Recovered Paper's Future

Bill Moore

In 15 years, the U.S. paper recovery rate has nearly doubled from approximately 25 percent in 1985 to almost 50 percent. Some grades are highly recovered, for example, old corrugated containers (OCC) has a 70 percent recovery rate.

Yet new paper recovery activities are expected to be relatively dormant without help from the mill sector. This is because the key U.S. players - local governments that affect old newspaper recovery (ONP) and solid waste haulers that collect commercial grades such as retail store OCC and office papers - are not creating new paper recovery efforts.

Currently, the United States' major under-recovered paper grades are old magazines (OMG), residential mixed paper (RMP) and office papers. To wake up these areas in the supply community, a spike in recovery paper pricing is needed.

OMG increases are possible. Several recently launched U.S. and Canadian newsprint recycling projects have been creating a new demand for ONP and OMG. These projects are not expected to add significantly to newsprint capacity. An important factor in North America's recovered paper future will depend on an increase in exports to Asia and the Pacific Rim. This should bring U.S. recovery of ONP to its economic limit in five to seven years.

The U.S. containerboard industry has come to view OCC as a primary pulp source. Although there is limited new machine capacity scheduled for installation during the next five years, small incremental growth in this sector will consume significant quantities of OCC. As with ONP, this will push OCC levels to its limits.

At that point, RMP will become an increasingly important fiber source. The recycle paperboard sector, which includes containerboard, is expected to use it in increased quantities. North American newsprint mills also are interested in using RMP in production.

Mexico's influence on the U.S. market should not be ignored. Its paper industry has an important dependence on recovered fiber from the United States, and the country's per capita income and paper consumption are growing. This places pressure on recovered paper moving south of the U.S. border.

Europe will have less of an effect on the United States. Europe's newsprint industry is expected to use more recycled pulp, but European countries are expected to rely on their domestic supply of mechanical grades of recovered paper. However, this can affect North America as the over-supply of ONP in Europe becomes less available to Asia.

The Pacific Rim economically is almost back on track. Its newsprint consumption will continue to rise, placing mills at capacity and creating a need for new capacity.

Overall, U.S. population growth is expected to be slow. Therefore, new supply for recovery will be limited. Several large grades of recovered paper can be increased (OMG and RMP), but it will take major efforts by both domestic and foreign mills to push potential U.S. recovery any further.