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North America

In January 2023, had you asked 100 people to predict the state of the recovered fibre market in January 2024, you might have got as many as 10 different answers based around the “normal” dynamics of our business, such as higher/lower prices, a shortage/excess of material, a stronger/weaker economy, etc.

But not a single one of those 100 people could have predicted where we are today: issues in the Red Sea/Suez Canal (and the Panama Canal too) leading to disruption and shipping cost increases, with a domino effect halfway around the world to the USA. How long can these disruptions be expected to last? Some people think we’ll be in better shape in a few months but, personally, I disagree. It may seem hard to believe but, after the Arab-Israeli war of 1967, the Suez Canal was closed to international shipping for eight years - so hold on to your seats. I would expect us to experience spiralling shipping costs, longer transit times and all kinds of general disruption owing to the situations in both the Suez and Panama Canals. The market is going to get a little crazy. And adding to the associated nervousness, January is typically a low-generation month owing to the drop in consumer purchases and in store inventories after the high-spending holiday season.

On the US domestic market, Fastmarkets/RISI PPI Pulp and Paper Week increased OCC and mixed paper prices in January for the ninth or tenth month in a row. And as in the past few months, this is not about increased demand but rather decreasing supplies. Domestic mills remain nervous about not being able to get enough recovered fibre feedstock to keep their machines running, so they are scrambling to find tons and bidding up the price in the process. One large integrated mill group, with an internal recycling division, as well as dozens of converting plants, evidently had been selling all of their DLK externally and buying lower-priced grades to consume internally. However, rumour has it that this mill group has stopped selling the DLK out of its plants and is now keeping those tons for its own feedstock. This has caused a ripple effect in the marketplace and a shortage of DLK availability.  

So across the whole of the USA, OCC, mixed paper and DLK are much in demand, resulting in higher prices. Regarding higher grades like SOP, coated book and white ledger, printers are slow at this time of year but pricing has remained steady and relatively flat.    

As for US exports of recovered fibre, the first 10 months of 2023 saw a reduction in purchases by India, Indonesia, Taiwan and South Korea whereas Malaysia and Thailand significantly increased their buying of US material. Full-year figures for 2023 should confirm Thailand as the biggest buyer of OCC out of the USA while US shipments to Mexico are likely to have dropped more than 50% last year. Canada also purchased less fibre from the USA last year when compared to 2022.