ANALYSIS OF DEMAND AND SUPPLY
FOR SECONDARY FIBER IN THE
U.S. PAPER AND PAPERBOARD INDUSTRY
Volume One
Sections I through VIII and X
prepared for
RESOURCE RECOVERY DIVISION
OFFICE OF
SOLID WASTE MANAGEMENT PROGRAMS
ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 2O46O
UNDER CONTRACT NO. 68-O1-222O
! I.) Little.!
-------
I
I
I
I
I
I
I
• Prepared for
•Resource Recovery Division
Office of Solid Waste Management Programs
Environmental Protection Agency
— Washington, D.C. 20460
ANALYSIS OF DEMAND AND SUPPLY FOR SECONDARY FIBER
IN THE U.S. PAPER AND PAPERBOARD INDUSTRY
Volume One
Sections I-VIII and X
Under Contract No. 68-01-2220
Attention: Project Officer
Resource Recovery Division (AW463)
March 1975
(Revised October 1975)
C-76644
Arthur D Little, Inc.
Environmental Protection Agency
Region V, Library
230 South Dearborn Street
Chicago, Illinois 6060H
-------
PRINCIPAL CONTRIBUTORS
Fred D. lannazzi, Project Leader
George A. Graham, Consultant
Edward M. Myskowski, Consultant
Peter L. Oliver
William F. Reehl
Gee Fun Wong
OTHER PARTICIPANTS
Claire R. Canty
Thomas L. Doorley
Frank R. Hamilton (Chas. T. Main, Inc.), Consultant
Frederick G. Perry
PROTECTION AGENCY
Arthur D Little, Inc
-------
TABLE OF CONTENTS (Cont'd)
Page
VII. AVAILABILITY OF WASTE PAPER
A. General Approach VII-1
B. Collectable Tonnage of Old Corrugated
Containers (OCC) VII-8
C. Collectable Tonnage of News VII-25
D. Collectable Tonnage of P/S and High-Grade
Deinking Grades VII-34
E. Collectable Tonnage of Mixed Waste Paper VII-44
F. Alternative Method for Calculating Collectable
Tonnage of OCC VII-45
G. Summary of Collectable Tonnage VII-52
VIII. SUBSTITUTABILITY OF SECONDARY FIBER
A. Approach VIII-1
B. Historical Usage Patterns VIII-1
C. Containerboard VIII-4
D. Groundwood Paper VIII-9
E. Tissue and Other Machine Creped Paper VIII-11
F. Folding Boxboard VIII-12
G. Printing, Writing, and Related VIII-15
H. Industrial Packaging, Converting and
Miscellaneous VIII-21
I. Construction Paper and Paperboard VIII-22
J. Summary VIII-22
IX. PROCESS ECONOMICS (See Volume Two)
X. POTENTIAL FOR SECONDARY FIBER USE, 1973-1983
A. Approach and Basis of Evaluation X-l
v
Arthur D Little, Inc
-------
TABLE OF CONTENTS (Cont'd)
X. ANALYSIS OF DATA (Continued)
B. Factors Considered in Estimating Potential
Future Waste Paper Usage X-2
C. Overall Potential Waste Paper Usage X-12
D. Reuse of OCC X-24
E. Reuse of Old News X-30
F. Reuse of Pulp Substitutes and High-Grade Deinking X-34
G. Reuse of Mixed Waste Paper X-35
vi
Arthur D Little, Inc.
-------
LIST OF TABLES
1-1 Capital Intensivity and Capital Requirements for the
Manufacture of Selected Paper and Paperboard Products 1-9
III-l Magnitude of the Pulp, Paper and Paperboard Sectors-
1972 III-4
III-2 Indicators of Paper Industry's Capital Intensivity III-5
III-3 Paper and Allied Products Industry Profitability and
Capital Structure (1969-1974) 111-12
III-4 Products Included in Functional Groups 111-16
III-5 Projected U.S. Demand for Paper and Paperboard 111-18
III-6 Corrugated Container Requirements for Railroad and
Truck Shipment 111-20
III-7 Major Containerboard Producers 111-23
III-8 Containerboard Supply/Demand Trends 111-25
III-9 Containerboard Price Trends 111-26
111-10 Capacities of Major North American Newsprint
Suppliers, 1974 111-30
III-ll Capacities of U.S. Uncoated Groundwood Paper
Suppliers, 1973 111-31
111-12 Groundwood Paper Supply/Demand Trends 111-32
111-13 Newsprint Contract Price Trends, 1970-1975 111-34
111-14 Uncoated Groundwood Paper Price Trends, 1971-1974 111-36
111-15 U.S. Tissue Shipments by Product Type, 1973 111-38
111-16 Capacities of Major U.S. Tissue Producers, 1973 111-39
111-17 Tissue Paper Supply/Demand Trends, 1973-1977 111-41
111-18 Wholesale Price Index for Converted Sanitary Tissue 111-43
111-19 U.S. Production of Bleached and Wastepaper Boxboard
by Type, 1973 111-45
vzi
Arthur D Little, Inc.
-------
LIST OF TABLES (Cont' d)
111-20 Major U.S. Bleached Boxboard Producers 111-47
111-21 Major U.S. Recycled Boxboard Producers 111-49
111-22 Factors Related to the Use of Recycled Fibers in
Folding Carton End-use Markets 111-51
111-23 Boxboard Supply/Demand Trends 111-52
111-24 Bleached Paperboard and Recycled Boxboard Price Trends 111-54
111-25 U.S. Production of Printing, Writing, and Related
Paper Products, 1973 111-57
111-26 Capacities of Major U.S. Printing and Writing Paper
Producers, 1973 111-59
111-27 Printing, Writing, and Related Paper/Supply Demand
Trends 111-60
111-28 Printing and Writing Paper Price Trends 111-62
111-29 Production of Industrial Packaging and Miscellaenous
Converting Papers, 1973 111-64
111-30 Capacities of Major Producers of Unbleached Kraft and
Other Packaging and Industrial Converting Paper
Products, 1973 111-66
111-31 Capacities of Major Producers of Special Industrial
Paper, 1973 111-67
111-32 Supply/Demand Trends for Industrial Packaging, Convert-
ing, and Miscellaneous Papers 111-69
111-33 Price Trends for Unbleached Kraft Papers 111-70
111-34 Major Producers of Construction Paper 111-74
111-35 Major Producers of Gypsum Linerboard 111-75
111-36 Capacities of Major Producers of Hardboard and
Insulation Board 111-76
111-37 Construction Paper and Board Supply/Demand Trends 111-77
111-38 U.S. Capacity, Production, Trade, and Consumption
of Bleached Paper-Grade Pulp, 1969-1974 111-81
viii
Arthur D Little, Inc.
-------
LIST OF TABLES (Cont'd)
111-39 World Capacity Trends for Bleached Sulfite Pulp 111-82
111-40 World Capacity Trends for Softwood Bleached Kraft
Pulp 111-84
111-41 World Capacity Trends for Hardwood Bleached Kraft
Pulp 111-84
111-42 Average Annual Increase in World Pulp and Paper
Capacities 111-85
111-43 Free-World Bleached Paper-Grade Pulp Demand, 1975- 111-87
1980
111-44 Free-World Bleached Kraft Pulp Demand Capcity,
1971-1978 111-87
111-45 Paper and Paperboard - Projected U.S. Demand and
Production 111-91
111-46 Summary: Number of Pulp and Paper Mills by Pulp
Manufacturing Process 111-93
111-47 Number of Integrated and Nonintegrated Paper Mills
by Functional Group 111-96
IV-1 Ownership Pattern of Commercial Timberland, January
1970 IV-6
IV-2 Timber Holdings of Major Forest Products Companies IV-7
IV-3 Net Volume of Timber on Commercial Timberland by
Wood Species, January 1970 IV-10
IV-4 Net Volume of Growing Stock on Public and Private
Commercial Timberland IV-12
IV-5 Net Annual Growth and Removals of Growing Stock on
Commercial Timberlands in the United States by
Sections and Regions - 1970 IV-14
IV-6 Present and Projected Pulpwood Consumption by Major
Geographic Section and Region IV-17
IV-7 Fiberwood Prices by Form of Wood and Mill Type IV-18
IV-8 Chip Prices by Species and Mill Type IV-19
IV-9 Pulpwood Prices, by Selected Area and Species,
1950-1973 IV-21
ix
Arthur D Little, Inc.
-------
LIST OF TABLES (Cont'd)
IV-10 Pulpwood Stumpage Prices, by Selected State and Species,
1950-1973 IV-25
IV-11 Comparison of Logging Methods in North America IV-27
IV-12 Southern Pulpwood Requirements by Method of Delivery,
1973-1978 IV-32
IV-13 Estimated Delivered Cost of Pulpwood by Major Geographic
Section IV-33
V-l Fibrous Raw Materials used in Paper and Paperboard
Manufacture V-5
V-2 Recovery of Waste Paper in the United States, 1968-1973 V-6
V-3 Comparison of U.S. Consumption and Recovery Rates of
Waste Paper, 1968-1973 V-7
V-4 Allocation of Waste Paper Exported from the United States
in 1973 V-8
V-5 Paper Stock Consumption, 1970 V-ll
V-6 Estimated U.S. Consumption of Waste Paper by Grade and
Region, 1970 V-15
V-7 Annual per Capita Consumption and Discards of Paper V-18
V-8 Number of Dealers and Average Size by Region - 1970 V-23
V-9 Largest Paper Stock Dealers V-24
V-10 Second-Tier Paper Stock Dealers V-25
VI-1 Comparison of the Selling Prices of Selected Common Paper
Stock Grades with Those Used in Cost Models VI-14
VI-2 Estimated Cost of Box Pickup and Hauling VI-16
VI-3 Estimated Plant Investment for Waste Paper Sorting and
Baling VI-19
Vi-4 Summary of Estimated Operating Cost for Waste Paper
Sorting and Baling VI-20
VI-5 Estimated Direct Labor Requirements VI-21
Arthur D Little, Inc.
