News Brief: Week of December 12, 2016

This week, our main story covers recent turbulence in the recovered paper (RCP) market in China, where seller speculation and buyer panic are leading to price instability. We'll also consider the drop in West coast recycling rates and what we can do to give them a boost.

But first, in the spirit of the holidays, we'd like to share the Plastics Recovery Update gift guide for you earth-friendly shoppers. Click here to check out products made from post-consumer materials – and save all the unnecessary stocking-stuffing knick-knacks from the landfill!

"Domestic brown grades & mixed paper prices surge in China, pushing up imported RCP"[1]

The Lunar New Year doesn't seem to be bringing the lower RCP (scrap paper) import prices Chinese buyers had hoped. Instead, instability of the domestic pulp and paper market has instigated some large purchasers to fork out above average prices to secure exports and maintain tonnage volumes. Just recently, there was a trend of steady recovered paper prices along with increased quality and available volumes, securing Chinese mill dependence on domestic scrap paper. Buyers were even willing to pay more to buy old corrugated containers (OCC) tonnage from local suppliers as imports grew more expensive.

In November, however, surges in premium OCC grades have bumped prices in domestic mixed paper and corrugated board. In the first week of November, post-consumer as well as pre-consumer and imported OCC jumped $7.3-14.6/ton and another $14.6-21.9/ton in the following two weeks. In the fourth week, prices continued to rise: Chinese mixed paper and corrugated board increased RMB 170-350/ton to RMB 1400-1870/ton; post-consumer OCC increased 120-150 to 1640-2050; pre-consumer and imported OCC increased 110-350 to 1750-2130.

To stabilize prices, major Chinese packaging board manufacturers pressed levels down. Consequently, premium OCC grade prices dropped, but only modestly compared to the November hikes. Early December closing data showed Chinese mixed paper grade prices decreased by RMB 120/ton to RMB 1280-1750/ton, post-consumer OCC dropped 120 to 1520-1930, and pre-consumer and imported OCC fell by 120-150 to 1630-1980.

The domestic scrap paper price frenzy – a result of an overheated Chinese packaging board market, seller speculation, and buyer panic – has triggered price increases of bulk grades across major supply markets, including Japan, the US, and Europe. In the past three weeks, import prices have jumped: Japanese OCC increased $18/ton to $226-228/ton; mixed paper increased 12-14 to 220-223; ONP edged up 5 to 233-235. US OCC jumped 5-7 to 215-217; mixed paper increased 10-12 to 178-182; ONP rose 5 to 190-195. European OCC spiked 10-12 to 195-202; mixed paper increased 10 to 170-175; ONP remained flat at 175-180.

This story was published by RISI, which requires a subscription. Subscribers can access the original story here.

"Why are recycling rates slipping on the West Coast?"

The West coast, including California, Colorado, Oregon, and Washington, has seen steady decreases in diversion rates since 2012 as consumption and waste generation has increased. Believe it or not, economic recovery is, in part, blamed for this trend. While consumption and waste generation has been on the rise, the percentage of these materials- especially metals, plastics, and electronics- recovered has fallen, though actual recovery has increased.

Fun fact: increases in cardboard recycling are used as a telltale indicators of economic rebounds, representing boosts in shipping and Internet shopping, according to Peter Spendelow, a solid waste policy analyst at the Oregon Department of Environmental Quality.

The Californians Against Waste cite other causes of lower diversion rates, including lower commodity market values, closing of recycling centers, and cheap disposal alternatives. To facilitate recycling, Colorado's solid waste and material plan report suggests some common sense solutions: setting realistic goals, prioritizing composting, addressing cheap costs of landfills, inclusion of construction and development materials, and improving rural recycling programs. To learn more about recovery rates on the West coast, click here.

[1] By Nick Chang, Editor, PPI Asia.