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The Paper Markets – 2009

The Paper Markets – 2009

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The Paper Markets – 2009

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  1. The Paper Markets – 2009 Joanne Schweikert – Field Sales Sonoco Recycling

  2. Sonoco Recycling • Sonoco is a Paper and Packaging Company (not a gas station) • Founded in 1899 – NYSE Symbol “SON” • 4 Billion in Sales last year • Recycle 3.5 million tons per year • 30 Paper Mills Worldwide • Richmond Paper Mill located at 1850 Commerce Road • Virginia Recycling Plants located in Madison Heights and Fishersville

  3. What Happened? • Last February OCC was $115 per ton, now cardboard is $25 per ton, what happened? • A sudden drop in demand from China caused the markets to plummet • Chinese mills had stocked up on paper anticipating a spike in business after the Olympics • The boom did not materialize, the global economy froze and Chinese mills were overstocked

  4. What Happened? • Following the purchasing “freeze” in China was the month of December that set a record for mill downtime • Key phrase heard was “lack of generation” due to dismal Christmas retail season. This could lead to shortages of OCC and allow mills to use up excess inventory • At this time most mills are up and running with plenty of supply

  5. February Update • OCC rose $5.00 to Southeast Yellow Sheet High Side of $25.00 per ton • Export prices are rising….why? China’s mills are struggling…why is export up? • Two reasons: Shipping rates are lower and OCC prices are a bargain • China is buying and warehousing, betting on a third quarter recovery • Sonoco’s market prediction (guess) is for $50 OCC Mid Year and $70 by Year End

  6. Historic Southeast Yellow Sheet Prices

  7. Conclusion