I
I
-------
LIST OF TABLES (Cont'd)
VI-6 Estimated Plant Overhead VI-21
VI-7 Summary of Estimated Dealer's Cost for Baled, Shredded
News and OCC VI-22
VI-8 U.S. Rail Transportation of Waste Paper - 1972 VI-28
VI-9 Estimated Transportation Costs for Secondary Fiber Mill
Using Own Trucks VI-29
VI-10 Summary: Derivation of Delivered Cost of Waste Paper
Used in Cost Models VI-32
VI-11 Estimated Required Capacities for Process Steps in
Newsprint Separation Process VI-40
VI-12 Estimated Total Fixed Capital for the Separation of
Newsprint-Rich Material from MSW VI-41
VI-13 Estimated Operating Cost for the Separation of Newsprint-
Rich Material from MSW VI-42
VII-1 Sources of Waste Paper Stocks and Their Recycle
Applications VII-2
VII-2 U.S. Demand Projections, 1973-1983 VII-3
VII-3 Identification of Paper Grades Going to Permanent Stock
and Nonrecoverable - 1973 VTI-5
VTI-4 Selected State Characteristics Influencing the Avail-
ability of Waste Paper VII-9
VII-5 Sources and Availability of New Kraft Cuttings, 1973 VII-14
VII-6 Shipments of Containerboard Products by End Use, 1972 VII-16
VII-7 Sample Calculation of Collectable Tonnage for Old
Corrugated Containers VII-17
VII-8 Summary - Consumption and Availability of OCC by Major
Geographic Region - 1973 VII-18
VII-9 Summary - Consumption and Availability of OCC by Major
Geographic Region - 1977 VII-19
VII-10 Summary - Consumption and Availability of OCC by Major
Geographic Region - 1983 VII-20
xi
Arthur D Little, fnc
-------
LIST OF TABLES (Cont'd)
VII-11 Summary - Consumption and Availability of Waste News
by Major Geographic Region - 1973 VII-28
VII-12 Summary - Consumption and Availability of Waste News
by Major Geographic Region - 1977 VII-29
VII-13 Summary - Consumption and Availability of Waste News
by Major Geographic Region - 1983 VII-30
VII-14 Derivation of Collectable Tonnage for P/S and High-
Grade Deinking VII-35
VII-15 Summary - Consumption and Availability of P/S and
Deinking Grade by Major Geographic Region - 1973 VII-37
VII-16 Summary - Consumption and Availability of P/S and
Deinking Grade by Major Geographic Region - 1977 VII-38
VII-17 Summary - Consumption and Availability of P/S and
Deinking Grade by Major Geographic Region - 1983 VII-39
VII-18 Summary - Consumption and Availability of Mixed
Papers by Major Geographic Region - 1973 VII-46
VII-19 Summary - Consumption and Availability of Mixed
Papers by Major Geographic Region - 1977 VII-47
VII-20 Summary - Consumption and Availability of Mixed
Papers by Major Geographic Region - 1983 VII-48
VII-21 Alternative Method for Deriving Collectable Tonnage
of OCC VII-53
VII-22 Sample Calculation of State Consumption and Collect-
able Tonnage of OCC (Alternative Method) VII-54
VII-23 Consumption and Availability of OCC by Major Geographic
Region - 1973 (Alternative Calculation) VII-55
VII-24 Consumption and Availability of OCC by Major Geographic
Region - 1977 (Alternative Calculation) VII-56
VII-25 Consumption and Availability of OCC by Major Geographic
Region - 1983 (Alternative Calculation) VII-57
VII-26 Availability and Recovery of Major Waste Paper Grades
in 1977 VII-61
VII-27 Apparent Total Consumption of Paper and Paperboard
by Region VII-64
xii
Arthur D Little, Inc
-------
LIST OF TABLES (Cont'd)
VII-28 Estimated Regional Consumption of Paper and Paper-
board Based upon Population Distribution VII-65
VII-29 Estimated Recovery Rates for Secondary Fiber Based
upon Total Apparent Consumption for 1977 VII-66
VIII-1 Commercial Processes for Pulping Wood VIII-2
VIII-2 Paper and Paperboard Production and Waste Paper
Consumption - 1969 VIII-5
VIII-3 Stiffness Characteristics of SBS and Recycled Folding
Boxboard VIII-17
VIII-4 Strength and Optical Properties of Selected Virgin
and Secondary Fiber Pulps VIII-20
VIII-5 Summary of Fiber Furnishes Used in the Economic
Analysis of Selected Paper and Paperboard Products VIII-24
VIII-6 Companies Utilizing Secondary Fiber in the Manufacture
of Paper and Paperboard Products VIII-27
X-l Distribution of Leading 90-Minute Market Areas by
Major Geographic Sections X-8
X-2 1973 Paper and Paperboard Consumption and Waste Paper
Consumption X-17
X-3 1977 Paper and Paperboard Consumption and Potential
Waste Paper Consumption X-19
X-4 1983 Paper and Paperboard Consumption and Potential
Waste Paper Consumption X-21
X-5 Projected Availability and Potential Recovery of Major
Waste Paper Grades in 1983 X-23
X-6 Summary of Potential Recovery Rates for Secondary X-25
Fiber in 1973, 1977, and 1983.
xiii
Arthur D Little, Inc.
-------
I
I
I
I
I
•
LIST OF FIGURES
1-1 Comparison of Potential Secondary Fiber Usage with
Projected Increase in Production 1-12
1-2 Present and Potential Use of Secondary Fiber in Studied
Functional Groups 1-15
III-l Major Pulp and Paper Manufacturing Sector Suppliers
and Customers III-2
III-2 Year-End Capacities for Virgin Fulp and Papermaking,
by Region - 1973 III-7
III-3 Geographical Distribution of U.S. Pulp and Paper Mills III-8
III-4 U.S. Production of Combination Paperboard and Solid
Bleached Paperboard, 1962-1973 111-50
IV-1 Geographic Sections and Regions of the United States
Used in This Report IV-3
IV-2 Ownership Pattern of Commercial Timberlands IV-5
IV-3 Ownership Pattern of Growing Stock on Commercial
Timberlands, 1970 IV-11
IV-4 Net Annual Growth and Removals of Growing Stock on
Commercial Timberland in the United States - 1970 IV-13
IV-5 Potential and Current Net Growth per Acre IV-15
I
I
I
I
I
IV-6 Timber Growth, Removals and Pulpwood Consumption by
Major Geographic Section IV-16
• IV-7 Typical Transportation Costs for Pulpwood, Third
Quarter, 1974 IV-30
I V-l Consumption of Fibrous Materials in Paper and Paper-
board Manufacturing V-4
• V-2 Percentage of Total Fibrous Materials Consumed V-4
V-3 Monthly U.S. Waste Paper Exports, 1972-1973 V-9
V-4 Estimated Supply of Converter and Post-Consumer Waste
Paper (1970) V-14
I V-5 Waste Paper Consumption and Papermaking Capacity (1971) V-16
I
I
xv
Arthur D Little, Inc.
-------
LIST OF FIGURES (Cont'd)
V-6 Flow of Waste Paper from Point of Origin to Consuming Mill V-20
VI-1 Dealer's Purchase and Selling Price Ranges for Waste Paper-
Corrugated Containers VI-2
VI-2 Dealer's Purchase and Selling Price Ranges for Waste Paper-
New Double Kraft Lined Corr. Cuts, Semichem. VI-4
VI-3 Dealer's Purchase and Selling Price Ranges for Waste Paper-
No. 1 News VI-6
VI-4 Dealer's Purchase and Selling Price Ranges for Waste Paper-
White Newsblanks VI-8
VI-5 Dealer's Purchase and Selling Price Ranges for Waste Paper-
White Ledger VI-9
VI-6 Dealer's Purchase and Selling Price Ranges for Waste Paper-
No. 1 Mixed Paper VI-12
VI-7 Cost of Transporting Paper Stock by Truck in the New England
Region (Common Carrier Rates) VI-24
VI-8 Cost of Transporting Waste Paper by Rail VI-26
VI-9 U.S. Rail Rate Territories VI-28
VI-10 Schematic Flow Diagram of the Forest Products Laboratory's
Waste Paper Separation Process VI-36
VI-11 Estimated Material Balance for the Separation of Newsprint-
Rich Fraction from MSW VI-38
VI-12 Sensitivity to Key Variables of the Operating Cost for
Separation of Newsprint-Rich Fraction from MSW VI-43
VII-1 Overall Fiber Balance for the United States in 1973 VII-6
VII-2 Overall Fiber Balance for the United States in 1977 VII-7
VII-3 Location of Corrugated Box Plants in the United States VII-13
VII-4 Availability and Recovery of Old Corrugated Containers
in the United States VII-22
VII-5 Recovery of Old Corrugated Containers by Major Geo-
graphic Regions, 1973-1983 VII-23
xvi
Arthur D Little, Inc
-------
LIST OF FIGURES (Cont'd)
VII-6 Consumption and Availability of Old Corrugated Con-
tainers by Major Geographic Regions, 1973 to 1983 VII-24
VII-7 Availability and Recovery of Old News in the United
States VII-31
VII-8 Recovery of Old News by Major Geographic Regions,
1973-1983 VII-32
VII-9 Consumption and Availability of Old News by Major
Geographic Region, 1973 to 1983 VII-33
VII-10 Availability and Recovery of P/S and Deinking Grades
in the United States VII-41
VII-11 Recovery of Pulp Substitutes and Deinking Grades by
Major Geographic Regions, 1973-1983 VII-42
VII-12 Consumption and Availability of P/S and Deinking
Grades by Major Geographic Region, 1973 to 1983 VII-43
VII-13 Availability and Recovery of Mixed Waste Paper in
the United States VII-49
VII-14 Recovery of Mixed Waste by Major Geographic Regions,
1973-1983 VII-50
VII-15 Consumption and Availability of Mixed Paper by Major
Geographic Region, 1973 to 1983 VII-51
VII-16 Availability and Recovery of Old Corrugated Con-
tainers in the United States - Alternative Calculation VII-58
VII-17 Recovery of Old Corrugated Containers by Major Geo-
graphic Regions - Alternative Calculation VTI-59
VII-18 Consumption and Availability of Old Corrugated
Containers by Major Geographic Regions - Alternative
Calculation VII-60
VII-19 Comparison of Waste Paper Usage to Total Fiber
Consumption, 1983/1977 VII-67
VIII-1 Composition of 18-Point Clay-coated Folding
Boxboard VIII-13
VIII-2 Package Stiffness of Selected Board Samples
VIII-16
xvii
Arthur D Little, Inc.
-------
LIST OF FIGURES (Cont'd)
X-l Leading 90-Minute Markets X-7
X-2 Leading "Second Morning Service" Markets X-9
X-3 S-M-S Market Area for Southwest Pennsylvania X-ll
X-4 Comparison of Potential Secondary Fiber Usage with
Projected Increase in Production X-13
X-5 Present and Potential Use of Secondary Fiber in
Studied Functional Groups X-15
X-6 Relationship of Population to Apparent Supply of
OCC at Various Recovery Rates X-2 7
X-7 Relationship of Population to Apparent Supply of Old
News at Various Recovery Rates X-32
xviii
Arthur D Little, Inc.
-------
I. SUMMARY
A. PURPOSE AND SCOPE
The principal purpose of this study is to compile a comprehensive tech-
nical and economic data bank of information on the U.S. pulp and paper
industry, with specific attention to the role of secondary fiber in the
industry. The data, which are presented and discussed in Sections III
through IX, are intended to facilitate an assessment of the technical
and economic potential for secondary fiber use in the manufacture of
pulp and paper.
The study includes the following:
• Characterization of the pulp and paper industry in terms
of annual sales, products, total investment, number of
mills, present and future demand, plant locations, major
companies, etc.;
• Analysis of the cost and availability of the wood re-
sources to support projected pulp and paper requirements;
• Characterization of the waste paper industry in terms of
its products, annual sales, investment, major companies,
etc.;
• Analysis of the cost and availability of the major waste
paper grades by major geographic regions;
• Analysis of the substitutability of:
- virgin with secondary fiber,
paper stock grades, one for another, and
products made from secondary vs. virgin fiber;
• Comparison of the investment and operating cost (in new
installations) for manufacturing selected paper and paper-
board products from
- virgin fiber,
secondary fiber, and, where applicable,
blends of virgin and secondary fiber.
Obviously, the economics may differ appreciably for each of
these situations in existing mills.
1-1
Arthur D Little, Inc.
