Speakers in The Future of Mixed Paper session at the Paper & Plastics Recycling Conference in Chicago, from left to right, Greg Rudder, Johnny Newsome, Bob Cappadona and Pieter Eenkema van Dijk. Moderator Linda Leone stands at right.
The Chinese government recently has taken noteworthy actions that are significantly disrupting recovered paper markets in the United States, said several speakers in a few sessions at the 18th annual Paper & Plastics Recycling Conference, held in Chicago Oct. 11-13, 2017.
As the event’s name indicates, the Paper & Plastics Recycling Conference covered different aspects of the recovered fiber sector in sessions titled: The Future of Mixed Paper, The Changing Paper Industry and Indexes and Trading Platforms.
Speakers discussed the steps the Institute of Scrap Recycling Industries (ISRI), Washington, has taken to address China’s scrap import ban on mixed paper as well as moves material recovery facility (MRF) operators have made, from slowing down lines to adding sorters, to address quality issues. Cleaning up quality is a must, everyone noted.
In the Indexes and Trading Platforms session, Greg Rudder, editor of PPI Pulp & Paper Week (P&PW) for the Boston-based research firm RISI, explained the firm’s methodology behind its pricing. RISI’s assessment of the open market price for purchase by mills derives from prices based on negotiations. P&PW reports 160 prices each month, including 117 domestic mill prices, 37 export prices to China/Asia and six export prices to Mexico.
Rudder also shared the history of mixed paper shipped from the U.S. to China. Citing information from the Washington-based American Forest & Paper Association (AF&PA), Rudder said regarding short tons of mixed paper shipped to China, 2016 panned out to be the lowest total since 2002. In 2016, the U.S. sold 2.37 million short tons of mixed paper to China, a drop from the 3.07 million short tons in 2015 and a fall from the height of 5.63 million short tons shipped in 2009. (The total in 2002 amounted to 1.86 million short tons.)
In April 2017, mills in China reported that imported mixed paper contained 20 percent contaminants, on average, Rudder said.
Linda Leone, regional vice president of recycling for the Northeast U.S. and eastern Canada at WestRock Co., Norcross, Georgia, acknowledged that change needs to happen. Leone served as moderator in the Paper Stock Industries (PSI) Chapter of ISRI session, The Future of Mixed Paper. Speakers in that session included Johnny Newsome, director, global mill supply and trade sales, at Sonoco Recycling; Bob Cappadona, vice president of Casella Recycling; Pieter Eenkema van Dijk, CEO of Van Dyk Recycling Solutions, Stamford, Connecticut; and RISI’s Rudder.
Leone said, “While the future of mixed paper is unclear as it relates to China, we know it needs to evolve.”
Casella’s Cappadona said contaminants in incoming loads at MRFs are a safety and time issue. He said more needs to be done to ensure cleaner incoming streams of recyclables.
“I don’t think there’s any doubt from an operator’s perspective that we’re going to have to get better,” Cappadona said. He referenced The Tortoise and The Hare fable when he said, “The turtle wins the race; it’s OK to slow down [the line].”
He addressed China’s 0.3 percent limit on contaminants, saying he does not think it is achievable. (The current limit has been 1.5 percent.) Aug. 24, China’s Ministry of Environmental Protection (MEP) released newly drafted limits on prohibitive materials in scrap shipments. The MEP draft proposes tightening the thresholds for “carried waste” (contaminants and prohibitives) to 0.3 percent for all scrap materials.
“It’s just not going to happen,” Cappadona said of the 0.3 percent limit. “Additional labor will help but I don’t believe it will be the solution.”
Cappadona suggested screening or optical equipment will be the answer to cleaning up quality at MRFs. But it will come at a cost. “It could cost the industry millions of dollars related to retrofits,” he said. “0.3 percent is not attainable.”
From an equipment perspective, Van Dyk Recycling Solutions President van Dijk said it is possible to make cleaner mixed paper with better equipment.
“It’s not easy to be in mixed paper when it has one value on Monday” and is a totally different value on Friday, van Dijk said.
“How can you clean up your mixed paper? Put optical quality controls on mixed paper lines,” van Dijk suggested. He predicted optical sorters will be the future for single-stream MRFs seeking better quality on the backend.
Sonoco’s Newsome offered some light in the darkness of mixed paper’s outlook. He said MRFs will improve their sorting capabilities, and mixed paper is not going away as it “will always be part of the residential program.” He projected new global capacity for this grade will grow 2.2. percent.
In addition, as China tightens its restrictions, Newsome said mixed will be exported to other countries where capacity is increasing.
Rudder said Vietnam and India are interested. Rudder noted that one-third of the mixed paper shipped out of the U.S. goes to countries besides China.
Newsome said, “Demand for recovered paper will grow at a higher rate than collection.”
He added, “The mixed paper situation is a short-term issue with a long-term solution.”
Beyond exports, Newsome said domestic mills also will run mixed at slower speeds. However, the industry should not have to absorb the costs, he said.
“I see the mills would pay more for products to cover line speeds and new investments,” Newsome said.
RISI’s Rudder said three of the largest containerboard facilities in the U.S. are considering using more mixed paper in their recipes.
In the Indexes and Trading Platforms session, the other presenters discussed an online trading platform designed to help buyers and sellers in the secondary fiber sector interact in a potentially more efficient way.
Bill Hanley and Jason Rumsey, both with California-based merQbiz, an e-commerce platform for recovered paper, shared how the online trading tool offers a network of buyers and sellers with direct communication, integrated logistics and invoice management.
No matter the tools paper stock dealers use to get the job done, nearly everyone in the industry is playing the wait-and-see game with China and anticipating how its actions will affect a worldwide industry.
The 2017 Paper & Plastics Recycling Conference was Oct. 11-13 in Chicago at the Chicago Marriott Downtown Magnificent Mile.