OCC Expectations From Big Mills For The Coming Year

Written by Jordan Biberkraut, Operations Manager

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China is planning to ban all imports of used corrugated cardboard containers by 2020, and it’s actually a good thing for North American paper and pulp mills.

Outpacing any other nation by a long shot, China is the largest importer of North American old corrugated containers (OCC) materials. In 2017, China imported 25 million tons of recovered paper from the United States.

Essentially, China acts as the primary recycler of OCC materials for the United States and North America as a whole. The U.S., Canada, and Mexico send off OCC materials to China and it’s all recycled there.

As the largest importer of OCC materials, China has quite a bit of power when it comes to pricing of OCC materials, to the point of effectively controlling the market.

In fact, the volatile pricing of OCC materials over the last few years is directly linked back to China. The beginning of 2017 saw record-breaking prices for OCC materials, setting an American national average of $133-143/ton, because of increased export prices.

Fortunately, the coming months and years are looking far brighter for domestic OCC material prices. Industry professionals speaking to PPI Pulp & Paper Week predict an average OCC price of about $90-$100/ton, a price-point that hasn’t been seen since 2016.

But wait, if China is slowing down imports of OCC materials and getting ready for a full-on ban, how will that improve the market?

Well, back in the last quarter of 2016, prices shot up because there were less OCC materials being produced in North America whereas China actually increased its production rates.

China is still going to focus on recovering OCC materials internally, analysts predict. But the upsurge of paper products produced in North America, largely thanks to an increase in e-commerce sales, will stabilize prices.

As China moves to being more independent when it comes to OCC materials, so will North America.

This is being described as a “market shift” by mill system leaders, one that “brings opportunity.”

It also means more stable pricing in North America for OCC materials to about a $100/ton average, industry experts predict.

Focusing on recycling and repurposing OCC materials in the coming months and years won’t be too difficult, either, with Rebox in the mix.

Pulp and paper mills can rely on Rebox to pay for their OCC materials, pick up them up directly, and recycle them domestically.

What’s better, Rebox pays all of its partners a fixed rate for OCC materials. Regardless of how the market fluctuates, Rebox partners won’t have to deal with plummeting or skyrocketing prices, allowing for far more stable financial planning.

China is moving to become self-sufficient when it comes to recycling and repurposing OCC materials. Shouldn’t North America do the same?

Thankfully, whereas China needs to figure out where it’s going to get high-quality OCC materials, North America already has a functional system in place: Rebox.