-------
The concluding section (X) projects the possible reuse levels that might
be attained by 1983. These projections used the 1973 Capacity Survey
of API as a starting point and assumed that present paper and paperboard
quality would be maintained.
Finally, as directed by the Environmental Protection Agency, this report
includes detailed information on each pulp and paper mill in the United
States. This is tabulated in the Appendices, along with the appropriate
supporting data for the corresponding segments of the report.
B. BASIS OF ASSESSMENT
This study considers the industry's activities between 1973 and 1983.
Major reliance was placed on industry production and consumption data
for 1973, because they represented the most complete data available
at the time of writing.
Industry production capacity and fiber usage levels for 1977 were used
as the base line to project waste paper usage to 1983. (The more re-
cent data now available in the 1974 Survey indicate a significant
downward revision in the waste paper use levels; however, the 1977
capacity levels are fairly well established because of the long lead
time required for construction of new facilities.)
A key assumption was that the U.S. economy would begin to recover in
the last half of 1975, and that there would be no further major dis-
ruption of business activities during the studied period. We did not
postulate any new regulatory influences or financial incentives during
this period; nor did we assume that any existing pulp mills would be
idled, or that the pulping of virgin fiber would be curtailed, simply
to accommodate the pulping of secondary fiber. Also, we did not
postulate the selection of paper stock grades or the substitution of
virgin fiber with secondary fiber at levels that would be deleterious
to present paper quality characteristics.
In the preparation of the economic comparisons of Section IX, second-
quarter 1974 cost and price figures were generally used. However,
second-quarter 1974 selling prices for waste paper were not used, because
we believed that they were not indicative of the likely long-term
trends and that a cost comparison of secondary fiber with virgin fiber
based on 1974 prices would produce misleading results. Accordingly, we
developed cost models for the collection and baling of waste paper as
an aid in forecasting its long-term selling prices.
All estimates of investment cost, operating cost, and profitability
pertain to a new grass-roots facility producing a single product on
a single machine. Comparing the economics of using secondary fiber
instead of virgin fiber (either exclusively or in a fiber blend)
in existing mills was not within the scope of this study. Had this
been done, the results would more likely have reflected the constraints
1-2
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
or advantages of specific plants, such as size and type of equipment,
market opportunities, and access to waste paper resources.
A final point that should be noted in considering these cost compari-
sons is that none of the investment costs, operating costs, or selling
prices used in this report include escalation due to inflation.
C. OVERALL FINDINGS AND CONCLUSIONS
The following statements summarize our major observations concerning
the potential impact of evolving industry characteristics on the use
of secondary fiber.
Although the present economic recession has slowed the trend toward
greater use of secondary fiber, a number of emerging technological,
economic, and social factors are combining to encourage more extensive
use:
• Virgin and secondary fiber are now being blended
commercially in the manufacture of newsprint and
linerboard.
• The construction of new grass-roots pulp and paper
manufacturing facilities based upon virgin fiber is
being increasingly inhibited by the magnitude of the
capital investment required.
• Nonintegrated mills, principally in the tissue and
printing paper industries, have traditionally relied
upon market pulp, but its high cost is giving them an
incentive to seek an alternative material.
• The rapidly escalating cost of pulpwood and the rising
cost of solid waste disposal (including the disposal
of waste paper) are improving the competitive position
of secondary fiber.
• The stigma historically associated with recycled products
is disappearing.
On the other hand, as demonstrated in Section IX, the economics of
paper and paperboard production (comparative production costs, selling
price, and simple ROI) still favor the use of virgin fiber in most
cases. Thus, if the recycling potentials indicated in this report
are to be realized, the traditional investment and operating decision
patterns of the domestic pulp and paper industry must change signifi-
cantly.
Finally, the growth potentials for various grades of waste paper are
not equal. Greater use of old corrugated boxes and newsprint is
1-3
Arthur D Little, Inc.
-------
influenced by the "critical mass" — i.e., the quantity economically
accessible to support reuse of these materials. In the case of pulp
substitutes and high-grade deinking, on the other hand, availability
of supply is the constraining factor; and for mixed waste, limited
utility of the recovered fiber is the major constraint.
D. SPECIFIC FINDINGS
1. Industry Characteristics (see Section III)
(a) Historical growth patterns and changes in the paper industry
have resulted in a concentration of small, nonintegrated
mills in the Northeast and North Central regions of the
country. These mills have not shared in the recent in-
creases in paper industry profitability. Since they depend
on market pulp as a fiber source, their raw material costs
have increased more rapidly than their product prices. The
reduced availability of market pulp will maintain, or even
aggravate, this condition. To the extent that nonintegrated
mills continue to be economically viable, a greater use of
pulp-substitute and high-quality deinking grades of waste
paper may be anticipated.
(b) In many instances, smaller and older integrated facilities
may have viable paper-making capacity integrated to less
economically or ecologically viable pulping capacity.
This is especially true in the case of small groundwood and
semi-chemical pulp mills. An alternative source of fiber,
such as waste paper, can encourage the maintenance of
papermaking capacity despite the necessity for pulp mill
closures.
(c) As paper shortages occur, users are generally prepared
to accept lower quality in order to obtain the supplies
they need. While lower quality is not necessarily asso-
ciated with products made from secondary fiber, less
stringent product specifications will tend to increase the
potential for greater use of secondary fiber. Further,
social changes have removed the stigma once associated
with recycled products and now encourage reuse.
(d) Vertical integration of paper producers to other forest
products industries and woodlands operations establishes
a minimum base level of virgin fiber use which would
always be economically preferable to secondary fiber
pulping. A significant portion of the virgin fiber used
by the paper industry comes from the residues fron other
forest product industries; its use is particularly eco-
nomical for integrated corporations with consolidated
physical facilities.
I
1-4
Arthur D Little, Inc |
-------
I
I
I
I
I
I
I
I
• It protects producers from cycles of oversupply
I and falling prices; these have plagued the paper
industry in the past, and the industry is obviously
anxious to avoid them during the present period of
H acceptable prices and profits.
(e) Vertical integration of paper production from woodlands
operations to converting operations and other end-use
applications is another important aspect of overall
industry structure. Historically, this integration by
the major producers limited the markets available to
independent paper producers, especially in the container-
board and newsprint categories. Obviously, therefore, the
level of secondary fiber usage in these areas is influenced
by the extent to -which the large, integrated firms find
waste paper economical to use as a means of supplementing
their wood resources.
(f) Current market patterns and the high capital cost of new,
grass-roots virgin fiber pulping facilities favor incre-
mental capacity expansion. This kind of expansion has
several advantages:
• It minimizes total capital requirements at any
given time (although it does not necessarily
minimize unit capital costs per ton of new pro-
duction capacity).
Since producers usually find it more feasible to add paper-
making capacity than to add virgin fiber pulping capacity,
incremental exoansion will orovide an increased oooortu-
lUdl\.J_Llg UdpcH_J-l_y UlldlL UU dl_lU V-L1.^J_L1 J-XUCi- pLl-L^-LUg Udpd^X
• incremental expansion will provide an increased opportu
• nitv for waste oaoer.
I
I
I
I
I
I
I
I
nity for waste paper
(g) The factors that discourage overexpansion also contribute to
the reduced availability and high price of market pulp.
This world-wide condition increases the demand for pulp-
substitute grades of waste paper for both domestic reuse
and exports.
2. Wood Resources (see Section IV)
(a) Pulpwood is both a by-product of and in direct competition
with timber products.
(b) Competition for standing timber is likely to increase as
new technology makes it economically attractive to make
lumber from pole-size timber, which traditionally was
used exclusively for pulpwood. Conversely, new pulpwood
harvesting technology, such as whole-tree chipping in the
woods, reduces the likelihood of selectively taking a
few sawlogs from a pole-size timber stand.
1-5
Arthur D Little, Inc
-------
I
(c) Public ownership of the commercial timberlands and growing
stock is a significant feature of the U.S. wood resource.
This is particularly true in the West, where 67% of the
timberland and 71% of the growing stock are publicly
owned.
(d) The total annual growth of timber exceeds the total annual
removal in all but the Western area.
(e) Timber growth per acre could be approximately doubled
in all sections by demonstrated techniques of intensive
forestry management.
(f) An adequate supply of timber is available for all pro-
jected demands throughout the next decade, but better
forest management practices will be required to assure
the supply beyond 1985.
(g) There is considerable variation in the origin of pulpwood
and the method by which it is delivered to a pulp mill.
Together with the distance from the mill, these are the
principal factors that influence the delivered cost.
(h) Pulpwood costs have been historically lower in the South
and West than in the Northeast and North Central regions.
The cost differential in these areas is likely to continue.
(i) Pulpwood costs have remained comparatively stable over the
past two decades. For a variety of reasons, we do not
expect this stability to continue through the next decade.
(j) We estimate that increases in pulpwood costs will exceed
the overall inflation rate. Obviously, specific regional
factors will be influential, but on an overall basis we
believe that annual increases will exceed those due to
inflation by 3-4%.
3. Characteristics of the Waste Paper Industry (see Section V)
The waste paper industry traditionally has been highly fragmented and
characterized by family-owned enterprises. There is a trend for large
waste paper consumers to acquire dealers who act essentially as pur-
chasing agents for the paper mill. This move is an attempt by paper-
makers to establish an assured source of supply.
Another recent trend is the acquisition of independent dealers and
scavengers by solid waste management firms. The acquisition of dealers
is a form of forward integration to establish a sales vehicle for paper
stock collected incidental to the solid waste disposal business; the
acquisition of scavengers is a backward integration step to facilitate
the collection of solid waste for the processing plant operated by the
waste management firm.
1-6
Arthur!) Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Publicly operated waste paper collection systems are becoming an inte-
gral part of the supply channel. In some instances, town- and city-
operated collection systems deal directly with a waste paper consuming
mill, bypassing the dealer organization.
4. Cost and Availability of Waste Paper (see Sections VI and VII)
Historically, the costs of collecting and processing waste paper have
often been greater than the selling price. The selling price structure
was based on volunteer labor for the primary collection (e.g., for
newsprint) or on the sale of by-product paper stock by a solid waste
collector who was paid a fee to dispose of the waste material initially
(e.g., for old corrugated containers and mixed waste). The price
structure for pulp-substitute and high-grade deinking products is differ-
ent: in this case, it is the generator that realizes income from the
sale of the by-product waste material.
Because of this unique pricing structure and the fact that the potential
supply generally exceeds the demand, selling prices for waste paper are
highly volatile. Although prices and demand are obviously related,
there is currently no valid quantitative measure of this relationship.
It appears to be influenced not only by the magnitude of the increased
demand, but also by the rate of increase.
The recovery of paper stock from municipal solid waste is technically
feasible, but it appears economically unattractive at current prices for
waste paper. The bulk of the waste paper required by the industry will
continue to be generated by source segregation and separate collection
systems and by the sale of paper stock by-product from a solid waste
collection system.
National average recovery rates give a distorted view of the utiliza-
tion of waste paper. Analysis of usage patterns shows wide variance
between major geographic regions. Some regions, e.g., New England and
the East North Central, have recovery rates comparable to some of the
highest reported in the world. Since this situation appears to reflect
a combination of demographic and industry characteristics, it is appro-
priate to consider these characteristics in evaluating additional oppor-
tunities.
With the exception of pulp-substitute and high-grade deinking materials,
the potential overall supply of waste paper exceeds the projected demand.
