U.S. OCC Prices Level Out After Chaotic Price Swings

 

According to a Sept. 25, 2018 report by Resource Recycling, (Portland, Ore., USA) U.S. OCC prices have remained stable for several months now, bringing some calm to what has been a wildly fluctuating market. But a supply glut may be preventing prices from climbing back up.

Although the price for domestic old corrugated containers (OCC) is currently trading for less than half its near-record value in 2017, given the current market challenges across all recyclable commodities, OCC remains a critical component of the stream.

While OCC prices are down, other commodities are down much further. As a prime example, mixed paper prices have dropped into the negatives in recent months. In the OCC market in the Northeast U.S. the material is trading for $70 to $75 per ton, according to RISI (Boston, Mass.) which was quoted in the report. 

OCC pricing impacts vary greatly by program and region. In some municipal programs, for example, price fluctuations might not have an immediate impact because of contract provisions. And geographically, the Pacific Northwest is seeing significantly lower prices on the RISI index than the Southeast.

The Pacific Northwest has more reliance on export markets than other regions, said Bill Moore of recovered paper consultancy Moore & Associates, and the Southeast is very much a domestic market. A tight freight market may also be playing into the price differences.

Although the stability is a welcome change, the report said that prices remain low compared to the recent past. Two years ago, the national average hovered around $100 per short ton; a year ago, it was up to $150 a ton, before a drop to the high-$90-per-ton range. Now the national average is between $67 and $72 per ton, according to RISI. 

The ongoing trade situation with China is one factor considered to be keeping prices lower. Domestic OCC supply had already increased in conjunction with the Chinese import restrictions. And the additional OCC being sorted out in MRFs tends to be lower-quality material. Suppliers are, therefore, producing more OCC with less quality, both of which can hold prices down.

But moving forward, all signs point to prices eventually creeping back up, driven by the steadily growing containerboard industry.