Demand for waste paper and scrap metal continues

By: | at 07:00 PM | Channel(s): International Trade  

Unpalatable as it might be to anxious trade analysts, waste paper and scrap metal will continue to be the biggest export product by container, with China gobbling most of it up. Figures compiled by the Los Angeles Economic Development Corporation show that 85 percent of the $2 billion in pulp and paper exports to the world through the Los Angeles area (including Long Beach) in 2008 went to Asia-Oceania.
For paper and metal exporter Newport CH International, the continuing strong demand is good news. “We are sending out 5000 – 6000 TEUs of scrap paper a month,” says company marketing executive Jimmy Yang. About 60 percent of the volume goes out through the West Coast.
Yang says he is “cautiously optimistic” for prospects this year and expects volumes to be about the same. “Newspaper is not in such great demand because of the switch to online content – people are reading less – and there is not as much recycling going on.”
After paper prices headed for the basement in 2008, the market has recovered its former glory. The landed price in China is $250 a ton for corrugated boxes and $195 - $200 a tonne for newspaper.
Offsetting this is the rate rise imposed by the TransPacific Stabilization Agreement. “Costs are rising steeply,” says Yang, “at least 100 percent over the past year on the West Coast; and it’s $1600 - $1700 a box at places like Seattle/Tacoma.”
Newport CH is also facing a logistical challenge in finding enough containers and booking space on vessels. “Because of the economy’s slowdown, the lines have been cutting back and there are fewer boxes.”
The company has been doing its own cutting back by reducing its scrap metal business. “It’s not all that profitable for us any more, and we are only shipping out a maximum of about 700 - 800 boxes a month,” says Yang.
Steady growth is also forecast by the biggest waste paper exporter, America Chung Nam. Although the company declines to forecast what the volumes will be this year, it is estimated that at least 250,000 TEUs will be sent out, many to its own Nine Dragons mill but some to other users. “We expect this to be a normal year with some increase in demand,” said a spokesman. “Prices have been rising in the last few months and could be due for a correction soon.”
The Chinese economy is seen as doing well. Recycling rates are increasing significantly in the country, but the mills still want U.S. OCC (Old Corrugated Containers) since the fiber is of better quality, says the company.
As with Newport CH, the TSA rate increases are a bother for Chung Nam, but it is taking a phlegmatic approach. “The increases in the last few months have made business more challenging. We will continue to work with our carriers to work out arrangements that are beneficial to both companies.”

Waste Paper Total Value by Country

American Journal of Transportation