As anyone in the recycling industry knows – material prices are determined by only one basic factor, “supply & demand”.
Market factors that can create demand can be a growth in production of finished product, (resulting in higher demand for recyclable feedstock) or even severe weather conditions affecting collection, transportation, and mill deliveries, which limit supply.
Excessive supply is created by a slowdown in the economy – resulting in less or diminished raw material needs. In severe cases this can result in temporary or even permanent mill shutdowns, generating additional material which can be “dumped” on the market – sometimes regardless of price.
According to a new market outlook by Grand View Research, the global cardboard box and container market was worth almost $500 billion dollars in 2014, with steady growth expected until 2022.
One of the reasons for this growth is E-commerce. With online services exploding less paper is needed for print catalogs, however a much greater volume of packaging is needed to ship all these products to consumers.
Box producers and paper mills which produce this material are well aware of this trend. Future growth trends and projections are an ongoing process within the industry – with companies’ continually charting and projecting shifts and changes – and the growth or decline in various sectors.
One company that is positioning itself to take advantage of this shift is Kruger Packaging, headquartered in Montreal. Kruger owns and operates the Trios-Rivieres Mill located in Quebec. To date this mill has produced “news”, used in newspapers and advertising publications. This sector of the print industry is eroding quickly, with print demand for newspapers, flyers, and catalogs being quickly replaced with e-readers, I pads, smart phones, and computers.
Kruger is in the process of a major mill conversion. They, in conjunction with the Canadian government, are in the process of converting one of their paper machines from newsprint – to 100% recycled linerboard – material used to produce cardboard boxes. This is a combined investment of over $400 million dollars.
Once on line this paper machine will produce 360,000 metric tons per year of liner, the majority which will be used to produce corrugated boxes and packaging. What will they use to produce this material? Kruger is projected to use over 1,000 tons per day of waste paper – the majority of which will be corrugated cardboard.
Obviously the question most recyclers have when a mill such as this is projected to come on line – where will this material come from? How will it impact the current market? How will other mills which purchase this material now be effected?
One thing is for sure – this type of new tonnage being consumed can only tilt the supply demand balance in one direction.
Contact us at 800.783.6766 if you would like further information or have any questions.