Global Outlook for Recovered Paper, 1995 Global Fiber Supply Symposium Proceedings

Mary Cesar

Jaakko Pöyry Consulting, Inc.

Paper recycling has changed considerably since the beginning of the decade. Market demand concerns dominated recycling in the late 80s and early 90s and all levels of government tried to encourage recycling through mandatory collection. The effect, in many areas, was a glut of recovered paper. Resulting low prices encouraged new investments in manufacturing capacity by a variety of players, including several developers from outside the paper industry.

The availability of project financing caused many more projects to be realized than were anticipated in 1990, particularly for OCC and OWP consuming mills. The dramatic price increases witnessed in 1994 and 1995 are testament to the changes taking place in the supply/demand balance. Put simply, demand is growing faster than supply, and high prices are the result.

The global nature of fiber compounds the problem. Worldwide consumption of recovered paper is growing faster than virgin fiber, and the U.S. is the main source of supply. In the future, domestic mills will compete directly with exports for limited supplies. High prices are likely to force grade substitution, and the ability to pay for fiber will determine the ultimate users.

As mills begin to recognize the inherent differences between virgin and recovered fiber, they will plan different strategies. The most successful mills will be those with specific strategies in place for the procurement of recovered paper.