Pricing For Bulk Grades Drop As Mills Turn Away Tons
Board Converting NEWS INTERNET DIRECTORY
According to an article in Recycling Today , prices for bulk grades in the United States have taken a dive in the do- mestic and export markets as mills continue to divert tons, with some sources saying they essentially have been able to name their price, particularly for old corrugated contain- ers (OCC). The Northeast and Midwest regions were hit hard when it comes to OCC pricing. Melanie Harman, Executive Vice President of Sales at Recycling Management Resources, headquartered in Duluth, Georgia, said “Everybody’s hid- ing because it’s such a disaster in corrugated.” Harman said about two months ago, the Southeast Asian market, particularly India, had bought lots of tons from the U.S., but before the tons could make it to their destinations, the orders were being canceled on the wa- ter. “A lot of international brokers and shippers with goods on the water had to displace, and when that happens, typ- ically you’re discounting, you’re calling in favors,” she says. In the months that have followed, Harman says dis- placed inventory from the export market has been coming back into the U.S., which hasn’t been able to absorb it all. “Now, it’s kind of the pick of the litter,” she says. “I can name my price. And by the way, I don’t even need it, so I’m turning it away.” Harman says she suspects consumer habits have played a role in the state of the corrugated market today. The looming recession has curtailed spending to a degree, meaning fewer goods to ship. She adds that this has cre- ated what she describes as “one big overnight explosion.” Many in the industry were blindsided by how quickly the market turned, but Harman says she doesn’t believe it’s going to change any time soon, despite the upcoming containerboard capacity expected to come online within the year as some of the projects are anticipating potential delays. According to Cascades Inc.’s second-quarter 2022 earnings report, the Kingsey Falls, Quebec-based packag- ing producer says its Bear Island mill conversion in Ash- land, Virginia, has been affected by the current inflationary environment, adding that higher costs combined with la- bor and material availability constraints have led to tempo- rary delays in construction milestones. The total cost of the project has increased to $470 mil- lion to $485 million. When the project first was announced in October 2020, the estimated cost was approximately $380 million, and the anticipated startup date was mid-De- cember. “Our team is working closely with contractors to miti- gate any potential delay caused by these elements in or- der to meet the targeted mid-December 2022 start date,” Cascades President and CEO Mario Plourde said during the earnings call. Visit www.recyclingtoday.com for more information.
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August 29, 2022
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