The populous areas of the Northeast, North Central, and Pacific (espe-
cially California) regions are major sources. There is a sufficiently
large, concentrated supply of additional waste paper in these areas to
make reuse economically attractive. Opportunities for economic recovery
and reuse are far less in the more sparsely populated area of the South,
although there are sufficient supplies in this region to support increased
use of secondary fiber as a supplement to virgin fiber.
1-7
Arthur D Little, Inc.
-------
5. Substitutability of Secondary Fiber (see Section VIII)
Since secondary fiber is a by-product and a solid waste material, and
hence is not manufactured to precise product specifications, we do not
believe that the substitution of secondary for virgin fiber is amenable
to precise analysis. The quality of the recovered secondary fiber,
hence the quality of the recycled-fiber product, is influenced by:
• the characteristics of the original product,
• the history of the recovered waste paper, and
• the ability of the reprocessor to recover maximum utility
from the selected grade of waste material.
There is considerable experimental and commercial experience in the
use of secondary fiber in many paper and paperboard products. The
constraint on greater usage more frequently involves commercial/economic
considerations and not technical substitutability. For example, experi-
mental data indicate that secondary fiber can be used in construction
board products, such as insulation board and medium-density hardboard.
These could be major new applications; the difficulty is apparently that
they would be unsatisfactory from a commercial/economic standpoint.
6. Process Economics (See Section IX)
(a) The unit size and capital requirement for an integrated
virgin fiber pulp and paper manufacturing facility are an
order of magnitude larger than for one based upon secondary
fiber.
(b) The calculated ROI for the manufacture of newsprint and
corrugating medium from secondary fiber is about equal to
or slightly greater than that associated with the use of
virgin fiber. Although ROI's for some other grades (such
as jute liner) are substantially lower, they appear suffi-
ciently attractive to warrant more thorough examination. For
still other grades (such as bond paper) the ROI clearly indi-
cates that secondary fiber would not be competitive with an
integrated virgin fiber mill. Blends of secondary fiber look
particularly attractive for the manufacture of linerboard,
newsprint, tissue, and uncoated book paper.
Table 1-1 summarizes the magnitude of the capital, capital
intensivity, and scale of operation for selected paper and
paperboard products.
(c) The calculated ROI for some of the secondary fiber cost
models is probably understated, because they are compared
directly with commodity products made from virgin fiber on
larger machines. In practice, the smaller machines using
secondary fiber would probably be used to make the higher-
1-8
Arthur D Little, Inc.
-------
rH
1
H
W
£
§
c G
o cu
x e
CO C 4-1
H M W
1 3
M CU C
PH erf .M
CO '—•
W
e
erf
o
PH
CO
H
§
s
M
fr— ^
O1
H
erf
j
<3
H
M
5!
u
O
EH
N
H
>
H
CO
2:
H
H
Z
M
. T
a
i— i
r_>
H
s
Q
O
erf
PM
Q
erf
o
PQ
erf
ta
%
•<3
PM
Q
§
*5
erf
H
§
PM
Q
U
H
CJ
w
hJ
w
CO
fK
o
M
2
^
H
f <\
%
*~fr
1
S
CO C
CO
4-1
G
Oj
0
cu
j_i
•H
E
0"
CU
erf
rH
CO
1 J
•rl
P.
CO
U
o
rH -H
CO rH
4J rH
0 -H
H S
^^
>.
rH C
•H 0
ct) H
P
~-* O
O -H
O r4
O 4-1
<0-,g
x-^ rH
CD CO
C
O
•H
J 1
^•J
O
3
13
O
rl
PM
C 3
0 C
w^
^4
u
•rl
rJ >,
4J rH
0) -H
2 CO
^ O
&
3
O
M
O
rH
cfl
C
O
•rl
4J
O
G
3
PM
8^ B~S
o\ r>
• •
r- c»
rH
O O
rH CO
rH
rH 0
CM O
rH rH
0 0
O O
O O
ft A
<• o
rH 0
CO rH
O O
rH O
CO
^
M
cd
C T3
•H C
60 O
K CJ
•rl 0)
> CO
Q 1 1
^tf rO
O M
PQ CO
erf o
W rO
Z M
M CU
rH O
-3- O
rH rH
O O
rH O
-a- co
r?
cfl
a -a
•rl C
60 O
r4 CJ
•H CU
> w
1 1
•
T3
4J
s
60
>-j
)-l
O
CJ
B^S
CM
vO
O
O
CM
CO
ON
rH
O
O
o
*i
o
sf
CO
o
o
o
rH
(3
•H
60
CO M
erf -H
Pd >
SJ ,
PM
4-1
O fl
8'd
tz a.
P CO
25 s
0 cu
o a
erf
o
B^S
vD
•
O
,_|
O
~J
CO
CO
rH
O
o
o
A
CM
O
H
O
O
CO
t?
cfl
T3
C
O
a
01
CO
1
B~2
m
•
CM
CM
O
O
CM
CM
r*.
CM
o
o
o
A
CM
in
CM
o
CO
1^
c
•H
60
O M
Z iH
M >
H
H 1
§ M
CU
<•£ ft
CO
O PH
z
M TJ
H G
Z O
M m
erf
PM
B-S
CM
•
<•
o
CO
o
CM
CM
o
o
o
M
in
•
-------
added-value specialty items in their respective product cate-
gories; the short duration of the machine run would tend to
offset the economic advantage of the larger machines using
virgin fiber.
(d) The use of secondary fiber in the various functional groups
would have unequal effects on the overall level of waste
paper recovery. For example, a 5% increase in the secondary
fiber content of containerboard would cause a substantially
higher tonnage of waste paper to be reused than a similar
gain in any other functional group, because of the larger
apparent demand (consumption) for containerboard.
(e) The relative importance of the various economic cost models
should be recognized, since they clearly are not equally rep-
resentative of the numerous products included in each func-
tional group. For example, containerboard as a functional
group represents 25.2% of total industry consumption. The two
commodity grades selected for our economic models (linerboard
and corrugating medium) represent 95.6% of the total func-
tional group. Since they are commodity products, the economic
models are applicable to the entire production, with the
understanding that the models represent new installations
and thus do not represent production costs for existing
capacity.
Groundwood papers as a functional group represent 18.2% of
total U.S. paper and board consumption. This functional group
includes both a commodity (newsprint) as 86.1% of its total
and specialty products (groundwood printing papers). Thus,
our economic models for newsprint production are broadly
applicable to new-capacity costs for a relatively large portion
of the U.S. paper industry, whereas our uncoated groundwood
printing paper models provide examples of new-capacity costs
for a much smaller industry fraction.
Tissue and other machine creped paper at 4 million tons consti-
tute 6% of the total U.S. consumption, while the specific box
facial and roll toilet tissue considered in our cost model
comprises roughly 45% of this functional group.
Printing and writing papers at 17.8% of total U.S. paper
and board consumption are an example of specialty products.
The grades selected for modeling (bond paper and uncoated
book paper) represent about 43% of the total functional group.
While the preceding cost models exhibit a range of quality
variation, there is a wider range of quality variation within
this functional group and even within the individual cost
models. Accordingly, the models represent specific grades
and are not applicable to the entire group. In a similar
manner, the relative importance of our specific cost models
varies within each remaining functional group.
1-10
Arthur D Little, Inc
-------
(f) The manufacture of secondary fiber products from pulp-
substitute grades of waste paper presents a special economic
problem. Unlike OCC and old news, which appear to be in
abundant supply, only limited quantities of pulp-substitute
grades are available. The shortage increases their selling
prices and thereby reduces the potential profitability of
recycling them.
In situations where nonintegrated mills that rely upon
market pulp are viable, our calculations indicate that the
partial or complete substitution of secondary fiber for mar-
ket pulp reduces their manufacturing costs. Nevertheless,
their overall profitability is not sufficiently attractive
to justify the construction of new manufacturing facilities
unless new sources of high-grade deinking and pulp-substitute
grades are developed (or present ones are substantially
expanded) to provide a low-cost cellulosic raw material.
(g) The sensitivity analyses of the studied examples indicate
that the delivered cost of fiber and the scale of operation
are the key cost variables. Other assumptions and cost
estimates that are included in the cost model, such as the
cost of energy or the amount of fixed capital required, are
comparatively insignificant.
(h) Sensitivity analyses of the derived return on investment
indicate that selling price is by far the single most impor-
tant variable. The mid-second-quarter 1974 prices that were
used in the original calculations increased significantly
in practically every category during the preparation of this
report.
(i) Transportation costs account for a sizable fraction of the
total delivered cost of secondary fiber. If they could be
reduced—or even kept reasonably stable—by such means as
optimum site selection or the consolidation of shipments in
and out of the mill, the profitability of practically all
the secondary fiber examples would be significantly improved.
7. Potential Waste Paper Usage (see Section X)
Figure 1-1 shows, in part, the additional amount of secondary fiber that
is projected to be used in each functional group by 1977. This infor-
mation is based on consumption figures presented in the 1973 Capacity
Survey of the American Paper Institute (API).* The consumption was
apportioned among the various product groups on the basis of published
data where available, or on our assessment of the categories in which
the secondary fiber was likely to be used.
* In API's 1974 Capacity Survey, projected waste paper usage and cap-
acity expansion are revised downward significantly.
1-11
Arthur D Little, Inc.
-------
Containerboard
Groundwood Papers
Tissue and Other
Machine Creped
Papers
Folding Boxboard
Printing, Writing,
and Related Papers
Industrial Packaging,
Converting, and
Miscellaneous
Construction Paper
and Paperboard
'73-77
'77-'83
'73-'77
'77-'83
'73-77
'77-'83
'73-'77
'77-'83
'73-'77
'77-'83
'73-77
'77-'83
'73-'77
'77-'83
Increase in Waste Paper Usage
ncrease in Total Production
Summary
1973-77
Total Increase in:
Production 7.7
Secondary Fiber Usage 3.2
0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Increase in Production and Secondary Fiber Usage (Million Short Tons/Year)
Basis: Total Increase at End of Studied Period
Source: 1973-1977, API 1973 Capacity Survey, reaggregated by ADL; 1977-1983, ADL Projections
FIGURE (-1 COMPARISON OF POTENTIAL SECONDARY FIBER USAGE WITH
PROJECTED INCREASE IN PRODUCTION
1-12
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
This graph also shows the increases in production that we expect by
1977. This is based on an API survey of new capacity and expansion
scheduled for completion by that year. We apportioned these increases
among the product groups and estimated the corresponding production
in 1977.
Similarly, Figure 1-1 shows our projections of the additional production
requirements to meet the estimated apparent demand in 1983 and our
estimates of the additional amount of secondary fiber that could be used
in each functional group.
It should not be inferred from Figure 1-1 that the additional secondary
fiber would actually be used exclusively in new mills. The intent is
simply to show how much more secondary fiber might be used in each of the
studied functional groups to meet the fiber requirements resulting from
the growth in demand. From this standpoint, it is irrelevant whether
the secondary fiber is used in new or existing production facilities;*
the key questions are (a) whether total U.S. paper and paperboard con-
sumption will reach the estimated 75.4 million tons in 1977 and (b)
whether U.S. consumption of secondary fiber will reach the total of
17.5 million tons projected by API.
