By Ken McEntee
Recovered
paper export statistics from the U.S. Department of Commerce fly in the
face of reports of a weak export market in October. Traders in October
cited declining exports as a partial cause of eroding prices, including a
massive drop of $100 per ton for Sorted Office Paper (SOP) within a
month and a milder drop in Old Corrugated (OCC) prices.
October
trade data from the Commerce Department’s Census Bureau show a 30
percent increase exports of chemical deinking grades compared to
September shipments, along with a flat month-to-month average price.
Overall,
exports in October were up almost 4 percent, to 1.9 million tons, while
the average price for all grades were up 2.6 percent, to an average of
$165.68 per ton. For the first 10 months of the year, exports were up
13.4 percent, to 19.3 million tons, while the average price was up 4
percent. Sales for the year were up 18 percent, to almost $3.2 billion.
October surprise
While the October free-fall was mainly attributed to domestic markets, a weak export market also was cited.
Traders
in October attributed the whopping drop in SOP prices mainly to Georgia
Pacific, which first announced at mid-month that it was dropping its
SOP and Coated Book Stock (CBS) prices to $150 a ton, representing a
drop of about $100 per ton within a four-week period. Other mills
followed. Canadian buyers like Kruger and Cascade were the only
holdouts, reportedly holding their prices closer to $200 per ton until
later in the month. Up to the GP announcement, other mills were already
buying at levels $30 to $50 below their September prices.
Mill
inventories were reportedly very high, but traders also noted that
lackluster overseas demand was contributing to declining prices.
Traders
also reported weakness in Chinese buying of OCC in October. Reportedly,
after placing orders early in the month Ralison International, which
buys for China’s Lee and Man Paper, reportedly has told suppliers not to
ship any more tonnage. Meanwhile, America Chung Nam, which supplies
China’s giant Nine Dragons Paper, was reportedly issuing purchase order
with the price “to be determined.”
Commerce statistics show a 2
percent decline in OCC exports to China during October, along with a 4
percent increase in the average price of OCC shipped to China. Judging
by traders’ reports, November trade data should indicate a much larger
reduction in exports to China, along with a heavy drop in price.
Traders
reported that OCC was moving to China from Los Angeles for about $245
per short ton, delivered to major Chinese ports. After a weeklong
Chinese holiday at the beginning of October, the price was reported at
about $220 per ton including shipping.
According to what appear
to be undervalued prices reported by the Commerce Department, OCC
exports to China averaged $130.81 per ton in September and $136.07 per
ton in October. Commerce trade data indicates FAS value, including the
value of recovered paper to the dock and transportation to the dock, but
not including costs of loading and handling at the port, nor ocean
freight.
October exports
According to Commerce
Department data, all major grade categories of recovered paper improved
from September to October except old newspapers (ONP). Meanwhile, prices
were up for all grades except mixed paper, which dropped 2.6 percent,
and chemical deinking grades, which remained just a quarter dollar below
September levels.
* Despite chaos in the U.S. market, commerce
reported a 30 percent increase in exports of chemical deinking grades,
from 41,000 tons in September to 54,000 tons in October. The average
price if deinking grades was at an average of $254.25 per ton in
October. A 42 percent, 4,300-ton drop in deinking grade exports to China
was more than offset by a 136 percent gain in shipments to India, from
6,100 tons in September to 15,000 tons in October. Exports to Canada
were up 56 percent, from 6,000 tons in September to 9,300 tons in
October. Exports to Mexico were relatively flat, falling 1.4 percent in
October, to 3,800 tons. Among moderately-sized markets ranging between
2,300 and 3,300 tons, exports to the Netherlands were up 109 percent; El
Salvador up 116 percent; South Korea up 68 percent, Italy up 31
percent, and Japan up 37 percent.
* Along with the 30 percent
increase in deinking grade exports, October shipments of pulp
substitutes were up 2.2 percent, with a 1.2 percent increase in price,
to an average of $232.92 per ton. Exports to Mexico tanked, dropping 20
percent, from 44,200 tons in September to 35,400 tons in October.
