What’s happening in the North American recovered paper market, especially with OCC?
How about: down, down, down, down, down, down, down and down. That’s right: eight consecutive months of price drops. We’ve seen drops in the past when OCC has gone down for three or four months in a row, but I’m not sure we’ve ever seen eight consecutive drops in recent history.
While not every region has seen these eight straight months of decline, the overall US average has. While there are some slight nuances from region to region, every one of them has experienced price drops from the high levels we saw in mid-2021. It’s nearly across the board.
This continual decline is being driven by three factors including, firstly, a softening economy in the USA. GDP fell in the first quarter of 2022 and the stock market has been battered by significant decreases over the past few months. If you add in high inflation, consumer spending starts to fall and box shipments suffer.
Secondly, mill inventories are full and there are reports of mills turning away tonnage. And thirdly, export has slowed owing to China’s COVID resurgence and lockdowns. Add to this shipping and logistics problems and OCC starts to back up, which forces price declines.
These three factors combined are simply too impactful to support the high demand we have seen in the past. It’s certainly a correction in the market. The only question is: have we seen the end of this decline?