The total annual production of the U.S. paper industry is projected to
increase by 7.7 million tons between 1973 and 1977. The container-
board category is expected to account for some 2.7 million tons, or
about 35% of this, and therefore presents one of the most attractive
opportunities for secondary fiber. Between 1977 and 1983, overall
U.S. production is projected to increase by an additional 15.0 million
tons; we believe that containerboard will also account for 35% of
this increase, or 5.5 million tons.
Secondary fiber could gain a large share of the new capacity (additional
or replacement) in the containerboard category. It could also gain a
larger share in the groundwood paper area because of the availability
of old news to support additional production and the greater cost-
competitiveness of this fiber compared with that of the alternative
raw material.
On the other hand, the overall percentages of secondary fiber used in
tissue and printing and writing paper may decline; this reflects our
assessment that the industry is exploiting existing sources of pulp-
substitute and high-grade deinking stock as rapidly as possible, leaving
less reserve supplies to support expansion. However, regulations are
under consideration that would require all government agencies to prac-
*The distribution of secondary fiber between new and existing facil-
ities is briefly discussed in Sections X-D and X-E with respect to
its two major applications — namely, the recycling of old corru-
gated containers for containerboard and the use of old news in
recycled newsprint.
1-13
Arthur D Little Inc
-------
tice source segregation of office waste. Their enactment could signifi-
cantly increase the supply of high-grade deinking waste.
Whereas Figure 1-1 is based upon projections of increases in U.S. pro-
duction, Figure 1-2 illustrates the role of secondary fiber in relation
to the total U.S. demand (consumption) of paper and paperboard products.
Since 1973 data show historical performance, the demand represents actual
paper and paperboard consumption. Estimates of secondary fiber usage in
1977 and 1983, on the other hand, assume that paper consumption will
equal market demand projections for the original products. These figures
reveal a substantial dissimilarity in the potential for secondary fiber
penetration of the various product groups. Again, they reflect our
considered opinion regarding the availability of the appropriate waste
paper grade to support expansion, and the potential for recycled fiber
to displace or supplement virgin fiber in each product category. For
groundwood papers, the contrast between Figures 1-1 and 1-2 reflects the
fact that about 65% of all newsprint used in this country is imported.
Figures 1-1 and 1-2 also point up the difference between various
products with regard to their projected use of secondary fiber. In some
products (containerboard, newsprint, tissue, and printing and writing
papers), secondary fiber has the potential to capture additional markets;
its penetration will be limited primarily by its economic availability.
In such other products as folding boxboard, secondary fiber will prob-
ably not show substantial growth, as it is not expected to capture
markets but simply to follow the growth of those that now exist.
Because the high per capita consumption and usage pattern of container-
board produces a concentrated supply of OCC, we expect that the utiliza-
tion rate of this grade of waste paper will continue to be high. Util-
ization of pulp-substitute and high-grade deinking grades will also be
high, due to the projected cost of virgin market pulp.
News, on the other hand, appears underutilized. As a percentage of
the groundwood paper produced in the United States, however, the use of
old news is projected to reach about 30%, a sharp increase from the
present level of about 15%. The large amount of imported newsprint tends
to obfuscate the true utilization rate of this grade.
The underutilization of mixed waste is a reflection of its limited com-
mercial utility. For this rate to increase, cleaning techniques must
be significantly improved.
In summary, secondary fiber represents a viable alternative raw material
to meet the industry's future fiber requirements.
I
Arthur D Little Inc. |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Contamerboard
Groundwood Papers
Tissue and Other
Machine Creped
Papers
Folding Boxboard
Printing, Writing,
and Related Papers
Industrial Packaging,
Converting, and
Miscellaneous
Construction Paper
and Paperboard
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
;" j 18%
.:-^'.'"'-'1 23%
;.;';#;•;'•-.;•• •"•:".....] 30%
Jj 5%
g»
j£
J
29%
_L|31%
1 32%
I I
r
63%
62%
I ™ j 63%
1
7%
B 9%
8%
K£| n*
m
21%
iM 24%
F 1 24%
\ J
J '
1 I
i%
36%
[ (\ 36%
L
T
Se
igend:
3tal Consu
--^fc-^~.
mption
^r-~^
W&
*~
condary F
—• y— '
iber
12 16 20 24
Consumption (Million Short Tons)
28 32
FIGURE 1-2 PRESENT AND POTENTIAL USE OF SECONDARY FIBER IN
STUDIED FUNCTIONAL GROUPS
1-15
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
II. INTRODUCTION
A. BACKGROUND
In 1970, the United States consumed some 58 million tons of paper and
paperboard products. Of this total, 9 million tons were either saved
for some period in the form of books, records, etc., or lost their
identity as paper (e.g., decorative laminates or sanitary tissue paper).
Twelve million tons of the total were recycled, and the remainder - 37
million tons - was discarded into the solid waste stream. At present,
35% (by weight) of household trash consists of waste paper, making it
by far the largest single component.
In addition to the value of recycling in reducing the solid waste dis-
posal problem, industry experts project that after 1985 this country will
be harvesting wood faster than it is being grown. The increased con-
sumption of forest products, coupled with the removal of forest lands
to fill urban requirements, is reversing the excess of growth over re-
movals that has existed in the past.
Accordingly, an increase in the recycle ratio could greatly ameliorate
the problems of solid waste disposal and loss of forest resources.
Unfortunately, the percentage is apparently declining rather than rising:
as recently as 1950, it was 30%, but by 1970 it had dropped to 20%. In
terms of actual tonnage, however, the industry recycled more at the 20%
ratio (12 million tons) than it did at the 30% ratio (8.7 million tons),
because U.S. consumption of paper and paperboard doubled in the inter-
vening 20 years.
England and Germany have reported recycle ratios of 40-45%, which has
aroused some criticism of the U.S. industry. These recycle ratios,
however, are based on the countries' production of paper and paper-
board, and England and Germany are major importers of these products.
If the percentage had been based on consumption, as in the United States,
they would have changed to 27-32%.
Opportunities for profitable recycling have been reported in the liter-
ature. These publications point out that because the investment per
daily ton of secondary fiber capacity is about half that for a virgin
fiber mill, the operating cost of a recycling operation could be higher
and still produce a more favorable return on investment than a virgin
pulp mill, despite economies of scale. Such economic comparisons, of
course, do not reflect quality differences and market opportunities for
these recycled products.
Thus, the potential for increased secondary fiber use in this country
is a complex and controversial issue. For studying preliminary oppor-
tunities, generalizations regarding the following can be of some use:
• Comparative economics of virgin vs recycled paper
and paperboard manufacture;
II-l
Arthur D Little, Inc.
-------
• Potential market demand for recycled products; and
• Potential opportunities to increase secondary fiber usage.
In view of the complex and controversial nature of the problem and the
social and economic impact resulting from changes in the secondary
fiber usage pattern, it is imperative that EPA possess a comprehensive
appraisal of the supply, demand, and opportunities for secondary fiber
usage in the paper .industry. The reason for EPA's sponsorship of this
study was to provide a data bank of technical and economic information
that would assist EPA in the accomplishment of its environmental
objectives.
B. APPROACH
To carry out the objectives of this program, we relied heavily upon
existing data, our own informed judgment and interpretive skills and
those of consultants retained by us, and information derived from visits
with selected agencies, organizations, and manufacturers.
The principal part of this program (Sections III through IX) involved
the collection and organization of industry data, which included the
following tasks:
• Characterization of the industry in terms of its annual
sales, products, total investment, number of mills,
present and future demand, plant locations, major
companies, etc. (Section III);
• Analysis of the cost and availability of the wood
resources to support increased pulp and paper require-
ments (Section IV);
• Characterization of the waste paper industry in terms
of its annual sales, investment, major companies, etc.
(Section V);
• Analysis of the cost and availability of the major
waste paper grades by major geographic regions
(Sections VI and VII);
• Analysis (in Section VIII) of the substitutability of:
- secondary for virgin fiber;
- paper stock grades, one for another, and
- products made from secondary fiber as
opposed to virgin fiber; and
I
II-2
Arthur D Little, Inc. |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
• Economic comparison (in Section IX) of the invest-
ment and operating cost for the manufacture of
selected paper and paperboard products made from
- virgin fiber,
- secondary fiber, and, where applicable,
- blends of virgin and secondary fiber.
We then assessed (in Section X) how the above-listed technical and
economic characteristics might influence the use of secondary fiber
by the industry through 1983.
II-3
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
III. CHARACTERISTICS OF THE PAPER INDUSTRY
This section deals with the characteristics of the pulp and paper industry
that may influence its use of waste paper. The information was obtained
from published data, our industry contacts, and various trade associa-
tions.* While we have attempted to provide reasonably accurate infor-
mation on individual companies, we have not developed original data for
these companies since it is not critical to the overall analysis. A
summary is included at the end of this section.
A. ROLE IN THE U.S. ECONOMY
1. Size and Inter-Industry Relationships
With annual sales of $31 billion in 1974, the paper and allied products
industry ranked tenth among the fifteen major U.S. manufacturing indus-
tries. The industry has total assets of about $22 billion and currently
employs about 718,000 people.
Because this study is aimed at an analysis of waste paper usage, we will
focus our attention on the segments of the industry that produce pulp,
paper and paperboard. Those that are primarily engaged in converting
paper and paperboard into boxes, cartons, stationery, etc., and are not
users of waste paper are excluded, except to note the segments that are
significant sources of waste paper.
Tissue converting is the only exception to the exclusion of converting
operations, because there is no well-established market for the interim
product—the jumbo rolls off the paper machine. As a result, converting
operations in the tissue sector are usually integrated with papermaking
operations. For this reason, the tissue market characteristics (price,
quality requirements, movement of product, etc.) are best described for
the converted tissue product.
Accordingly, with the exception of tissue converting, we have focused
on the pulp, paper, and paperboard sectors because the economics of
their manufacturing operations will ultimately determine the level of
paper recycling that can be achieved.
Figure III-l shows the relationship of the pulp, paper and paperboard
production sectors to their major supplier and consumer industries. It
indicates that the paper industry's major raw materials are logs and the
residues from sawmill and plywood operations, which are used to make wood
pulp. Waste paper is also a significant raw material, particularly in the
paperboard and building paper sectors. The chief customers are the makers
of paperboard containers and boxes and a variety of converted paper and
paperboard products, who sell their products primarily to the printing and
publishing industry and to the consumer market through wholesale and
retail channels.
*A comprehensive list of associations in the paper and allied trades is
given in Appendix F.
III-l
Arthur D Little, Inc.
-------
CO
cu
•rl
rl
4-1
CO
3
C
H
rl
CO
Q
CO
e
o
U
rl
0
•n
cd.
Is
CO
a)
•H
"14
TO
CJ
•H
CU 4-1
13 CO CO
CT] rH Cd
S cd -H
1 T
H CM
PJ M
.Q ^
^1 4-
C
cJ Is
iH
TO C
]) TO
J 3
3 S
* C
o cd
0 CJ H
rH T
H rH
34-10)
rH CD O
rH Cd TO
0) l-
H -H
U PM IS
***** ^*
CO i-
CSl f
N /^N
H CJ*»
4 r^
oo oo O
CN CM CO
V
oo
C
•rl
^
to
CU
•H
4-1
CO
rt 3
cu "O
ft C
cd H
CM
00
T-t r<
\J H*
C -rl
cd n
ft 4->
rH O
3 cd
PH l-W
3
1
rH
O
TO
co
•rl
P
j
ft
rH
3
CM
TO
i-H
r"
•r
*.
