Strong start.

The paper market is showing signs of strength as the industry proceeds into the first quarter of 2007.

The period of time that bridged 2006 and 2007 saw little change in the market. Prices of old corrugated containers (OCC) remained stable, thanks to the tremendous generation brought on by the holiday season. The story for old newspapers (ONP) was similar.

However, the last 30 days have seen prices moving up. Many sources expected to see an increase in the price of OCC, and they were not disappointed. "It was obvious that there was pretty good interest in OCC export," says one Midwestern recycler. "Things were getting strong and it's being reflected in [published prices]."

Sources report a posted price increase of $10 per ton for OCC. A California recycler reports price increases of up to $25 recently on the West Coast.

Mixed paper has also seen higher prices in the last month, as have high grades like sorted office paper (SOP) and pulp substitutes. "Everything's going up fairly significantly," says one California recycler.

While ONP looks relatively strong on the West Coast, some sources in the Midwest report signs of a backslide for the grade. While the grade seems to be moving steadily enough in the Midwest, sources expect the market to slip some in light of the continued downslide in housing starts. Statistics released by the U.S. Census Bureau in January report a 0.2 percent decrease in total construction spending. This is driven by a 1.6 percent decrease in residential construction spending in November and a 1.7 percent drop in October. A slow housing market spells trouble for insulators, which are a large consumer of ONE

The early part of the year is typically slow for generation, particularly compared to the boom that is usually experienced during the holiday season, with tons of packaging materials winding up back in the recovered materials stream and newspapers fat with advertising. This year, however, while generation has slowed somewhat, it is still stronger than usual. "I've always felt the first quarter the market stayed down, but things are looking pretty good right now," says a recycler based in Ohio.

Sources report some mill closures and scheduled downtime in the Midwest. "It's causing some grief, but not disrupting things too much," says an Ohio-based recycler. Robust demand on the export front has contributed strength to the overall market. In years past, demand from China has been curtailed by the approach of the Chinese New Year, which is Feb. 18. However, so far a slowdown hasn't occured. "This year hasn't reflected that," a California recycler says. "Strong buying has continued--it's a sign of a strong market."

(Additional news about paper recycling markets is available at www.RecyclingToday.com.)