Wednesday, November 12, 2008

Awash in Paper

Recycled paper is starting to pile up around the world, and in some cases people are paying to have paper taken off their hands.

Scrap dealers in much of California are stockpiling paper gathered from curbside collection because they can't find a market for it, reports the Sacramento Bee. The British government may use abandoned military bases to store waste paper, according to The Times of London. The Kanawha County Solid Waste Authority in West Virginia closed its satellite recycling centers a few days ago.

Paper companies seem to have been slow to react to the global collapse of the market for recycled papers. Just yesterday, an environmental executive for a major paper manufacturer in the U.S. stated in a public presentation that there was plenty of demand for recycled paper so there was no sense up-cycling low-grade papers like newsprint to make high-quality coated paper. (See our discussions of up-cycling in "I'm an environmental idiot!" and "Talking to the Idiot".)

The price of mixed paper for export from the New York area to Asia dropped to $10 to $15 per ton in November, down from $115-120 just a year ago, Pulp & Paper Week recently reported. Much of the drop has occurred in a matter of weeks, as Chinese paper mills that were gobbling up waste paper from around the world suddenly stopped buying. The Chinese mills are idling machines because of weak paper markets and in many cases find themselves with too much waste paper. Some paper is backing up at North American ports because the Chinese companies that were supposed to buy it cannot arrange letters of credit for the shipments.

Hardest hit by the global collapse in the waste-paper market are places like California and the United Kingdom that grew accustomed to exporting their recycled paper at high prices rather than using most of it locally. Those high prices drove a 100%-recycled newsprint mill in Pomona, CA out of business 18 months ago. Once a big user like that closes down, it's hard to restart it to take advantage of lower prices for recycled fiber.

North American paper companies may face growing pressure from customers to use some of the recycled fiber rather than having it stockpiled -- or worse, landfilled. And there may be opportunities for paper mills to get their hands on cheap fiber. But it's not clear whether North America has the infrastructure (such as deinking operations) to process all of its own recycled paper.


Travis Estell said...

What about giving paper producers some sort of incentive to increase the percentage of recycled paper in their products?

D. Eadward Tree said...

Gerard at paperthought ( has some interesting comments on "Awash in Paper," noting the short-sightedness of relying on other countries to use our recycled paper.

D. Eadward Tree said...

John Harrington writes in the latest issue of The New Single Copy ( that "within the last month, the market for magazine waste paper, which has been for some time a key source of income for wholesalers, has virtually collapsed. Most waste paper was being sold through brokers to the China market, where it was used to manufacture construction materials. In a constricting world economy, there is not a lot of construction going on. Some wholesalers thought they had a level of protection on this issue through price-protection contracts they had with paper brokers. Sorry, however, last week, one of the largest brokers notified its customers it was exercising a force majeure clause in its contracts and cancelling them."