H
H
H
&
rH
CM
T) TO
rl CU
cd X
o o
,0 ^i
M
CU T3
ft C
cd cd
PM
TO
-O rl
rj CU
cd c
•H
rl Cd
CU 4J
ft p4
cd o
CM cj
nd 4J
Q) ft
4J CU
M CJ
CU K
> CU
d ^^^
0
O
^^
*^
vD
CN
V
ft
rH
3
CU )
ft
cd
Cw
rH
r-l
vn
TJ
CU
•rl
rH
rH
• 4->
00 TO
C 3
•H T3
4J p)
C H
•H
^i
CM
^^•^
r*^
CM
'V
t
'"^
V4
TO CU
rH Pi4
rH Cd
•H P,
^
M 00
01 T3
ft rH
cd *o
CM
4J
x-s p,
i-H CU
CM CJ
CM 0)
17
w
o
o
cu
,0
2
P
fi
o
1
cu
cd
H
cu
cd
TO
CU
o
TO
a
>
i
t
b
pq
u>
3
CO
t)
o
c§
cu
_<
TO la
M m
cu
C
•H
cd
4.
J
C
c
3
u
"•r.
1
}-4
Cl_
3
O
,£
)
M
a)
ft
cd
rl
|
CU
n3
cd
H
cu
rH
cd
TO
0)
O
Ji
^ PM S
^^^
o
m
^"^
^<
u-
N
^
-^
VD rH
CM in
t
Tit
M
cd
o
*£
(U
ft
cd
CM
i-H
CO
VO
CM
* — /
,
TO
rH
i-H
•rl
g
f
v
t
TO
i-l rH
QJ rH
ft -rl
CM
* M
oc cd
T3 o
rH Pfl
*
^-v 00
rH 'rj
VD rH
\o pa
CM
CU
i-i cu
cd B
IS 0
*r3 p^{
cd cu
K rH
•H
-,£>
TO O
cd
•H o£J
rl
cu >>
4J rH
3
oo co
C TO
•H £3 H
T3 0) 0)
rH T3 rH
•H t-i ed
3 Cd CU
pq O P
/«^v
CN
m
N»X
/
TO
C3
O
•H
4J
cd
c
00
•rl
TO
m
CM
X.
S
V-i 00
cu Pi PJ
4_1
g
rrj
o
PL,
a
cfl
cu P-I
3
T3 (L
TO rH -H 4-
e
>0
o
rH TO Cf
u O -H
4-> J3
4-1 00 CJ
O P) Cd
U -HO)
ft rH
T) rH pq
•rl CU .Cd C 3
TO
rH
cd
a
•H
TO
rH
cd
1 00 U
rl C
3 -rl
B CU -rl B
cu
f.
hJ 3S Oi I3P td p i t^J QJ)
TO
t-
•1
CO O
ft 4-1
rl 8 U
CU
•rl CO
rH CU
ft -rl
ft M
3 4-1
C*0 CO
•_( -O
O C
•n H
cd cd
U I-l
4.
J
ft £
Cfl C
CM £
i CU
\ f.
H
oo cd
C 0
•H -H
P* 3
rH CU
3 JC
PM O
M
00 4-1
fi C
•rl CU
J_J g
cd oO
O -H
O CM
T3 TO
O r-
1
0 cd C I
IS -H , H B
rl CU
tJ Q) rH ^3 rH
Pi 4-
Cd TO CC
00 C 4-i £
C 0
•H C_
00
J
00 T3
rl CJ
Q) 3 0
•2 *° •"-
cd o
•H
rl O
4J -H
) ca c
• 3 cd
a o ro TJ oo
0 C 3 rl Cd a rl
d
hJ CM 3
M O
cd
•H
TO
rH
rl CJ Cd
TO
4-1 T
ca i
H CJ
3 -H
rH 3 Cd B
cd
a
TJ 00 0)
C rl ,C
•H H O U
rl
3
rH
3
en
r7 CO" ^ ^ P
rH
/*N CT
^ rH
••>• --J- O 00
CM
^-^
CN in CN
^s v_
' v— '
xD
OO
CM
"*-*
f^
-a-
rH
*-*
^>
cd
rH
U
m
m
^-
rH
***
T3
M
CO
cu
1-1
cd
TO
cu
TO
cu
^rj
4J
c
cu
cfl
ft
C
•rl
TO
CU
fi
y
&
,,
w
H
0
'Z
*
4J
CU
00
3
pq
T)
c
cd
4-1
C
cu
B
§
00
1
o
cu
o
•H
U-4
HI
o
"
ON
r-(
rH
cd
1
O 4J
•H C
[J (y
cd TJ
a -H
<4-4 CU
•rl t-l
CO CM
CO
c-j cu
rH ft
C-3 4-1
rH <4H
cd o
•H
M cu
4-1 O
TO -rl
3 M-l
T3 V-<
C 0
M
CU
Tl >
rl -H
Cd 4-1
-a 3
C a
cd 01
4-1 X
B>
u
fVJ
5
o
CO
00
cc
111
I
V)
D
O
Q
Z
<
bO
CC
O-
a.
D
oo
o
LLJ
00
CD
Z
E
D
o
CC
UJ
a.
<
Q.
Q
a.
CC
O
ui
CC
D
a
III-2
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
There is a large degree of vertical integration within the pulp and paper
industry. For example, companies operating pulp mills usually own or
control through leases a portion of the woodlands that supply their pulp-
wood. Such companies also usually employ their own logging crews and often
operate sawmills and plywood mills so as to obtain the highest return on
their timber and to control at least part of the supply of pulpwood required
for their mills. Most companies are also engaged in converting some or all
of their paper and paperboard materials into boxes, stationery, etc. Few
pulp and paper companies, however, are engaged in printing and publishing.
Table III-l indicates the magnitude of the studied sectors of the pulp,
paper, and paperboard industry in terms of 1972 U.S. Department of Commerce
data. A total of 787 plants with gross fixed assets of about $14 billion
employ about 220,000 people to produce products worth about $12 billion
annually.
The largest sectors are paper mills and paperboard mills. Most of the
production in both these sectors comes from mills integrated to their own
on-site pulp production. However, a number of mills, particularly in the
paper sector, rely on purchased "market" pulp for their raw material. All
of the building paper and board mills provide their own pulp, which in-
cludes large amounts of waste paper for the production of building paper.
The so-called "market" pulp mills make either paper-grade pulp, dissolving
pulp, or a combination of both. Paper-grade pulp, an interim product, is
primarily sold to nonintegrated or partially integrated paper mills. Since
most paper-grade pulp is bleached, it can be viewed as a competitor to the
pulp substitute or deinking grade of waste paper. Dissolving pulp is not made
from waste paper, because impurity problems make the process technically
difficult and economically unfeasible; therefore, we have not considered
the applications of dissolving pulp (primarily rayon and cellophane)
in this analysis.
The paper manufacturing industry is capital-intensive, as shown by its
comparatively low ranking of sales per dollar of stockholders' equity and
high ranking in assets per employee (Table III-2). Within the paper
industry, the market pulp sector is most capital-intensive, followed by
the paperboard, paper, and building paper and board sectors.
2. Geographical Distribution
The U.S. pulp and paper industry began in New England in the 1800's with
the development of groundwood pulping, sulfite pulping, and papermaking
to supply the growing paper needs of the Northeast. The proximity of the
expanding population centers to large resources of water and high-quality
softwood pulpwood in northern New England and New York state were key
contributing factors to the early development of the industry.
III-3
Arthur D Little Inc
-------
TABLE III-l
MAGNITUDE OF THE PULP, PAPER AND PAPERBOARD SECTORS - 1972
Number of Number of Value of Gross Value Shipments/
Sector Plants Employees Shipments Fixed Assets Assets Ratio
Paper Mills
Paperboard Mills
Building Paper
and Board Mills
"Market" Pulp
Mills
358
276
95
58
130,000
68,000
12,000
11,000
($ million)
6,400
4,100
470
690
($ million)
7,600
4,400
400
1,600
0.84
0.93
1.18
0.43
Total 787 221,000 11,600 14,000 0.83
a!971 data; 1972 data not yet available
SOURCE: 1972 Preliminary Census of Manufactures", U.S. Department
of Commerce
III-4
Arthur D Little, Inc
-------
1
1
1
1
•
1
1
•
1
1
1
1
INDICATORS OF
Sales per Dollar of
Stockholders' Equity
Food
Leather & leather products
Shipbuilding, railroad equip.,
mobile homes
Motor vehicles and parts
Apparel
Aircraft and parts
Broadcasting & motion pictures
Metal Products
Textiles
Soaps, cosmetics
Appliances, electronics
Rubber
Farm & industrial machinery
Beverages
Office machinery (incl.
computers)
Publishing & printing
Chemicals
Paper and wood products
Measuring, scientific and
photographic equip.
Glass, cement, gypsum,
concrete
Metal manufacturing
Tobacco
Pharmaceuticals
Petroleum refining
Mining
Furniture
Jewelry & silverware
Musical instruments, toys,
and sporting goods
All Industries
SOURCE: Fortune,
TABLE III-2
PAPER INDUSTRY'S CAPITAL INTENSIVITY
$4.30
3.41
3.20
3.12
3.01
2.97
2.96
2.90
2.70
2.65
2.57
2.56
2.27
2.25
2.19
2.16
1.97
1.97
1.96
1.95
1.83
1.77
1.72
1.51
0.78
N.A.
N.A.
N.A.
2.48
Assets per Employee
Petroleum refining
Mining
Tobacco
Beverages
Broadcasting & motion pictures
Metal manufacturing
Chemicals
Paper and wood products
Pharmaceuticals
Soaps, cosmetics
Glass, cement, gypsum, concrete
Food
Publishing and Printing
Farm and industrial machinery
Rubber
Measuring, scientific and photo-
graphic equipment
Shipbuilding, railroad equip-
ment , mobile homes
Motor vehicles and parts
Aircraft and parts
Appliances, electronics
Office machinery (incl.
computers)
Metal products
Textiles
Apparel
Leather and leather products
Furniture
Jewelry and silverware
Musical instruments, toys,
sporting goods
All industries
May 1973, p. 243
III-5
A-
$126,775
84,291
65,158
57,338
48,965
43,460
38,640
36,475
31,353
29,879
27,988
27,853
27,335
24,172
23,944
23,265
23,151
22,602
21,562
19,894
19,612
19,576
17,094
12,403
11,307
N.A.
N.A.
N.A.
$ 27,107
+l-»i it- F^ I ;<•*
-------
Gradually, however, the need for substantial wood supplies for pulping
(as well as for lumber and plywood) outstripped the capabilities of the
Northeastern area. Many of the mills, particularly those nearest the
population centers, closed their pulping facilities and turned to purchased
pulp or, in some cases, deinked wastepaper for their fiber requirements.
As this trend was taking place, the population was moving west; the pulp
and paper industry also moved westward to the North Central states and then
to the Pacific Northwest and the South.
