China’s tight quality restrictions may have gained the most attention in 2017, but healthy underlying demand for scrap paper continues to drive strong pricing, according to presenters at the 2017 Paper & Plastics Recycling Conference Europe event. The conference was held in Warsaw in early November.
The use of communication grades of paper has been declining In the 21st century, but the growing global demand for packaging has kept the recovered fiber sector buoyant, particular in the case of old corrugated containers (OCC). “OCC demand is where the action is,” stated Bill Moore of Atlanta-based Moore & Associates. “Other grades are about all flat,” Moore said regarding the recent global demand picture.
In 2008, said Moore, packaging grades made up 49 percent of the world’s finished paper production while newsprint output comprised 13 percent of production. In 2016, those numbers had shifted to 60 percent for packaging and just 7 percent for newsprint.
On the recovered fiber demand side, the world’s paper mills consumed 70 million tons of OCC in 2000, but that figure is projected to grow to 170 million tons in 2021.
Geographically, the falloff in communication paper has affected the United States significantly, said Moore. Whereas U.S. paper and board mills churned out 105 million tons of product in 1999, that number shrank to just 72 million tons in 2016.
China’s 21st century role as the world’s workshop has meant its packaging grade output has soared, as has its consumption of OCC. The boom in containerboard production there has caused China’s supply needs to shift, said Moore. In 1993, 46 percent of what Chinese mills imported was OCC and 21 percent was old newspapers (ONP). By 2016, that had shifted to 67 percent OCC and just 7 percent ONP. Whereas in 1993 China was importing a little more than twice as much OCC as ONP, but 2016 it was importing nine time as much OCC as ONP.
David Powlson, who works from the United Kingdom for Finland-based Pöyry Management Consulting, said the world’s percentage of forested land is currently growing, and that virgin pulp is likely to provide increased competition to recovered fiber between now and 2050.
He said tissue production in China is one of the fastest-growing finished paper sectors globally, and it is made almost entirely from virgin fiber-content bleached hardwood kraft pulp made from eucalyptus trees and other trees.
Nonetheless, said Powlson, Pöyry is “expecting, through 2050, equal amounts of recovered paper and virgin fiber growth” in paper production capacity.
Recovered fiber’s limitation, said Powlson, is a ceiling on recovery rates. He said only remote areas of Spain, Italy, Ireland and Eastern Europe can yield more fiber from the European continent. While China’s government is optimistic it can source more of its own recovered fiber, “We don’t believe you can increase the collection rate in China much beyond where you are,” he commented.
In 2016, Chinese mills bought 82 percent of Europe’s exported recovered fiber and 79 percent of North America’s said Powlson. Some 51 percent of what was shipped from North America was OCC while 21 percent was mixed paper. Europe, on the other hand, sent 72 percent in the form of OCC and 19 percent mixed paper.
Jochen Behr of London-based packaging producer DS Smith said his firm’s recycling division has focused on “stringent quality control” in the face of increased quality scrutiny by the Chinese government.
Behr referred to changes in consumer behavior that have resulted in more (packaged) household deliveries as a reason why DS Smith believes that “packaging is a market set for growth.”
He said DS Smith handles some 5 million tons per year of recovered fiber and consumes 3 million tons of that in its own mills. The company is pursuing a model of “box to box recycling in 14 days,” said Behr.
Behr said he anticipates more “cross-sector collaboration” between consumer product companies, packaging producers, retailers, delivery services and government recycling agencies as the home delivery trend gains momentum.