However, that 8,900-ton drop was offset by an 8,900-ton improvement in
shipments to China, from 85,300 tons in September to 94,200 tons in
October. Exports to El Salvador were up 78 percent, from 2,800 tons in
September to 5,000 tons in October.
* OCC exports in
October were up 1.2 percent, with a 5 percent improvement in price, to
an average of $155.09 per ton. Exports to China were down 1.7 percent,
from 696,000 tons in September to 684,000 tons in October, a difference
of 12,000 tons. However, that loss was offset by increased exports to
India, Indonesia and Vietnam. Exports to India were up 10 percent, or
5,000 tons, to 56,000 tons. Exports to Indonesia were up 79 percent, or
3,400 tons, to 7,800 tons. Shipments to Vietnam were up 97 percent, from
3,100 tons in September to 6,100 tons in October.
* Following
deinking grades, mixed paper exports showed the greatest improvement in
October, at 13 percent above the September number. Mixed paper prices,
however, were down 2.6 percent, to an average of $158.80 per ton.
Shipments boomed in October to China, India and South Korea. Exports to
China were up 10 percent, or 20,000 tons, to 218,000 tons. Exports to
India were up 52 percent, or 12,500 tons, to 37,000 tons. Exports to
South Korea were up 39 percent, or 11,500 tons, to 41,000 tons. On the
downside, exports to Indonesia were down 41 percent, or 7,700 tons, to
11,200 tons.
* Exports of groundwood, overall, were down less
than 1 percent in October. While ONP exports were down 6.4 percent,
exports of other groundwood grades were up 4.2 percent. ONP prices were
up 3.8 percent, to an average of $163.45 per ton, while prices of other
groundwood were up 1.8 percent, to an average of $151.86 per ton.
*
ONP exports to China, the dominant market for the grade, were up less
than 1 percent, to 120,000 tons. Shipments to Mexico strengthened in
October, improving by 28 percent, or 3,400 tons, to 15,000 tons.
However, the grade was hurt by a 23 percent, 7,900-ton decline in
exports to Canada.
* China’s imports of other groundwood grades
were up 7 percent, or 14,000 tons, to 216,000 tons. After China, the
next largest market was South Korea, at 14,600 tons, a 12 percent
decline compared to September. Exports to Canada were down 26 percent,
or 2,400 tons, to 6,900 tons.
* Improved shipments to China and
India were responsible for the overall improvement in October exports.
Exports of all grades to China were up 2 percent, or 28,000 tons, to 1.3
million tons. Exports to India were up 24 percent, or 24,000 tons, to
125,000 tons, making India the second largest market for the month.
Canada showed the largest September-to-October reduction in tonnage, at
7,600 tons, an 8 percent decline to a total of 88,000 tons.
Year through October
At
almost 19.3 million tons shipped, the annual record of 20,975,455 tons
shipped in 2009 may have been surpassed during November. The average FAS
price of $162.63 per ton for all grades will most likely top last
year’s record of $157.99 per ton. Through October, exports of all grades
were up significantly except for mixed paper and ONP. Meanwhile, prices
were better for all grades except OCC and groundwood other than ONP.
*
Led by China, OCC exports were up 34 percent in 2011 relative to the
same time in 2010. Shipments to China were up 54 percent, or 2.3 million
tons, to 6.7 million tons for the year, representing 78 percent of all
OCC shipped, and equating to 29,000 shipping containers per month.
Through October 2010, China accounted for 67 percent of all OCC exports.
Subtracting tonnage to China, OCC exports to all other markets through
October would be down 9 percent.
The next largest market after
China was India, at 538,000 tons, representing a 1 percent increase
compared to the same time in 2010. Following China, the strongest growth
has been in exports to Vietnam, which were up 69 percent, or 24,000
tons, to a total of 60,000 tons. On the downside, OCC exports to Ecuador
were down 76 percent, or 71,000 tons, from 93,000 tons through October
2010 to 22,000 tons through October 2011. Exports to Mexico were down 12
percent, or 53,000 tons, to 400,000 tons, while shipments to Indonesia
were down 50 percent, to 46,000 tons. Shipments to Argentina and Chile
were down about 18,000 tons each. OCC accounted for 44.6 percent of all
scrap paper exports, up from 37.9 percent a year earlier.
