Attached is your PO for deliveries of recyclables during September 2020.
Again, this month, the overall market for recyclables improved compared to the previous month. This improvement is due to pricing increases in all fiber and metal grades. A couple of plastic grades also increased but most remained flat.
This month, increase demand for all fiber grades drove much of the market improvement. OCC demand is high as the container board continues to be strong in both domestic and global markets. On the domestic side, COVID-19 continues to drive high demands with consumers shopping online. We believe the COVID-19 related shift in demand will continue even after people become more mobile.
Most domestic paper mills increased the prices for their recycled paperboard used to make corrugated shipping containers. In turn, they were willing to pay more for OCC. The domestic mills are taking every ton that we can produce. One major company reported that their current backlog of orders was 8.5% higher than a year ago and that year-to-date shipments were 2% higher compared to the same time last year. They stated the increase in shipments was partly driven by COVID-19 related strength in food packaging, including takeout packaging.
The export market pricing for non-OCC fiber grades improved more than the domestic market. There are two main reasons for this increase. First, China released a large order for recycled fiber. This is one of the last big purchases before China fully implements its total ban on imported recycled paper at the end of this year. Second, several Asian countries are buying mixed paper and other fiber grades. They are using this material to supplement the shortage of recycled material in their own countries and to convert this material into pulp sub for China’s box production.
We expect this export demand for fiber to fall off some by late October or early November. However, as stated in last month’s market letter, several paper companies have announced plans to build North American containerboard mills. This increase in domestic capacity may help ease the pain from reduced export demand.
Despite this encouraging news about strong demand and rising prices, we have to mention the potential impact of wildfires in both Washington and Oregon. First and foremost, we urge you to be safe out there and do not take unnecessary risks to deliver material. Your safety is more important than delaying delivers a few days. Secondly, especially in our Clackamas plant, the fires have the potential to impact our operations. We will notify you immediately if the fires cause temporary closures at either facility.
In the midst of these challenging times, we will be constantly watching these developments and will always strive to obtain the best pricing available. It is our pleasure to work with you to recycle material and to protect our environment. We appreciate you and thank you for your business.