Massive Supply Shortfalls Drive OCC Prices

SEATTLE (Scrap Monster): The sharp decline in OCC collection from commercial establishments and residential collection programs due to coronavirus pandemic-triggered shutdowns has led to notable surge in prices.

According to RISI, the U.S. recovered fiber market remained more or less resilient from pandemic impacts until mid-March. However, market conditions reported rapid change over the past two months. The OCC prices have surged substantially from levels of $73 per ton in April to as high as $107 per ton in May.

The U.S. recovered paper supply was hit very badly following lockdowns imposed by several states across the U.S. The supply of OCC and sorted office paper reported sharp declines, mainly due to shutdown of major paper users including schools, offices and stores. The OCC in the residential stream too remained muted. Overall, the U.S. recovered paper collection decline by around 30%-50% in second half of March and April. Trade sources indicated that some paper mills were seen replacing OCC with mixed paper.

Going forward, the projected decline in paper packaging demand from its current peak would lead to weakened recovered fiber demand. The step-by-step reopening of businesses will alleviate recovered fiber shortages.

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