Date: February 11, 2021
Source: News Room
The chaotic market for Old Corrugated Containers (OCC) is emblematic of the recycling industry over the last few years. Following China's "National Sword" policy, enacted in January 2018 and similar restrictions in other countries including Indonesia, India and others, the price paid for OCC declined sharply, falling to its lowest level in twenty years by the end of 2019.
The COVID-19 pandemic then reversed the trend as the slowdown in commercial activity disrupted supply while demand for OCC surged along with e-commerce, panic buying of grocery store products, food delivery, etc. to accommodate stay-at-home workers. Consequently, prices paid for recovered OCC, which rose sharply in the spring of 2020, began to settle down as states began loosening restrictions around May and as paper mills began to catch up.
Demand from China picked up, as paper companies there seized the opportunity to import U.S. OCC before China's import restrictions took effect. But even when exports to China fell to their lowest volumes on record in December 2020, OCC prices remained stable - in part, because U.S. paper mills are now operating at higher capacity.
South and Southeast Asia had lower demand earlier in the year, largely because of logistics: Container shortages in the shipping industry and local collection disruptions because of COVID-19 meant some mills in South and Southeast Asia slowed or idled due to a lack of feedstock.
But export figures show several countries steadily increased imports as the year progressed. In July 2020, India brought in 42,000 short tons of U.S. OCC; in December, the country imported 170,000 short tons. Vietnam's monthly OCC imports increased from 92,000 short tons in July to 208,000 short tons in December.
Despite China's ban on scrap imports, the country is likely to continue its outsized influence of the U.S. market as OCC going to India and Southeast Asia can ultimately enter China in pulp form.