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New Year brings better prospects – for now

Prices in the US edge up for OCC and SOP but traders are waiting to see if the brighter picture will be sustained.

The average US mill price for OCC earlier in January improved about US$ 5 compared to December to US$ 42.50 per ton free on board, according to a market survey by The Paper Stock Report. The average price was US$ 100 per ton at the beginning of 2019.

‘The export price of OCC should rise over the next few months due to the demand, with China and Asia coming back into the market,’ said a supplier in Florida. ‘Domestic prices should go up due to the demand that we see.’

According to a supplier in Nebraska, ‘Mills are actively buying (OCC). We were contacted by a mill we haven’t sold OCC to in over 24 months. There is a lot of domestic and off-shore capacity coming on-line in the next four months. Mills are either stockpiling OCC or trying to make nice with suppliers they kicked to the kerb during the last year.’

The supplier noted that new machines designed to run OCC and mixed paper are likely to start up with cleaner double-lined Kraft cuttings (DLK). That appears to be playing out in the market, as several traders said DLK prices at the time of writing have gone up as much as US$ 20 per ton in a month to a national average of more than US$ 90 per ton. ‘A mill we sell was at US$ 85 per ton in December and increased to US$ 105 per ton in January.’

Upcoming new containerboard capacity, along with a projected seasonal drop in generation by the end of January, has many suppliers optimistic that the improved OCC prices are not a short-lived result of restocking. The opposite may be the case for SOP, some traders believe.

After seeing the national average mill price for SOP free-fall from almost US$ 225 per ton in January 2019 to around US$ 107 per ton by October, traders said interest in the grade has been percolating while generation has slowed. Some took heart from a New Year rise of US$ 10 per ton compared to December.

New Year for European traders started from a very low base. Prices for almost all grades, but especially the brown grades and mixed paper, were at the levels of the early 1990s. For mixed paper, they dropped so far that that collectors had to pay exporters to take their material.

But there was slight increase in brown grades in the New Year because Chinese importers were in buying mode. A ban in India on mixed papers with more than 2% contamination meant that many mills switched to boxed board cuttings and OCC. Freight rates are unchanged.

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