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Thin is in: from limited profit margins to narrower trading ranges, paper producers and recyclers are working in tighter quarters.

The collection of newspapers and corrugated cor·ru·gate  
v. cor·ru·gat·ed, cor·ru·gat·ing, cor·ru·gates
To shape into folds or parallel and alternating ridges and grooves.

 boxes is often the first thing people think of when recycling comes to mind, but unfortunately this popularity contest does not necessarily result in profits.

Although recovered fiber makes up a healthy percentage by weight of curbside curb·side  
1. The side of a pavement or street that is bordered by a curb.

2. A sidewalk.

Located, operating, or occurring at or along the sidewalk or curb:
, office and industrial recycling programs, secondary fiber supplies a paper industry that is competing against new forms of competition on all fronts.

This decade, the booming economies of China, India and a handful of other nations are helping to keep secondary fiber in demand, helping to offset relatively stagnant newsprint newsprint

low grade paper used for newspapers. Old newspapers are fed to cattle as an alternative roughage and may occasionally be ingested by dogs. Significant amounts of lead are accumulated in tissues; no cases of poisoning have been recorded in cattle, though it has been
 and boxboard box·board  
A firm cardboard used for making boxes.
 industries in North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. .

Additionally, improvements in information technology have made buyers of recovered fiber savvier about their purchases, as well as being willing to seek out fiber from markets both near and far.

TRADE GAP, Recyclers of scrap paper scrap paper npedazos mpl de papel

scrap paper npapier m brouillon

scrap paper scrap n
 have seen a variety of noteworthy changes this decade, with the escalating demand from China probably being the most predominant and widely reported upon.

The increased Asian demand has a direct correlation Noun 1. direct correlation - a correlation in which large values of one variable are associated with large values of the other and small with small; the correlation coefficient is between 0 and +1
positive correlation
 with stagnant or declining North American North American

named after North America.

North American blastomycosis
see North American blastomycosis.

North American cattle tick
see boophilusannulatus.
 demand, particularly on the boxboard side, where boxes are being made in China to ship goods that used to be made and boxed in Adj. 1. boxed in - enclosed in or as if in a box; "boxed cigars"; "a confining boxed-in space"; "felt boxed in by the traffic"
boxed-in, boxed

enclosed - closed in or surrounded or included within; "an enclosed porch"; "an enclosed yard"; "the enclosed check
 North America.

From an operations and trading viewpoint, for many recyclers this has meant making new connections with East Asian companies and learning the ins and outs ins and outs  
1. The intricate details of a situation, decision, or process.

2. The windings of a road or path.
 of trans-oceanic shipping and inspections procedures.

The good news is that such shipping can still be done profitably for recyclers, as indicated by the top-tier position scrap paper enjoys as a containerized con·tain·er·ize con·tain·er·ized, con·tain·er·iz·ing, con·tain·er·iz·es
1. To package (cargo) in large standardized containers for efficient shipping and handling.

 shipping product moving from North America to Asia.

However, the export bonanza can yield questions as well as answers. To fill orders placed by large-scale Asian consumers, recyclers are under pressure to recover additional tons.

According to according to
1. As stated or indicated by; on the authority of: according to historians.

2. In keeping with: according to instructions.

 information presented by Moore & Associates, Atlanta, at the 2006 Paper Recycling Paper recycling is the process of recovering waste paper and remaking it into new paper products. There are three categories of paper that can be used as feedstocks for making recycled paper: mill broke, pre-consumer waste, and post-consumer waste.  Conference, these additional tons are becoming increasingly more costly to harvest.

In a workshop presented in coordination with the conference, Bill Moore and Peter Engel For executive producer, see Peter Engel (television producer)

Peter Engel (born 1959) is a science writer, graphic designer, and architect, perhaps best known as one of the foremost American origami artists and theorists.
 indicated that in the first quarter of this year, the estimated cost of recovering a ton of old corrugated containers (OCC OCC

See: Options Clearing Corporation


See Options Clearing Corporation (OCC).
) in North America had fallen behind the mill price for the secondary fiber grade. Such a situation cannot endure in the long run, Moore noted.

If North American recyclers hope to see prices bid up for secondary fiber commodities, that initiative will probably come from overseas. Newsprint production is declining in North America, as newspaper publishers strive to keep readers and, at the same time, downsize Downsize

Reducing the size of a company by eliminating workers and/or divisions within the company.

When a company downsizes, it is attempting to find ways to improve efficiency and increase profitability.

It is sometimes referred to as trimming the fat.
 their sheet thickness and page sizes on a regular basis.