* Mixed
paper exports through October were down 10 percent, while the average
price jumped 14 percent, to $159.11 per ton. The drop was due to a 16
percent, 384,000-ton reduction on mixed paper shipments to China, from
2.6 million tons through October 2010 to 2.1 million tons in 2011, as
Chinese mills tended to buy more OCC instead of attempting to sort
contaminated residential mixed paper. Exports to Italy also were down
heavily for the year – a drop of 62 percent, from 91,000 tons through
October 2010 to 34,000 tons. Exports to South Korea, the second largest
market for mixed paper, were down 6 percent, or 31,000 tons, to 501,000
tons. Shipments to Mexico were up 18 percent, or 27,000 tons, for a
total of 176,000 tons, while exports to Thailand were up 36 percent, or
26,000 tons, for a total of 97,000 tons. Mixed paper accounted for 19.6
percent of all exports, down from 24.6 percent a year earlier.
*
ONP exports were down 13 percent through October, with a 10 percent
increase in price, to an average of $159.43 per ton. ONP exports to
China, the largest market for the grade, were up 11 percent, to almost
1.2 million tons. But that 114,000-ton gain was a fraction of the
reduced volume shipped to Mexico, Canada and Indonesia. ONP exports to
Mexico were down 63 percent, or 351,000 tons, from 555,000 tons through
October 2011 to 204,000 tons through October 2011. Exports to Canada
were down 32 percent, or 119,000 tons, to 251,000 tons, while shipments
to Indonesia were down 73 percent, or 92,000 tons, to 34,000 tons. ONP
accounted for 10 percent of all scrap paper shipped, down from 13.1
percent a year earlier.
* Meanwhile, exports of groundwood other
than ONP were up 30 percent, with a 1 percent drop in price, to an
average of $144.99 per ton. Like for ONP, China is the dominant market
for other groundwood, pulling in 83 percent of the total. Exports to
China through October were up 45 percent, from 1.5 million tons through
October 2010 to 2.1 million tons in 2011. Exports to South Korea were up
77 percent, or 76,000 tons, from 98,000 tons to 173,000 tons. Shipments
to Mexico were down 57 percent, from 201,000 tons through October 2010
to 86,000 tons, while exports to Canada were down 27 percent, from
120,000 tons to 88,000 tons. Groundwood grades accounted for 13.3
percent of all exports, up from 11.7 percent a year earlier.
*
Exports of chemical deinking grades through October were up 15 percent,
while showing a 2 percent gain in price, to an average of $259.80 per
ton. India, Italy and Japan mainly led the surge. Deinking grade exports
to India were up 37 percent, or 27,000 tons, to 99,000 tons, making
India the leading market for the grade. Shipments to Italy were up 126
percent, from 12,000 tons through October 2010 to 27,000 tons. Exports
to Japan were up 86 percent, from 12,000 tons to 22,000 tons. Exports to
Canada, the largest market for deinking grades at the same time a year
earlier, were down 15 percent, or 15,000 tons, to 86,000 tons. Exports
to Vietnam and the Philippines also were down significantly. Deinking
grades accounted for 2.8 percent of all exports, the same as a year
earlier.
* Exports of pulp substitutes were up 10 percent through
October, while the average price was up 7.8 percent, to $216.12 per
ton. Like for deinking grades, shipments to India were the main driver.
Exports to India were up 145 percent, from 73,000 tons through October
2010 to 178,000 tons. Shipments to Italy were up from 10,500 tons to
92,000 tons. While deinking grade exports to Mexico were down through
October, shipments of pulp subs south of the border were up 15 percent,
or 51,000 tons, for a total of 400,000 tons. Improved volumes to those
markets more than offset a 5.4 percent, 55,000-tons reduction in
shipments of pulp subs to China, the largest market for the grade, at
958,000 tons. Exports to Canada were down 51 percent, from 49,000 tons
to 24,000 tons. Pulp subs accounted for 9.6 percent of all scrap paper
exports, down from 9.9 percent a year earlier.
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