Security Shredding and Storage - a shredding industry publication

Export Regulations
Deinking Grade Market Report


By Ken McEntee
Of the six major recovered paper grade classifications, chemical deinking grades, including Sorted Office Paper (SOP - PSI Grade #37) and other office generated grades, make up the smallest portion of the fiber generated in the U.S. Although their volume is miniscule compared to more robustly traded grades like old corrugated containers (OCC), deinking grades were clearly the strongest of all grades in terms of export growth in 2014.

Because of increased demand from markets like Canada and China, U.S. exports of deinking grades last year were up 15 percent in 2014 relative to 2013, based on trade data from the U.S. Commerce Department. In comparison, overall U.S. scrap paper exports were up 1.3 percent last year, from 20.8 million short tons to 21 million tons.

Deinking grade exports improved from 698,392 tons in 2013 to 799,051 tons in 2014. That volume accounted for only 4 percent of all recovered paper exported from the U.S. last year. In comparison, OCC, at 9.7 million tons, made up almost half of all the tonnage exported.

In contrast to the 15 percent improvement in deinking grade exports, shipments of pulp substitute grades, which contain similar fibers, but from pre-consumer sources like printers and converting plants, were down 21 percent last year, from 1.5 million tons on 2013 to 1.2 million tons.

In terms of volume, exports to Canada showed the largest growth in 2014 over 2014. Exports to Canada - the second largest market for the grade - improved by almost 56,000 tons, for a total of almost 165,000 tons, a 51 percent gain compared to 109,000 tons in 2013.

In terms of percentage of increase, China was the biggest growing destination among major markets for deinking grades. Exports to China improved from almost 26,000 tons in 2013 to almost 58,000 tons in 2014, a gain of 136 percent.

Exports to India, the largest market for deinking grades, were up 11 percent, to more than 298,000 tons, accounting for 37 percent of all deinking grade exports.

Rounding out the top five markets for deinking grades, exports to Mexico dropped 1 percent in 2014, to almost 84,000 tons, while shipments to El Salvador doubled last year, to more than 28,000 tons. Only two other markets – the Netherlands and Peru – imported more than 20,000 tons of deinking grade fiber from the U.S. last year.

Exports of deinking grades have been on a five-year growth trend, increasing by more than 51 percent since 2009. But those numbers remain considerably below the peak years of 2000 and 2001, when deinking grade exports topped 1 million tons each year. In 2000, South Korea was the largest importer of deinking grades from the U.S. The ensuing decline in exports through the next decade coincided with a major decline in Korean buying. From a peak of almost 1.2 million tons shipped in 2000, U.S. deinking grade exports plummeted to less than 560,000 tons in 2004. After a three-year bump up to close to 800,000 tons shipped from 2005 to 2007, exports once again slid downward to less than 528,000 tons in 2009. With the exception of a slight dip in 2012, exports have pushed back upward each year since then.

Although China is the dominant export market for most major recovered paper grades, that isn’t the case for deinking grades. In 2014, China accounted for only 7 percent of all deinking grade exports. Although exports to China were up by 136 percent compared to 2013, they were still well below the average annual shipments through the decade of the 2000s.

After exploding from around 32,000 tons in 2000 to 126,000 tons in 2001, deinking grade exports to China dropped to about 64,000 tons by 2003, popped back up to around 116,000 tons in 2005, then leveled out at around 80,000 tons between 2008 and 2012. The volume then plummeted to less than 25,000 tons in 2013.

Conversely, demand from India has been on a generally upward trajectory since 2002. Between 2000 and 2000, U.S. deinking grade exports to India fell from just short of 200,000 tons to less than 13,000 tons. Since that time, however, with just a couple of downward bumps, Indian demand has steadily improved from almost 13,000 tons in 2002 to almost 300,000 tons last year. The sharpest increases have been over the past four years, during which annual exports have improved 240 percent, beginning with about 88,000 tons in 2010.

Likewise, after dropping from about 121,000 tons in 2010 to around 96,000 tons in 2011, deinking grade exports to Canada have been in a steady climb, culminating with a record of almost 165,000 tons in 2014. The opposite, however, has been the trend for exports to Mexico. Between 2001 and 2008, Mexico was the leading market for U.S. deinking grade exports by a large margin. Between 2007 and 2009, however, annual volume dropped from almost 300,000 tons to less than 52,000 tons. Since 2011, exports to Mexico have leveled out at between 85,000 and 90,000 tons annually. Meanwhile, Mexican mills have ramped up their buying of pulp substitute grades from the U.S. from about 407,000 tons in 2012 to about 537,000 tons in 2014.

While deinking grades accounted for 4 percent of U.S. recovered paper exports, they made up about 7 percent of the recovered paper used domestically, according to the American Forest & Paper Association data. Compared to pulp substitutes, about half of which are exported, about 77 percent of U.S. generated deinking grades are used at U.S. mills, according to AF&PA and Commerce Department data. Since 2007, domestic consumers have steadily used about 79 percent of the deinking grades available.

Following a massive decline during the fourth quarter of 2011, prices for Sorted Office Paper (SOP) have generally stabilized. During 2013 and 2014, average national SOP mill prices stayed between a relatively small margin of $139 and $162 per ton, according to The Paper Stock Report. The average national price early in 2015 bumped up close to $165 per ton. That trend generally reflected export prices was well, based on Commerce Department data. According to Commerce data, which shows FAS prices for all deinking grades, rather than just SOP, export prices generally stayed within a range of $204 per short ton and $222 per short ton from January 2013 through November 2014, before showing a $20 hike in December. The exception was a one-month jump to $230 per short ton in January 2014.

Ken McEntee is editor and publisher of The Paper Stock Report and Paper Recycling Online, which cover the paper recycling markets. For more information, visit www.recycle.cc.

Member Login