Moore noted that while newsprint mill operating rates Operating rate

The percentage of total production capacity of a company, industry, or country that is being used.

operating rate

The portion of capacity at which a business operates.
 in North America have been easing their way back up since a 2002 trough, this is largely because of shut mills being eliminated from the potential capacity roster rather than any increases in production.

On the paper recovery side, the high cost of collection can be attributed in part to the increased fuel costs being paid to keep trucks out on the road, and "getting to the next ton," which Moore remarked is always costlier.

Those high collection costs are making for trickier margins for many recyclers. In a global market where mill buyers consider currency fluctuations and regional price differences when making spot purchases, passing on higher gasoline or diesel fuel costs to a buyer can prove difficult.

GRADING ON A CURVE. For recyclers, one way to seek a better margin is to pay attention to secondary fiber grades that are trading at or above historic averages relative to other grades.

Recently, the mixed paper grade has been one such grade that has gained the attention of recyclers. As Moore stated about the grade at his workshop, "Every dog has its day."

Historically, the dog metaphor may be accurate for the mixed paper grade, but this decade the grade has gained in value steadily compared to the benchmark old corrugated containers (OCC) grade.

Information collected and complied by Moore & Associates shows mixed paper trading Paper trading (sometimes also called "virtual trading") is a simulated trading process in which would-be investors can 'practice' investing without committing real money.  at less than 30 percent of the value of OCC less than 10 years ago, in 1998. The grade has subsequently gained ground in per-ton pricing relative to OCC, hitting a 70 percent value in 2004 and remaining above 60 percent since that time.

The willingness of Chinese mills to buy this grade and then undertake hand sorting with deep and affordable local labor pools is seen as the biggest reason why the mixed paper grade has thrived this decade.

For North American recyclers this has been a double dose of good news. While the increased sale price of mixed paper helps out their top line income, their relative lack of sorting and processing costs to produce the grade can also help overall bottom line results.

FLATTER WORLD. A trend that may be welcome by some recyclers is one toward less volatility in the pricing of secondary fiber.

Although there were some major per-ton price spikes and dips in both 2000 and 2002, the remainder of the decade has witnessed comparatively flat pricing movement, characterized by drifts rather than spikes.

Perhaps more remarkably, according to what Moore & Associates has tracked, is the harmony of regional and even global price movements. "That wasn't the case 10 or 15 years ago," Moore reminded attendees of his workshop.

Although regional price differences still exist, according to published pricing surveys, prices generally move in concert and, most commonly, per-ton price differences are commonly in the $3 to $11 per ton range.

The unified nature and open communication of secondary fiber pricing was also noted by Paper Recycling Conference keynote panelist pan·el·ist  
A member of a panel.

Noun 1. panelist - a member of a panel

panel - a group of people gathered for a special purpose as to plan or discuss an issue or judge a contest etc
 Steve Voorhees of Rock-Tenn Co., Norcross, Ga., who cited the fact that prices are "readily communicated on East and West Coasts" as a factor in the workability of export markets.

Price transparency Price Transparency

The accessibility of information on the order flow for a particular stock, allowing knowledge of the quantities of stock being offered and the bids at the various price levels. Also referred to as "market depth.
 can reduce the risk in some transactions, but it can also tend to "reduce unit margins for basic transactions," according to Voorhees, making for potentially thinner profits for recyclers.

To see some hope in the smaller or flatter world that they now operate in, recyclers can take comfort in the continued boom in China and what may be just the beginning of a boom in India, the world's only other nation with more than 1 billion people.

The export surge to China is well underway, with recovered fiber shipments from the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area.  to China having zoomed from 2 million tons in 2000 to more than 7.5 million last year.

But in that same time span, shipments of scrap paper from the United States to India have remained relatively flat at around 500,000 tons per year. "I don't think we've really seen India take off yet," said Kevin Duncombe of Western Pacific Pulp and Paper, Downey, Calif, in an export-related session at the 2006 Paper Recycling Conference.

The potential of India's growth has attracted the attention of many segments of the economy, with the technology and back offices service sectors being primary examples.

In a presentation at this year's Institute of Scrap Recycling Industries Inc. (ISRI ISRI Institute of Scrap Recycling Industries
ISRI Institute for Software Research, International (Carnegie Mellon University)
ISRI Information Science Research Institute
ISRI Intelligent Systems Research Institute
) Convention & Exhibition, Weyerhaeuser's Pete Grogan noted that India's more educated populace is reading more newspapers, magazines and is using more office paper as its economy develops.

Although the nation's demand for basic materials and secondary commodities has not soared to the extent that Chinas has, ISRI is asking its members to consider the possibility.

The organization has announced a trade mission to India that will be taking place in January of 2007. Unlike a similar event in 2006 that focused on the paper industry in China, the tour of India will concentrate on ferrous ferrous (fĕr`əs), iron in the +2 valence state.

