of global exports, just behind Europe (42%). China is the largest importer of recovered paper and accounts for 51% of global imports, despite also being a major producer.

Export prices from the U.S. to China generally fell between 2013 and 2015. However, prices at the start of 2017 were up 39% year-on-year, following an increase in prices from summer last year. In this report, we look at why the market situation has changed and what factors drove prices up in 2016.

Export prices for OCC started to increase from June 2016, as a result of rising demand from China. In the run up to the G20 summit, which was held at the beginning of September in Hangzhou, many factories were forced to cut production in a bid to reduce air pollution for the event. In addition, summer floods in parts of China disrupted waste collection activity. This led to a decline in domestic corrugated waste supplies, and as a result, packaging manufacturers had to increase imports to meet their needs. Prices retreated briefly as production units returned back online after the G20 summit, and collection activity caught up with demand as the weather conditions improved.

However, U.S. exports prices for OCC rose throughout Q4 2016 and were up 21% at the start of the year from October 2016. This time demand for OCC from packaging board manufacturers in China rose, driven by an increase in packaging requirements over the holiday season. In addition, local OCC suppliers, who anticipated further price hikes, held back on selling raw materials to mills. This saw OCC stocks at packaging mills in China fall to record lows in December. As a result, manufacturers once again turned to imports from the U.S., as well as the EU.

In addition to the increase in demand from China, the “Amazon Effect” also helps to explain why prices turned around in 2016. The Amazon Effect is used to describe the rising popularity of online shopping, with more and more people choosing to sit in the comfort of their own homes to shop, rather than going outside onto the physical high street.

Online companies frequently use corrugated boxes to package their goods, and it is believed that less corrugated waste is being recycled by households than the amount that would be from retailers and large companies. This could lead to reduced supply of recovered paper and potentially see the price of packaging rise. Therefore, if you, like many of us, prefer the luxury of sitting on your own sofa while shopping, don’t forget to recycle your packaging.

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First Voice

  1. rajesh boyina:

    Can you tell me the avg export/ import price for Europe and us of occ

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