US OCC price forecast may continue to fall sharply in July

In 2020, OCC prices in the US fluctuated continuously, starting from a record low price in November/December 2019, then within 5 months from January to May 2020, the price increased by 80 USD/ton and may soon fall back to the original level in just v2 months.

The reason is that the shortage of resources has arisen and the collection has been disrupted due to the COVID-19 epidemic. In addition, paper mills in the US overstocked OCC in April and May 2020, when the source of generation was low and market demand was still high.

Starting from the end of May 2020, OCC prices have fallen sharply because the market is in oversupply.

The evidence is that the OCC inventory level in the US in May 2020 has increased to the highest level since February 2019 and is nearly 20% higher than the average level of the past 10 years.

Many U.S. carton paper manufacturers are pausing their machines and trying to regulate the market to reduce inventory pressure. The operating rate of U.S. carton paper machines fell from 95.9 percent in April to just 90.3 percent in May.

If OCC prices continue to decline rapidly in July, it could be beneficial for carton paper manufacturers.

In May 2020, manufacturers of recycled corrugated cardboard tried to increase prices but were unsuccessful, they will significantly reduce input costs in the near future as OCC prices continue to plunge in the following months.

Source: Fastmarkets RISI