Containing or having to do with iron. The difference between ferrous and ferric is the number of valence electrons they contain (ferrous contains two and ferric contains three), which
 and nonferrous non·fer·rous  
1. Not composed of or containing iron.

2. Of or relating to metals other than iron.



But should the Indian economy boom on the metals front, than in all likelihood a demand for paper products will be a part of the growth in that nation's economy.

At a presentation at last year's European Paper Recycling Conference, R.S. Baxi of J & H Sales International Ltd., London, said there are about 600 mills operating in India with a growing demand for secondary fiber that is expected to reach 9.3 million metric tons by 2015.

Baxi placed India along with China and other Asian nations Noun 1. Asian nation - any one of the nations occupying the Asian continent
Asian country

country, land, state - the territory occupied by a nation; "he returned to the land of his birth"; "he visited several European countries"
 among those that have experienced "continual growth over the last 10 years" in their scrap paper consumption.

That growing consumption "is being satisfied with imports," Baxi declared, as forestry is limited.

With India already being a leader in information technology, what paper recyclers can probably expect is a buying segment that will be well connected with the existing information grid that is part of a smaller world for the paper and paper recycling industries.


As the manufacturing sector booms in China, record amounts of recovered fiber are being exported there to help produce the nation's hunger for boxboard and other paper.

A presentation by Ranjit Baxi of J&H Sales International Ltd., London, at the Paper Division meeting of the Spring 2006 Bureau of International Recycling (BIR BIR British Institute of Radiology
BIR Bureau of Internal Revenue
BIR Bureau of International Recycling
BIR Baculovirus IAP Repeat
BIR Biomedical Imaging Resource
BIR Bureau of Intelligence and Research (US State Department) 
) Convention detailed the jostling for Chinese scrap paper market share that is taking place.

In 2005, Western European shippers picked up an additional 5 percent of market share at the expense of North American exporters. But North America remained the No. 1 exporter of recovered fiber to China, with nearly 7.5 million metric tons representing 44 percent of the market.

But last year, Europe sent nearly 5 million metric tons, for a 27 percent share, up significantly compared to the 2.7 million metric tons Europe shipped in 2004. Japan and Hong Kong Hong Kong (hŏng kŏng), Mandarin Xianggang, special administrative region of China, formerly a British crown colony (2005 est. pop. 6,899,000), land area 422 sq mi (1,092 sq km), adjacent to Guangdong prov.  have held steady with a combined 23 percent market share, but the overall growth of Chinese demand still meant that an additional 1 million metric tons flowed from there.

According to figures gathered by Baxi, thus far in 2006 North American shippers have regained some market in what is proving to be yet another record year for paper making in China.


Advance registrations are still being accepted for the 2006 European Paper Recycling Conference, which will be held in Barcelona Sept. 25-26.

The conference, organized by the Recycling Today Media Group, Cleveland, provides recyclers and mill buyers from throughout the world a chance to network, trade and learn about paper industry and recovered fiber market conditions worldwide, with an emphasis on Europe.

The conference features an exhbiit area, where equipment manufacturers and service providers can interact with attendees, and a number of sessions touching on key issues in the recovered fiber industry. Session topics include:

* A keynote session on Europe's place in the recycling universe featuring remarks from Henri Vermeulen of the Smurfit Kappa Group The Smurfit Kappa Group is Europe's leading corrugated packaging company, following the merger of Jefferson Smurfit Group and Kappa Packaging. This merger was finalized by the end of 2005.  and Dominique Maguin of Souiler/Veolia.

* "The Limits and Opportunities of New Supply Sources," featuring speakers from Germany and Spain.

* A roundtable discussion on mill buying featuring recovered fiber buyers from Spain, Sweden and Portugal.

A more detailed schedule as well as additional information and access to registration forms can be found at the conference Web site at

The author is editor of Recycling Today and can be contacted at
Containerized Shipping
Rankings: Exports to China

2004 Container Cargo Units
Received by China


Recovered Paper               524,302
Mixed Metal Scrap             172,092
Cotton                         94,439
Plastic Resins                 77,285
Drugs & Chemicals              75,265
Plastic Scrap                  49,959
Machinery & Parts              41,225
Wood Pulp                      40,804
Lumber                         32,053
Kraft Linerboard               28,417

* Twenty-foot Equivalent Units; Source: Moore & Associates,
U.S. Department of Commerce
COPYRIGHT 2006 G.I.E. Media, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 2006, Gale Group. All rights reserved. Gale Group is a Thomson Corporation Company.

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Title Annotation:COMMODITY FOCUS
Author:Taylor, Brian
Publication:Recycling Today
Geographic Code:1USA
Date:Aug 1, 2006
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