The shift to the South in the late 1930's was prompted by the develop-
ment of the kraft process, which enabled mills to use the resinous
wood that grows there. The industry flourished in that region because of
the availability of low-cost wood, fossil fuel, and a more favorable
climate for construction than in the Northeast. About 64% of the
industry's pulping capacity and 49% of its papermaking capacity are now
located in the South (Figure III-2) .
Because of this pattern of development, the older, smaller, and noninte-
grated mills tend to be located in the Northeastern and North Central
states, while the newer, larger, and integrated mills are located in the
South and Pacific Northwest. Figures III-3a through -3f more specifically
indicate the geographic distribution of U.S. pulp and paper mills in 1973.
For purposes of this industry overview, the mills are aggregated by major
pulping processes; subsequently, these are aggregated by the product groups
used in the analysis.
Readily apparent from Figure III-3 is the heavy concentration of kraft and
NSSC pulp mills in the South, and the less extensive but still important
segment of the industry in the Northeast, North Central, and Pacific
Northwest. Sulfite mills are located chiefly in the Northwest and Central
states. As noted earlier, many of the pulp mills that were established
in the Northeast during the development of the industry have been shut
down or converted to nonintegrated paper mills; accordingly, only a few
isolated sulfite mills remain in the Northeast. Groundwood mills are more
evenly distributed. Most recycled paper mills are in the East and North
Central regions, near the metropolitan areas that provide a waste paper
supply and end-use markets.
About 58% of all mills and 70% of the nonintegrated mills are in the
Northeastern and North Central regions, but only 18% of the U.S. virgin
pulping capacity and 38% of the papermaking capacity are located there.
Secondary fiber pulping is used to augment the virgin pulp; therefore,
these regions are traditionally large consumers of waste paper. As noted
in Figure III-3F, many of the nonintegrated mills in these two regions
produce fine paper and tissue, which are the major applications for paper-
grade market pulp.
Because many of its mills are relatively small, the paper industry in the
Northeastern and North Central regions tends to be more labor-intensive,
I
III-6
Arthur D Little, Inc. |
-------
1
1
1
1
on
1
1
1
15
IS
c3
1
1
1
1
tP%i:%&3 Virgin Pulping Capacity
l'^s/ 'TCoNl Paoermakina Caoacitv
H
''""M"
s
;'s'>v
^ \ . ^
^w^^^w — -^ I
,X/sCv
»N" ' ~*,
' • x ^^ /
: V ' \-
• Northeast
North
8;
s *• 1 y
^
s','^
iV^^
/ — "
x' ' 1
s^f^—
; t
\ '
' s ^
1 \ ^X"
X^"'"
\-*. ' x
** / ^
^x,s 1 /
'"' S"-I.
V 1 ^ "
y \ i / —
^^
N^^'
^
^ \ ^ /
X^-'
- ^V-
-x 1 ' '
/ / /
,\' ^ /" i
il
; /-;iS7>
• T"'^'
'X-?^';
*.' ^j
,\^j-
"^ ^ ^
"^ /- i
Central South Pacific Northwest
Source: "Paper/Paperboard/Wood Pulp
Capacity," API.
I FIGURE MI-2 YEAR-END CAPACITIES FOR VIRGIN PULP
— AND PAPERMAKING, BY REGION - 1973
1
1
III-7
1
A,
Arthur D Little Inc.
-------
UNBL.
BL.
0
4
0
2300
SUBCATEGCRY
UNBLEACHED
BLEACHED
SODA
MILLS
45
68
3
CARftClTYTONS/hw
44,000
49.500
1,300
A. KRAFT MILLS
SUBCATEGORY
AMMONIA
SODIUM
WITH KRAFT
MILLS
2
23
20
CAPACITY TON5t>AY
500
5500
19500
tNSSC mills integrated with kraft mills
B. NSSC MILLS
Source: "Capabilities and Cost of Technology Associated with the Achievement of the
Requirements and Goals of the Federal Water Pollution Control Act Amend-
ments of 1972 for the Pulp and Paper Industry," draft report to National
Commission on Water Quality, Hazen and Sawyer, February 1975.
FIGURE 111-3 GEOGRAPHICAL DISTRIBUTION OF U.S. PULP AND PAPER MILLS
III-?
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
SUBCATEGORY
SULFITE
DISSOLVING
MILLS
18
10
CAPACITY TONStlAY
6600
4800
C. SULFITE MILLS
SUBCATEGORY
GROUNOWOOD
MILLS
35
CAPACITY TON?teY
12400
D. GROUNDWOOD MILLS
FIGURE 111-3 CONTINUED
III-9
Arthur D Little, Inc.
-------
SUBCATEGORY
DE-INKED
PAPERBOARO FROM
WASTE PAPER
MILLS
21
132
CAPACITYT°N50AY
3,000
20,400
E. RECYCLED MILLS
SUBCATEGORY
FINE
TISSUE
COARSE
MILLS
72
67
82
CAPACITYTO*%iY
7400
6000
12700
F. NONINTEGRATED PAPER MILLS
FIGURE 111-3 CONTINUED
111-10
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
employing about 35% and 20% respectively of the industry's labor force;
the South employs about 30% and the West 15%, but each accounts for a much
higher proportion of the total national production of pulp, paper and paper-
board.
The industry's 787 mills are operated by approximately 450 companies.
Of these firms, the top 20 account for about 65% of total production;
the 50 largest produce about 85% of total output. These are typically
integrated to pulp production and have annual sales of more than $50
million.
The top 20 companies generally produce at least as much papermaking pulp
as they need. Usually they manufacture commodity paper and paperboard
products, such as linerboard, corrugating medium, bleached board, and
unbleached kraft paper. Their major operations are typically in the
deep South and the Pacific Northwest. Those that have owned properties
in the Northeast and North Central regions for many years manufacture
more specialized products, such as printing and fine papers, as well
as the commodity items discussed above.
At the other end of the spectrum are the family-owned, single-mill
concerns, most of which are located in the Northeastern and North Central
regions and make specialty paper products in quantities ranging from
less than 10 to several hundred tons per day. These producers usually
rely on purchased pulp, although some operate small pulp or wastepaper
deinking mills.
The medium-sized companies usually produce pulp and often are net buyers
of pulp as well. These tend to concentrate on a rather narrow product
range and are not as diversified as the major companies with regard to
the kinds of paper and paperboard products they can supply.
The location, product line, and capacity of all U.S. mills are listed in
Appendix A-l (categorized by functional group) and Appendix A-2 (categor-
ized by region and state). This information is summarized in Appendix
A-3, which lists the number of mills in each functional group by state.
3. Profitability Trends
Very few publicly-held companies produce only pulp, paper, or paperboard
without converting at least part of their production to end products.
Therefore, there are no publicly available data that characterize the
current profitability of only the pulp, paper and paperboard sectors of
the industry. The Internal Revenue Service publishes the profitability
of the pulp, paper, and paperboard sector from a composite of corporate
income tax returns, but this is several years out of date when published.
For much the same reason, no data are publicly available on the profit-
ability of individual grades or product lines, since few public companies
in this industry produce a single product line. Overall, however,
paper and allied products industry profitability data reflect trends that
are similar to those in most product sectors over the past five years
(Table III-3).
III-ll
Arthur D Little, Inc.
-------
TABLE III-3
PAPER AND ALLIED PRODUCTS INDUSTRY PROFITABILITY
AND CAPITAL STRUCTURE (1969-1974)
Net Profits'
Year Quarter
1969 I
II
III
IV
1970 I
II
III
IV
1971 I
II
III
IV
1972b I
II
III
IV
1973 I
II
III
IV
1974° I
II
III
% of Sales
4.7
5.2
4.7
4.6
4.2
3.9
3.1
2.5
2.5
2.8
2.5
1.4
3.0
4.6
3.8
4.6
4.7
5.9
5.6
5.6
6.6
7.9
7.8
% of Equity
9.8
11.1
9.6
9.9
8.3
8.2
6.2
5.3
4.9
5.9
5.3
2.9
6.5
10.5
8.6
10.5
10.8
14.6
13.1
13.0
15.8
20.5
20.1
Stockholders'
Equity/Debt
1.89
1.90
1.89
1.88
After income taxes
Revised series as of fourth quarter of 1971.
°Revised series as of fourth quarter of 1973.
Source: Federal Trade Commission, Quarterly Financial Report
for Manufacturing Corporations.
111-12
,83
,80
,75
,70
,68
,67
,66
1.75
1.79
1.77
1.80
1.86
1,
1,
2,
1,
2,
2,
,97
,97
,00
,98
.03
.07
2.15
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
In 1970 and 1971, the paper industry's after-tax return on sales and
shareholders' equity fell to its lowest level since World War II. Coupled
with low profitability, the industry's debt reached its highest level since
that time, as illustrated by its equity-debt ratio of 1.66 in the third
quarter of 1971.
In 1972, however, improved mill operating rates and higher prices through-
out the paper industry caused an upturn in profitability. Profits con-
tinued to rise through 1973 and were particularly significant in the first
and second quarters of 1974, after price controls were partially lifted
for this industry in March of that year and fully lifted in June. The
upturn in the industry's earnings also caused shareholders' equity to
assume a larger proportion of its total capital structure.
The industry's profitability in 1974 reached its highest point since World
War II and was well above the average for all industries. Market pulp
profitability was above the industry average, while average paper and
paperboard were below.
4. Trends that May Affect Watepaper Utilization
Since 1973, market pulp has been in short supply, and its price has risen
sharply. This is partly the result of inflation, which has increased all
manufacturing costs, particularly those of pulpwood and energy; also, as
discussed in Section IX, the high cost of replacing existing manufacturing
facilities has escalated the prices of market pulp and all other industry
products.
The shortage and high cost of market pulp have served to increase the demand
for the alternative raw materials, namely the pulp-substitute and high-
quality deinking grades. Thus, while we do not have the 1974 waste paper
consumption figures at this time, we expect them to show a sharp increase in
the quantities of these waste paper grades over previous levels.
The paper industry supply/demand balance has now loosened considerably as
the economic recession has dampened demand for its products. In turn, the
paper industry's demand for waste paper has slackened, and waste paper
prices have fallen considerably below their highs of 1974. On the other
hand, prices for most of the paper industry's products (including market
pulp) have remained firm, and the industry's profitability is currently
holding close to the record high levels established in 1974. This is in
contrast to the extremely low profitability that prevailed during 1970 and
1971.
In spite of the upturn since 1971, paper industry management has been much
more cautious than in previous years in expanding capacity. The key reasons
for the lower rate of capacity expansion which is foreseen through 1977 are:
• Scarcity of new or expandable mill sites;
• Difficulty and cost of obtaining additional woodland
control;
111-13
Arthur D Little, Inc
-------
• Escalating costs of mill construction;
• Difficulty and high cost of obtaining sufficient
capital;
• Uncertainty over future national and world economies;
• Uncertainty over the future impact of government
regulations.
The chief effect of this slower rate of expansion will be to tighten the
industry's supply/demand balance as the economy recovers from the current
recession. As a result, the industry's prices will continue to escalate,
and its consumption of (and prices paid for) waste paper will again in-
crease. The combination of supply constraints, rising prices, and slower
U.S. economic growth will also cause domestic paper consumption and pro-
duction to grow at a slower rate of 3-3.5% per year through 1983, com-
pared with 4.5% per year in 1960-1970.
