A year-to-year comparison of recovered paper export trends in the U.S. and Asia

The U.S.' total recovered paper exports between January and September 2024 stood at 9.03 million metric tons (9.95 million net tons), down 7 percent annually from 9.71 million mt, according to Census Bureau data.

Monthly shipments from the West Coast fell 29.2 percent to 58,173 mt in September from 82,138 mt in August 2024. Volumes from the East Coast in this period dropped 21.2 percent to 18,568 mt compared with 23,578 mt.

Fewer cargoes, mainly out of the larger New York and Los Angeles ports, also reflect a $5-7/nt freight alongside ship weekly average decline in Davis Index's export prices of Baled #11 Old Corrugated Containers (OCC) and Baled #12 Double Sorted Old Corrugated (DS OCC).

The data shows consistently lower shipments since the beginning of this year. Corrugated grades retained a fairly rangebound trend for exports at about $169-178/nt until May, with the year's high reaching $192-197/nt freight alongside ship in New York and Los Angeles, respectively, on May 16. A steady decline became apparent after early June; since then, prices and tonnages have weakened (see Figure 1).

The outlook for Q1 2025 appears bearish. Tonnages may not dwindle further — however, a sudden improvement is unlikely in the next few months. Prices are subdued at present but are far from reaching a bottom until the end of 2024.

Although this fading out appears moderate, tonnage movements tell a different story. A closer look reveals that shipments to two of Asia's biggest recovered paper buyers decelerated this year.

India

The country remains one of the top buyers of export-grade recycled fibre from the U.S.; however, volumes in the first nine months of the year were down 17 percent annually to 1.61 million mt from 1.93 million mt. These tonnages are also 40 percent lower than 2.7 million mt between January and September 2022.

India's imports of the material from the U.S. reached 179,085 mt in September 2024, 17 percent lower than 223,175 mt during the same month of 2023. Shipments were down 11 percent or about 22,000 mt against 201,420 mt in August 2024 and around 3 percent more than 173,243 mt this January.

The weekly Davis Indexes for OCC and DSOCC cost and freight in India have gradually fallen since August. Even though there was a $5-10/mt uptick in mid-September, the index prices slipped nearly $12-20/mt on October 10, 2024.

Indonesia

Indonesia's imports of recycled fibre had a slow start to the year. According to the Asian nation's Customs data, total inbound shipments of the material between January and September were 2.13 million mt. This translates to an annual fall of 19 percent from 2.62 million mt in the prior-year period. Shipments during the first nine months of this year were also 9.7 percent lower than 2.36 million mt imported in the same time frame of 2022.

Volumes from the U.S. were 248,592 mt from January to September, down 17 percent against 297,805 mt in the same period of 2023. During the same period in 2022, Indonesia's recovered paper imports from the U.S. were 363,653 mt, which means January to September 2024 volumes were 31 percent lower than two years ago.

The country has consistently reduced its volumes from some of its top suppliers other than the U.S. For instance, shipments from the UK in the first nine months of 2024 were 207,948 mt, 39 percent less annually from 341,028 mt.

Total shipments of recovered paper into Indonesia during September 2024 were 191,543 mt, a 27 percent annual drop from 262,009 mt and a 13 percent sequential decrease against 219,705 mt. During the review month, the supply of recycled fibre from the U.S. reached 25,348 mt. This volume was 36 percent lower than 39,794 mt in September 2023 and down 31 percent from 36,688 mt in August 2024.

Contributing factors

Market participants have cited several reasons for the gradual downtrend. The primary influencer is a slowdown in the recovered paper industry in the U.S. and Asia. Demand appears to have softened considerably, and a few buyers deem current prices unviable even though they are at their lowest.

It is also essential to consider the extended downtime that mills across both regions took earlier in the year. Moreover, several sites have closed permanently or are shut down for upgrades. Another important factor is that Asian importers raised material quality concerns. This led to more order cutbacks, especially for grades like Baled #54 Mixed Paper (MP).

Outlook

An overall bearish sentiment that took hold after the year's first half will likely remain for the near term. The upcoming change in the U.S. government could also impact recycled fibre exports. However, any real impact will emerge only after Q1 2025. 

In terms of demand, a recovery could be slower than expected. What is notable is that all the existing factors in play are a complete reversal of the strongly optimistic export outlook that was forecast at the beginning of 2024.