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Mill buyers from across North America on the closing panel of the Paper and Plastics Recycling Conference in Chicago on October 20 shared their insights into the challenges of today’s reclaimed paper market and the the impact of their activities since the start of the coronavirus pandemic.

Bill Moore, President of Moore & Associates, moderated the discussion with Johnny Newsome, Director of Global Factory Sourcing and Trade at Sonoco; Stéphane Dubé, vice-president of supply chain at Cascades; Bill Theado, Group Fiber Buying Director at Greif; and Brian Owen, Director of Fiber at Inland Empire Paper Co..

“The best factory buyers are what I call ‘supply developers,’ which is a real skill to be able to work in the market to get new tons,” Moore said in his opening remarks. “The cheapest [recycled] fiber mills in North America, people are working, regardless of the price cycle, they are working on supply development.

He added: “It takes time and there is a real lag between getting the job done and seeing results frequently. It is easier in weak markets to expand supply and the gain is like rent – once you get the right supply in the right place and at the right freight [rate] and good quality and you get that locked in, every year you get those savings on quality, cost and freight.

Much of the conversation focused on the current market for legacy corrugated containers (OCCs), as prices for bulk grades continue to fall in the United States, as well as tight supply on the office paper side. sorted, both of which had an impact on every panelist.

Newsome said Sonoco handles about 2.6 million tonnes per year across all of its facilities, 70% of which is OCC. “Our recycling division ensures the security of fiber supply for our 13 paper mills with 20 paper machines [that] produce 1.5 million tonnes of cardboard per year,” he said.

According to Dube, Waterfalls controls approximately 2 million tonnes per year of brown grade fibers and 200,000 tonnes per year of tissue grades. He said the company’s fabrics division, in particular, has faced challenges due to the scarcity of fabric-grade fibers in the market. “The white grades are very expensive and are gradually decreasing like snow under the sun,” he said.

Inland Empire Paper Co. uses mostly virgin fiber as a raw material – around 75% – but Owen said the company is always looking for ways to innovate, especially as a producer of newsprint. The company bought its own freight line, including 22 highway trucks, and Owen said she decided to visit its pressrooms and help set up balers. “In turn, when we show up and bring the finished product, we’ll then reload the trailer with recycled paper and take it home,” he said.

Although he primarily consumes virgin fiber, Owen emphasized the importance of recycled paper to Inland’s newsprint operation. He said the wood fiber alone doesn’t give the finished product the strength it needs, adding: “If you get that wet, it’s going to deteriorate pretty quickly. That’s… why we need recycled fibers, because there are products, high quality products, that we need a little more strength.

“In our mix, even though we’re making normal newsprint, we’re going to add 20 [percent] 30 percent on the recycled side to strengthen our sheets. That’s what helped us make a newspaper a little better than most traditional newspapers.

Theado discussed in several ways Greif addresses current supply and demand challenges, including trading with other factory groups to meet needs.

“The market is the market,” he said. “All the mills, [we] have to pay the market price. We talk to our partners, whether they are independent recyclers or other groups of factories.

“Freight is the key cost to control where there is no other controllable real. And, yes, transportation costs increase, but if we have tons near Johnny’s factories, we will exchange tons; We’ll sell the tons to Johnny and we’ll buy a few tons from him. We have a lot of partners across the country and we need them because our factories consume about 1.8 million tonnes per year. Our fiber basket in our group is about 3.5 million tons.

With many North American factories reporting being full and unable to move tons, one concern raised by the panel was safety and measures taken to protect those working in facilities with high inventory levels. It also creates more pressure to move supply if security measures hamper operations.

“Obviously the market has changed,” Theado said. “Inventory is everywhere, whether it’s a [recycling] factory or paper mill.

He said Greif was not allowing anyone into the ball parks because of the stacking and the company had been challenged to reduce inventory “because it’s just stacked too high everywhere”.

“We’re at max level right now with our paper mills,” Theado said. “We really, really have to watch how we stack the pyramid, and that’s hard.”

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Dube said Cascades implemented a security alarm to address similar inventory and security issues. As soon as inventory reaches a certain level, people within the company are notified and the priority for that facility is to release the inventory. “It happened over the last few months where we had to either slow down production or shut it down until we could move the loads,” he said.

On the plant side, Cascades also has a security protocol when stocks reach maximum levels.

“We have a strict ball stacking process,” Dube said. “We also put a [minimum] and one [maximum] in the factory, so our guys have to manage inventory. … It’s almost a signed contract with the plant manager that the plant’s purchasing groups will not exceed this maximum capacity. We’ll divert the loads, we’ll do something else, or they’ll push the truck away. …That’s what keeps us in the safe zone in terms of managing that inventory.

When it comes to the evolution of the recovered paper market since the start of the pandemic, all panelists agreed that one of the biggest changes has been the deterioration and rebuilding of relationships with the industry.

“When COVID started, there was an immediate drop in business around the world…and one of the reasons Greif’s recycling handles more tonnes than our plants consume is to have this hedge or that buffer and attract those tons,” Theado said. “But we also had commitments to commercial factories, so there was a lot of damage to suppliers and customers at the start of COVID. It took time to rebuild as supplies came back and we had to hug a lot of people to restore relationships.

Owen agreed, saying, “Zoom negotiations – that was something that was quite foreign to most buyers. Any time you talk about money, you talk about it across the table from someone, and so it was a big difference to rely on technology.

While supply has changed dramatically among different grades of recovered paper, Dube said demand has also changed since the pandemic began. He noted that Cascades’ containerboard division was “super, super oversold” as e-commerce soared during the COVID-19 shutdown and the company had to turn away customers on the containerboard side. his company. “But guess what’s happened now with the crisis we’re in?” he said. “That’s why the price is going down because we’re taking downtime. We’re not as busy as we used to be. … [There were] a lot of changes in demand for us that created a huge impact at the end of the day.

Newsome added: “Now I think what we’re seeing is a backlash from the artificial build-up of a pandemic, which just put us in a very tough market today.”