Resource Recycling News

‘Continued strong demand’ driving recycled fiber market

After a slump in demand, the containerboard market is heating up again, bringing with it a need for recycled fiber feedstock. | DenisNata/Shutterstock

Major mill operators forecast a year of recovering demand in the containerboard market, translating to a greater need for the OCC and other fiber grades needed to supply those paper machines. 

In recent earnings reports and calls with investors, representatives from the largest publicly traded fiber companies in North America discussed their projections for the recycled fiber market. They also touched on investments to improve recycled fiber processing capacity, reported their latest recycling tonnages and more.

OCC demand on the rise

Packaging Corporation of America CEO Mark Kowlzan said the company is taking steps to “manage our expectations in the first half of 2024 for continued strong demand.”

In the Lake Forest, Illinois-based company’s earnings news release, Kowlzan noted one such preparation is restarting another paper machine at its Wallula, Washington mill during the first quarter of 2024. The mill, which uses both recycled and virgin fiber, was idled in early 2023, and has been slowly coming back online, beginning with one paper machine restart late last year.

During the company’s Jan. 25 earnings call, Bob Mundy, chief financial officer, noted the company anticipates higher recycled fiber prices will continue during the first quarter of 2024.

Executives at International Paper (IP) agree. During the Memphis, Tennessee-headquartered company’s Feb. 1 earnings call, Timothy Nicholls, chief financial officer, said company executives anticipate “higher costs for OCC as demand continues to improve” throughout 2024.

IP saw its average OCC input costs in the U.S. increase by 14% in the fourth quarter of 2023 compared to the third quarter, the company reported on Feb. 1. 

Rising recycled fiber prices accompanied growth in demand for recycled-content end products, reflected in IP’s containerboard sales figures during the latter half of the year. IP reported selling 783,000 short tons of containerboard during the fourth quarter of 2023, up from 677,000 short tons during the third quarter and significantly up from 546,000 short tons during the fourth quarter of 2022.

Cascades reported “consistent strong domestic demand” for OCC throughout the fourth quarter. The Kingsley Falls, Quebec-based company noted its ability to supply itself with fiber feedstock was beneficial: “Good inventory management and leveraging our recovery facilities fulfilled demands of our mills without issue,” Cascades reported in an investor presentation.

CEO Mario Plourde added on a Feb. 22 earnings call that the industry is currently in the annual low-generation season for OCC, and that the recycled fiber price increase may slow as generation rises in March. But he emphasized that the demand for the material is consistent.

Cascades shipped 402,000 short tons of containerboard and other packaging products during the fourth quarter, down 6% compared to the prior quarter and up 10% compared to the fourth quarter of 2022.

Atlanta, Georgia-based WestRock saw containerboard shipments to external customers increase 21.9% in the three months ending Dec. 31, compared with the same period in 2022. Due to its pending merger with Smurfitt Kappa, WestRock did not hold an earnings call for the quarter.

Mill operators talk facility upgrades

Cascades Chief Operating Officer Charles Malo also commented on the company’s Bear Island, Virginia recycled fiber containerboard mill, during a Feb. 22 earnings call. The facility, which started up last year, has a capacity to produce 465,000 short tons of 100% recycled containerboard per year.

Asked about the facility’s ability to take in mixed paper in addition to OCC, Malo noted the facility has so far experimented with using up to 30% mixed paper in its process, but that 30% is “not the maximum we can use.” He said the facility could incorporate higher than 60% mixed paper in producing both the medium (the corrugated material between two sheets of linerboard) and the linerboard itself.

Malo said Cascades wants “to make sure that we do it properly, making sure that we check the quality of the product,” and that it is still ramping up the mixed paper capacity.

Michael Doss, CEO of Atlanta, Georgia-based Graphic Packaging, commented on his company’s in-progress Waco, Texas mill, which carries a $1 billion investment figure and has a projected capacity of 550,000 tons per year when complete. (The mill will more than replace the capacity taken offline by several mills the new facility is replacing.)

One component of the Waco mill will be a drum pulper allowing cleaning and separation of paper cups – up to 15 million cups per day, the company previously stated. During a Feb. 21 earnings call, Doss discussed current misunderstandings about cup recovery.

“There’s this perception that a lot of foodservice packaging and cups, in particular, are not recyclable today,” he said. “I don’t know why this urban myth continues to persist.”

He said that myth is prevalent even within the packaging industry, relaying the story of a packaging engineer at Starbucks’ Seattle research and development facility explaining that the company is working on reusable cups because paper cups are “not recyclable.” In response, Doss pointed out that Seattle itself is one of the first cities to accept paper cups for recycling.

“How can you tell me that it’s not recyclable?” He said.

Doss noted the fiber recovered from paper cups is high-grade, along the lines of sorted office paper in quality.

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