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American mills ‘hungry for OCC’

Paper scrap faced a typically cyclical market – until Covid came. ‘Luckily, there is steady export demand for the USA again,’ said market analyst Meghan Workman of Fastmarkets at the recent ISRI Convention & Expo. ‘Everyone is looking for paper scrap.’

India (322 400 tonnes), Mexico (173 700 tonnes) and Vietnam (163 200 tonnes) are the top three exporting destinations for the US followed by Thailand, Taiwan, Canada, South Korea, Malaysia, Indonesia and China.

‘Mills are especially hungry for OCC and will be in the future,’ Workman told delegates in Las Vegas. As an example, IndioPaper (formerly known as Nine Dragons) is converting a graphic plant into a packaging line and its containerboard production reached a new record of 47 million tonnes last year.

A total of 1.8 million new OCC capacity came online in the US during 2021 and much new capacity planned for the coming months. ‘I’ve heard an additional three million tonnes are planned through 2023,’ Workman noted. ‘This is mostly recycled material.’

She observed the build-up could be slow but more mills were following the trend. Others preferred to stretch out their inventory, warehousing paper over a larger timespan, a strategy that had proved successful for graphic paper. Around 2.8 million tonnes of recovered paper were exported in January and March with a slight dip in February. Momentum is strong, she said, with OCC trade increasing year-on-year despite high freight rates.

‘People in the industry realise, if you wait for demand, you will miss out on material at the time you need it,’ Workman cautioned.

Within the sector, demand has been affected by local newspapers closing while deinking grades are seen as ‘hot’ with workers returning to their offices: 30% more employees are back at their desks compared to February. Supplies for shredding companies is a long way from pre-Covid levels.
More companies are following what Workman calls the Pratt model. ‘Mixed paper was worth basically zero dollars three years ago. This has radically changed,’ she states. ‘It’s common now for US companies to use up to 30% mixed paper. Mills are testing out news grades best they can when OCC supply is tight.’
India is the largest player buying mixed paper from the US.

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