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North America

Recently-released data for the first six months of 2022 show that, as expected, OCC exports were higher than in the same period last year. After taking some downtime a few months ago, China’s mills are up and running again but slow GDP growth continues to dampen demand. While China’s GDP is still growing, it is much weaker than pre-COVID levels.

The biggest year-over-year increase in OCC demand during the first six months of 2022 came from Malaysia; without growth in shipments to this destination, US OCC exports would have been flat or even down versus 2021. Meanwhile, India has seen a slowdown in its economy and so recovered fibre demand, and hence pricing, is dropping in that market.

The biggest news in the USA is the addition of yet another recycled brown pulp (RBP) project. This new start-up will be the fifth or sixth RBP manufacturing plant to be announced in the past two years or so. The latest entrant is a new joint venture between CellMark and Total Fiber Recovery (TFR) of Chesapeake. Like the other RBP facilities already announced or up and running, the output will be targeted at Asia. TFR and CellMark will potentially add more facilities in the future.

RBP is expected to be a growth driver for the future of recovered fibre usage in Asia and the USA expects to be a significant factor in supply. Only time will tell.

As previously reported, there is significant nervousness about the economy, not only in the USA but globally. High inflation is putting a big damper on consumers’ discretionary spending and this has finally hit the manufacturing sector with a slowdown in orders for finished goods and a domino effect in terms of orders for packaging. As a result, there was a big difference in demand and therefore pricing for OCC and mixed paper between the end of July and the beginning of the month.

One exporter recently reported that OCC and mixed paper in the USA “are undergoing a significant correction from their highs”. We have certainly been here before. While it is expected that demand and pricing will drop, this won’t be forever and demand will spike again. As always, the question is when the economy will kick back into high gear. If anyone reading this can predict the future with certainty, please reach out to me as I could use your help picking what stocks I should buy or sell!