Baled OCC stacked for recycling.

China’s withdrawal from the fiber export market and a rise in e-commerce created an opportunity for domestic mills to consume more recycled fiber. | BAO Images Bildagentur/Shutterstock

All but two of 25 confirmed recycled paper mill projects announced over the past five years are completed, and new capacity activity has slowed considerably, according to a recent review led by the Northeast Recycling Council.

NERC launched the tracking effort in 2018 amid an unprecedented flurry of recycled paper mill capacity increases that were largely driven by China’s exit from the export market. After years as the largest importer of U.S. recovered fiber by far, the Chinese government announced a series of policies in 2017 and 2018 that ended mixed paper shipments and significantly reduced OCC shipments into the country.

The market shift tanked recycled fiber prices and created a glut of material looking for a home, and by early 2018, mill operators were taking note. At first, they simply enjoyed the lower feedstock prices. But soon some of the major companies were announcing projects to increase the amount of mixed paper and OCC they could consume. It was a boon to their operations to use cheap feedstock, and it was a plus for U.S. MRF operators looking for new markets to replace the void left by China.

The NERC report was maintained by Chaz Miller, who told Resource Recycling the burst of activity represented an unprecedented increase in capacity and the ability to use recycled content. “That many facilities doing this in this period of time” made it a historic event, he said.

Late in 2018, NERC published a list of mill projects and associated capacity figures, and it has done regular updates since then. This month, the regional recycling group published its final report.

“It’s just unlikely that there will be any more expansions in the near future,” Miller said.

Spurred by China and e-commerce

The U.S. fiber market has not fully settled into a new pattern since China’s exit, particularly on the export front. Recovered fiber exports have fluctuated significantly since 2018, when China’s pullback began in earnest. In 2023, fiber exports reached a 19-year low, and they were down 34% from 2016, before China’s new policies began. That suggests there are still significant quantities of mixed paper and OCC available for domestic consumption. 

But Miller’s prediction that mill projects have slowed down for the foreseeable future is related to a separate, simultaneous trend in the U.S. fiber market. At the same time China was withdrawing from the fiber market, demand for the material was projected to skyrocket because of the rise in e-commerce. In general, the thinking was that e-commerce would continue to rise as a portion of the shopping market, meaning more and more cardboard boxes needed to house shipments to households.

E-commerce got a further boost during the COVID-19 pandemic. But in the years since 2020, e-commerce hasn’t led to a continual increase in demand for containerboard.

“E-commerce peaked in the third quarter of 2020 as a percentage of overall retail sales,” Miller said. “And at the same time, Amazon and other companies got tired of shipping air.”

He’s referring to the widely documented phenomenon of small products arriving at households in oversized boxes. Besides generating much discussion on the internet, this phenomenon led to efforts like Amazon’s in-house packaging optimization work. The company currently reports it has “reduced the weight of outbound packaging per shipment by 41% on average” since 2015.

Amazon and other e-commerce giants have also expanded beyond containerboard in their packaging options, often to lighter materials. “Where possible, we use lightweight packaging by prioritizing flexible paper bags and envelopes, which are up to 90% lighter than similar-sized, rigid corrugate boxes,” Amazon noted in its latest sustainability report.

Miller says the idea that e-commerce would lead to an ongoing elevation in demand for corrugated box – and therefore recovered fiber – constitutes “wishful thinking.” He noted that the history of materials usage typically trends toward dematerialization, which is what’s happening in the packaging sector.

The fluctuating demand from e-commerce may be a reason that none of the startup mill projects – unestablished firms looking to build new paper mills from the ground up – have come online. A handful were announced in 2019 and 2020, including Crossroads Paper in Utah, CorrVentures in New York, and Empire Recycled Fiber in Pennsylvania and later Ohio. 

It’s true that a ground-up paper mill takes longer than installing a new machine in an existing mill. But Miller noted that securing financing for a new paper mill, which often costs hundreds of millions of dollars, might be difficult with the shifting e-commerce market demand.

“You only need so much boxes, and you only need so much capacity to make them,” Miller said.

Takeaways from the results

The 25 total projects together represent more than 8 million tons of recycled fiber capacity. But that doesn’t translate cleanly to a net capacity increase, because some of the projects are replacing existing infrastructure. 

One of the largest projects, for instance, is Green Bay Packaging, which built an entirely new mill that was completed in 2021 with 685,000 tons per year of recycled fiber capacity. But the company built it as a replacement for its previous mill, so the net capacity increase was less than that. Graphic Packaging has done the same, building a new mill in Kalamazoo, Michigan, with 500,000 tons per year of capacity, but simultaneously decommissioning multiple nearby mills, meaning no net change. Graphic is doing the same at an in-progress mill in Waco, Texas.

Graphic’s Waco mill and Total Fiber Recovery, a joint venture between equipment supplier Bulk Handling Systems and recycling company CellMark, are the two facilities the NERC report notes are still in development. The Total Fiber plant, located in Chesapeake, Virginia, has begun buying bales and is slated for a first-quarter startup in 2024.

Twenty-two of the tracked mill projects are in the U.S., two are in Mexico and one is in Canada. Miller noted that within the U.S., the distribution of the projects is striking. They’re primarily east of the Mississippi River, indicating that despite the new capacity, the geography of paper markets remains similar to before the projects were completed. There are several capacity increases in Washington and Oregon, representing the only projects in the Western U.S.

“What you don’t have is anything in California, which is simply stunning,” Miller said.

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