OCC Prices Flat in December after Roller Coaster Month
(USA, Dec. 8, 2017) Packaging and forest products analyst Chip Dillon at Vertical Research Partners, reports: “On Dec. 6, we learned from trade publisher RISI that the average price of recyclable old corrugated containers (OCC) across the USA declined by just $1/ton to $105 in early December from $106 in early November, as every single region except for the Southwest did not experience any price change. The price of OCC remained flat in the key Southeast region, at $115/ton. This overall $1/ton average change represented the smallest month-to-month change in the average OCC price in almost two years (since March 2016). The absence of volatility on the reported figure marks a sharp reversal from two months ago, when the average OCC price across the USA plunged by $54/ton (from September to October) — marking the sharpest single-month decline since November 2008.
Roller Coaster Ride in Between. According to the RISI commentary, the flat price level reported in early December vs early November masks a “bumpy ride” in between: In the first half of November, OCC exported to China rose by $30/ton before giving back all the gains in the back-half of the month.
We note that last month (early November) OCC prices in export-driven regions were up by $40-50/ton as Chinese mills re-entered the market during the month of October. That means OCC prices in regions such as Log Angeles likely saw a roughly $80/ton increase in just one and a half months (from their recent trough in early October until mid-November), demonstrating domestically-collected OCC’s price elasticity to Chinese purchases.
Vertical Research Partners is the preeminent independent equity research and consulting firm focused on the Industrials and Materials sectors. To learn more, please visit: www.verticalresearchpartners.com (Source: Vertical Research Partners)