The recent earnings calls from several fiber companies, including Sonoco Products, Cascades, Packaging Corporation of America, and Graphic Packaging, concluded the parallel development of both – Export Markets of Fiber and its end users.
During the calls, the companies talked about the current pricing trends around OCC and other grades and claimed their strategies to get benefitted from ongoing realities of domestic and export markets of fiber.
Kadant, a global supplier of paper recycling equipment, reported a previous and ongoing growth in the paper processing of those Southeast Asian mills which ship fiber into China.
Jeffrey Powell, the CEO, revealed that the industry has started noticing the movement of fiber to other areas outside China, where it is processed before getting shipped into the country. As per him, the import restrictions in China are the prime reason behind this increment of fiber production in other parts of the world. He highlighted the hauling down of demand for OCC coming from MRF setting by that coming out of packing plants or warehouses. As the market of later is increasing, so is increasing its price.
Powell envisioned the calming of stress between processors/ haulers and municipalities due to a massive shift of contracts between them from the revenue share system to the free-for-service model.
Cascades, a producer and marketer of packaging and tissue products, anticipated a low in OCC prices for the near future. As reported by the company, the 4th quarter of 2019 has seen a down of 56% from the 4th quarter of 2018 and a down of 9% from the 3rd quarter of 2019 in the average OCC index price.
Plourde, the CEO, looked forward to a buyer-friendly OCC market as soon as the generation of fiber increases. This increment in the production of fiber is expected to start by the end of this month. Pointing the overflow of OCC in the North American market, Plourde, expected the material to remain beneficial for buyers in the coming time.
Packaging Corporation of America
Packaging Corporation of America, an American manufacturing company, talked about enhancing its mills in Wallula, Wash, with fiber recycling capacity. It claimed that the project has been progressing in line with what was announced in the last earnings calls. In the past calls, the company officials declared about starting the production of 350,000 tons of recycled fiber pulp per year from 2020.
Mark Kowlzan, the CEO, confirmed the as-per-schedule advancements of the plant at Wallula and expected it to start functioning by the year-end. He mentioned that the mill’s fiber input costs are the highest in the country and also predicted to have opportunities for optimizing the fiber cost at that location.
Graphic Packaging, the designer and manufacturer of packaging for commercial products, mentioned installing the recycled paperboard system at its paper mill in Kalamazoo, Michigan, with an expectation of an early 2022 start-up. The company announced this installation in earnings calls of last summer.
Referring to this cleaning system as a state-of-the-art, Michael Doss, CEO, summarized its working as converting lower-quality grade material to high-quality paperboard.
Being capacity-neutral, the addition of this project, will not make any addition to the in-take of the recovered fiber of Graphic Packaging.
Sonoco, a provider of packaging and the world’s largest producer of tubes, cores, and composite cans, had capacity-increment for bringing in the more mixed paper. In the past few years, regardless of market roughness, the company has made several investments.
Robert Coker, the CEO, mentioned about the company’s efforts towards replacing the production of about 50,000 tons of uncoated recycled board by recycled pulp production. This pulp is exported to China as an alternative to evading its import restrictions on raw recovered paper. China seems to be favoring pulp, as in a recent announcement, the country has removed a tariff on pulp material.
The recent earnings calls of publicly traded paper firms showed signs of simultaneous improvement of fiber market exports and fiber end users. Where, at one side, a leading paper mill of the US is targeting to bring in lower grades of paper feedstock by installing equipment; on the other hand, another leader in the industry is exporting recycled paper pulp to China.