Recovered Paper Market Trends -...
Transcript of Recovered Paper Market Trends -...
Recycle Florida TodayJanuary 2017 - Tampa
Recovered Paper Market Trends
Bill MoorePresidentMoore & Associates
Atlanta, GA
www.MARecycle.com
Moore
& Associates
Moore
& Associates
Moore & Associates –Paper Recycling Market Consultants
• Recovered Paper Market Experts
• Based in Atlanta, Global Practice
• Market Research
• Strategic and Tactical Business Assistance
• Pricing Analysis
• Recovered Paper Sales & Procurement Assistance
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& Associates
Changes in the World Use of Paper & Board
• Recycling starts with paper and board production: we have to use it before it can be recovered
• Major global change in the graphic papers markets: newsprint, magazines, and printing/writing grades
• Production and use trends in the developed parts of the world (US, Western Europe, Japan) have been trending down for ten years now
• But the rest of the world use of these papers is about flat, with even some developing and emerging markets showing negative growth
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& Associates
Paperboard Packaging Grades
• In contrast to the graphic papers sector, paper based packaging is growing well
• In the developed markets there is still growth, in the developing regions (includes China) some growth is the norm, and in frontier and emerging markets growth should be strong
• Containerboard and cartonboard expansion will almost all be based on recycled fiber
• Much of the capacity increases (especially in the developed regions, but not limited to there) will be from graphic paper machine conversions
• Expect pressure on OCC supply and to a lesser extent Mixed Paper
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& Associates
US Mill Capacity Change By Grade(tons)
Major Grade 1995 2015 Change % Change
Market Pulp 14,527,830 11,891,147 -2,636,683 -18%
Newsprint 6,558,860 1,891,201 -4,667,659 -71%
Packaging 53,002,204 53,720,361 718,157 1%
Printing & Writing 27,627,131 15,258,957 -12,368,174 -45%
Specialties 3,125,315 3,810,032 684,717 22%
Tissue & Towel 6,994,597 8,520,719 1,526,122 22%
Total 111,835,937 95,092,417 -16,743,520 -15%
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& Associates
North American Recovered Paper Collections(Million Tonnes)
Export share: 1990: 24%, 2000: 26%, 2010: 39%, 2016: 32%
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& Associates
US Mixed Paper Market Issues
• Potential downside/bottom of the market cycle problems (or opportunities for buyers!) – over supply
• Quality – fiber length, mix, and non-paper contaminants: significant capital expenditures at the mill needed to use the grade and low yield
• Not a grade that was historically produced in large quantities, but residentially derived Mixed Paper changed that
• China purchases the largest amount of US collected Mixed Paper
• US mills with a few exceptions (Pratt being one of them) use minimal Mixed Paper
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& Associates
ONP Supply/Newsprint Market Issues
• Structural continuing decline in newsprint use in all the world’s developed and developing economies. Even emerging and frontier economies use is sluggish and future growth limited.
• Declining newsprint supply; increased worldwide recycle mill capacity for use of ONP - but not for newsprint, primarily in cartonboard; rising recovery rates = upward price pressure, especially at low end of cycle
• North American and European containerboard machine conversions. More to come, other regions?
• Merging with Mixed Paper as a grade – price and quality/fiber composition
• True deinking quality ONP becomes a premium grade – limited supply, higher prices
Moore
& Associates
Producing Paper & Board in the US Using Recycled Fibers
• For the last several decades, recycled fiber has had a distinct cost advantage over virgin fibers for the production of newsprint, away from home tissue products, containerboard, and recycle paperboard. But not for printing/writing grades and high end packaging.
• Increasing recovered paper costs over the next ten years may change the cost advantage dynamic:
– Higher commodity cycle costs
– Lower quality, shorter fibers and non-fiber contaminants -lower yields, higher processing costs
Moore
& Associates
US Mill Demand Trends
• OCC demand remains strong due to growth in containerboard usage – conversion of newsprint/graphic paper machines to recycled containerboard
• ONP demand declining in the face of greatly reduced newsprint production and the shift toward virgin fiber based newsprint (shutdown of recycled capacity) – low quality ONP and higher cost to produce newsprint from recycled fiber
• Little new demand for Mixed Paper
• Recycle fiber growth as a percentage of furnish for the US (and global) tissue/towel industry has peaked – lower quality high grades, widely available tropical hardwood bleached pulps, and higher mill processing costs
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& Associates
The PSI Guideline/Specification Changes
• The changes have not been without controversy
– Exporters/overseas buyers
– Where does ONP really fall
• RISI/PPW has begun reporting prices for #54 Mixed Paper and #56 Sorted Residential Paper prices, but not yet #58 Sorted Clean News
• They are still reporting the old Mixed Paper grade and #8 ONP – the pricing so far has been the same for Mixed Paper and SRP the same as #8 ONP
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& Associates
Moore & Associates and Kessler Consulting Recovery Rates Study
• Why we did the study
– Measuring/reporting:
Too many methods = inconsistency & confusion
– NOT “speaking the same language”
– EPA’s methodology believed to have flaws
– EREF’s* approach offers better starting point
* Environmental Research and Education Foundation
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& Associates
73.0
21.330.7
222.0
64.8
22.632.8
133.9
0.0
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250.0
MaterialsRecovery
OrganicsRecovery
Waste toEnergy
Landfill
Mil
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EREF EPA
EREF vs. EPA
Base year = 2013
EPA Recovery = 34.4%EREF Recovery =27.2%
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& Associates
15% 15%
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Community A Community B
Re
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Residential MSW Commercial MSW C&D
Two Communities … Two Recovery Rates?
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& Associates
Quality of Information
87%
13% 9%
13%
65%
43%
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Residential ICI C&D
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Actual Estimate
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& Associates
US Residential vs. Industrial/Commercial/Institutional (ICI) Recovery
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& Associates
Demystifying Recovery Rates:Summary of Our Analysis
Materials Recovery
21%
Organics Recovery
6%
MSW Generation& Management
347.0mm Tons
Landfill & Waste-to-Energy
73%
Source: EREF
ICI 57%
Residential 43%
347.0mm Tons
Residential & ICI MSW Generation
Source: Moore & Assoc.
and KCI
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& Associates
ICI = 234.8ons
77%(115.9mm Tons)
69%(136.8mm Tons)
4% (8.0mm Tons)
27%(52.7mm Tons)
Landfill & Waste-to-
Energy
ICI MSW (197.6mm Tons)
Residential MSW (149.5mm Tons)
9% (13.3mm Tons)Organics Recovery
Materials Recovery
14%
(20.3mm Tons)
Summary of Our Analysis
ICI 57%
Resi43%
• ICI accounts for 57% of all MSW generated, but 72% of materials recovery.• The recycling rate within the ICI segment is nearly double the residential rate. • Note: numbers may not add due to rounding.
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& Associates
Long Term Average Annual US OCC Price
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& Associates
OCC - Export Prices from the US, UK & Germany
Notes: USD per metric ton; UK Pound to USD – 1.25; German Euro to USD – 1.04
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& Associates
Mixed Paper – Export Prices from the US and UK
Notes: USD per metric ton; UK Pound to USD – 1.25
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& Associates
Long Term US Average Mixed Paper Price as a Percentage of OCC Price
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& Associates
Longer Term US Average Domestic FOB ONP Price
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Longer Term US Average Mixed Paper Price as a Percentage of ONP Price
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& Associates
Chinese Domestic Collections and Net Imports of Recovered Paper
Million Tonnes
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& Associates
Thank You for Your Attention