The supply/demand relationship of both pulpwood and saw timber in the
United States will also become significantly tighter by 1983. This
trend will cause timber stumpage prices to increase and create greater
economic incentive to manage timberlands for greater growth and yields.
This, in turn, will increase the economic advantage of companies control-
ling large blocks of timberland that support nearby pulp mills and wood
conversion plants. We believe that the costs of stumpage, wood harvesting,
hauling, and forest management associated with virgin pulpwood supply will
increase more rapidly than the rate of inflation. (See Section IV.) The
price of waste paper will also rise, but probably not as steeply as that
of pulpwood; the pressure for higher prices will be somewhat alleviated
by increased supplies as the practice of charging for solid waste disposal
becomes more widespread.
Pressure for protecting the environment will significantly accelerate
technological change in this industry. These concerns are already causing
significant modernization of the industry's plant and equipment through
technological improvements and industry consolidation. We expect to see
increased use of lower polluting unit operations such as high-yield pulping,
oxygen bleaching, high-consistency forming, and dry forming for special
applications as well as greater use of waste paper raw material. On the
other hand, increasingly stringent water pollution control regulations are
inhibiting the use of waste paper, particularly in deinking operations, by
adding to the costs of the repulped waste paper fiber.
B. INDUSTRY SEGMENTATION AND OVERALL GROWTH TRENDS
1. Industry Sectors
The paper industry comprises a variety of sub-industries built around major
product categories; the latter have been classified by the American Paper
111-14
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Institute (API) and the U.S. Department of Commerce according to end
use and/or pulping process employed. Many products compete for the same
end-use market, and this intra-industry competition must be taken into
account in projecting the future supply and demand for the product cate-
gories.
In organizing this presentation, we found it useful to aggregate the num-
erous industry product categories into seven functional product groups.
These were selected on the basis of common primary markets for the products
included; in many cases the products are complementary rather than directly
competitive.
Table III-4 shows the specific paper and paperboard grades that are defined
by API as belonging in the selected functional group. Production data for
1973 are also included to illustrate the relative magnitude of the tonnage
in the selected categories.
Subsequently, each category is discussed separately to identify its industry
characteristics and the possible effect of these characteristics on the use
of secondary fiber in that area.
2. Demand Projection
In this analysis, we have used the term "demand" or "consumption" to indicate
the requirement for paper and paperboard products by their subsequent user,
whether the latter is a converting operation or the ultimate end user.
Accordingly, in converting operations that produce scrap, such as the pro-
duction of corrugated boxes, the scrap factor must be subtracted from the
reported consumption to obtain the output of the converting industry.
Tissue is the one exception to this; as explained earlier, tissue manufact-
ure and conversion are commonly done on the same site, and the scrap is used
internally. Therefore, the "demand" or "consumption" of tissue converters
is equal to their output.
In Table III-5 we have projected the domestic demand for the major func-
tional groups through 1983. The expected increase to some 91 million tons
is substantially lower than other published estimates,* which range up to
93-95 million tons. The more optimistic estimates were made before the
onset of a severe worldwide recession, when few could anticipate the dura-
tion or extent of the falloff in economic activity. We expect the recession
to have a profound impact upon the level of paper production that will be
achieved by 1983.
*See, for example, "The Outlook for Timber in the United States," FRR 20,
U.S. Dept. of Agriculture, October 1973 and "Fiber Requirements of the
Paper Industry in the Seventies and Eighties," by Benjamin Slatin (API),
paper presented at TAPPI Secondary Fiber Conference, San Francisco,
Calif., September 15, 1971.
111-15
Arthur D Little, Inc.
-------
I
TABLE II1-4
PRODUCTS INCLUDED IN FUNCTIONAL GROUPS
1973 Production
Functional Group
Paper Grade as Defined by API
MM Tons
1. Containerboard
Unbleached Kraft Packaging & Industrial
Converting Paperboard
Unbleached linerboard 12.98
Corrugating medium
Folding carton type
Other unbleached packaging & 0.58
industrial converting kraft
Semi-Chemical Paperboard 4.32
Combination Paperboard-Shipping
Containerboard
Linerboard
Corrugating medium 1.51
Container chip & filler
19.39
2. Groundwood Paper
Newsprint
Groundwood Paper, Uncoated
Publication & Printing
Miscellaneous Groundwood
1.46
3. Tissue and Other Machine
Creped Paper
3.96
Sanitary Paper
Toilet Tissue
Facial Tissue
Napkin
Toweling
Tissue Paper, excl. Sanitary and
Thin Tissue
3.76
0.20
4. Folding Boxboard
7.67
Bleached Packaging & Industrial
Converting Paperboard*
Folding carton type
Milk carton
Heavyweight cup stock
Plate, dish & tray 3.92
Linerboard
Other, incl. solid groundwood
pulp board
Combination Paperboard - bending 2.76
Combination Paperboard - nonbending 0.99
5. Printing, Writing
and related
11.82
Coated Printing & Converting Paper
Coated, one side 1 3 85
Coated, two sides j
Book Paper, uncoated
Publication & printing
Body stock for coating } 3.06
Other converting & misc. book
Writing and Related
Cotton fiber
Chemical wood pulp 3.78
Cover & text
Thin
Bleached Bristols
Tab, index & file folders
Other uncoated 1.13
Coated
% of Total
21.0
0.9
7.0
2.5
2.4
6.1
0.3
6.3
4.5
1.6
6.3
5.0
6.1
1.8
31.4
4.87 7.9
3.41 5.5
6.4
12.4
19.2
I
I
I
I
I
111-16
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE III-4 (Cont'd)
PRODUCTS INCLUDED IN FUNCTIONAL GROUPS
Functional Group
Paper Grade as Defined by API
1973 Production
MM Tons % of Total
6. Industrial Packaging,
Converting & Misc.
7.37
Unbleached Kraft Packaging & Industrial
Converting Paper
Wrapping j
Shipping sack > 4.01
Bag & sack, other than shipping sack '
Packaging & Industrial Converting Paper,
except Unbleached Kraft
Wrapping |
Shipping sack > 1.26
Bag & sack, other than shipping sack '
Other Converting
Special industrial paper 0.56
Tube, can & drum paperboard
Special (combination) packaging ^ 1.54**
& converting
7. Construction Paper
Construction Paper
Insulation Board
Hard Pressed-Wood Fiberboard
Gypsum Linerboard
6.61
1.81
1.66
2.09
1.05**
TOTAL 1973 PRODUCTION (less wet machine board)
* Excludes tube, can and drum paperboard
** Arthur D. Little, Inc., estimate
61.69
111-17
12.0
6.5
2.1
0.9
2.5
10.7
2.9
2.7
3.4
1.7
100
Arthur D Little, Inc
-------
m
H
H
H
W
pQ
•*^3
H
CO
a
fO O
00 4J
os
^~s
&
4-1
U
O
r< /-N
O M
s*
CU ^
60 B^
Cfl ^
P
CU
>
o
pQ
Pi
51
PM
Pi
W
%
P-
Prf
O
6
£55
1
•
CO
•
p
e
w
H
o
W
*->
o
O
M >-N
O r<
cu ---
606-S
cd ^
VJ
cU
co
a
fO O
r- 4-J
Os
rH 2
^
N^X
O VO
* *
on CN
|-~. CM
• •
r~ CM
rH rH
Qj Lj
^
O
^1
o
rH
qj
c
o
•rl
4-1
CJ
a
3
01
T) P-
t-t Cfl
Cfl PM
O
"M o
CU O
a &
•rl *u
cd C3
4J 3
a o
O r(
cj O
CM
•
m
m
v
CM
m
•
-d-
O
•
co
o
*
"
o
•
CM
CO
•
00
o
CN
r-->
•
r^*
13
£_(
cfl
O
^3
X
PQ
60
a
•rl
»rj
rH
O
00
vO
m
vO
m
in
m
3
•a
60 CU
•rl Cfl
4-> rH
•H CU
60
CJ
•S
M
CM
00
VO
60
•S
60
rH
cfl
•H
P
4J
in
3
••d
C ca
cd 3
o
60 CU
a c
•rl Cd
4-> rH
M rH
CU CU
> CJ
C CO
cSS
oo
in
ro
in
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
This table indicates that growth in the demand for paper and paperboard
products will drop to about 3% per year compared with 4.5% in 1960-1970.
This slower rate of growth, which will be experienced by all of the func-
tional groups, will be caused by a number of factors:
(1) The 1973 base year used for the projection was above
the demand trend-line for most functional groups and
is being followed by two recessionary years, which
lowers the growth rate between 1973 and 1977.
(2) We have assumed that the U.S. real GNP will grow at
an average annual rate of 3.4% through 1983, com-
pared with a growth of 3.9% per year in 1960-1970.
(3) The slower rate of growth in capacity that we expect
in this industry will result in a generally tight
supply/demand balance, which will cause relatively
rapid price escalation and thus reduce demand from what
it might have been if prices were lower and the supply
were more abundant.
C. CONTAINERBOARD
1. Products Included
The containerboard functional group consists of all the paperboard
materials used in the construction of corrugated shipping containers.
These include linerboard made either from unbleached kraft pulp, waste
paper, or a combination of both; corrugating medium made from a combi-
nation of semi-chemical pulp and waste paper or entirely from waste
paper; container chip and filler board, which is made entirely from
waste paper; and unbleached kraft paperboard, which is used in folding
boxboard applications. The characteristics and end-use criteria for
each of these products are described below.
Since it is the surface layer of the corrugated sandwich, the chief
function of linerboard is to provide the strength characteristics
required of a corrugated container, chiefly resistance to bursting and
crushing. Standard physical requirements for corrugated containers
in the United States are set forth in Section 3 of Rail Rule 41, which
governs shipping containers for goods shipped by rail across state borders.
Identical standards for containers used for goods shipped by truck are
contained in Rule 222 of the National Motor Freight Classification.
Rule 41 was established in an era when corrugated containers were
beginning to replace wooden crates. Both Rule 41 and Rule 222 are con-
tinually being modified, since trucks are now the principal mode of
transportation for many products shipped in corrugated containers and
these containers have almost completely replaced wooden shipping crates.
Table III-6 summarizes the key physical requirements.
111-19
Arthur D Little Inc.
-------
vO
I
M
PQ
4-1
MH
IT
CO
O
0
O
rH
"^X^
&
H
vO
CM
H
•
*
•
C
a
**
•
c
•H
CT*
O
O
•
O
H
}«|
cu
P.
•rl
rH
cd
0
C
iH
S
CO
4J
C
S
cu
^1
•H
3
cr
cu
§
•H
T3
CU
S
M
a
•H
4J
cd
w
3
M
^|
O
O
QJ O
M
O
CJ
CO
cd
ca co
CO CU
cu X
M&
CJ
•H CU
xi C
4J «rl
|J
rH
tQ
a
cd
ca
cu
o
M
TJ
1-1
o
cu
rl
fl
•H
Ct(
• •
co
4-1
a
a
cu
rH rH
XI rH
3 cd
O ES
Q
CU
rH rH
60 rH
C cd
•H Jj
CO
CU
rH i-H
P.I-H
•rl Cd
^ S
H
rH
rH
cd
CB
CU
i-H
X)
3
O
i-H
rH
cd
01
t-H
01
C
•H
CO
0
CO
m
CM
CM
O
0
en
in
CM
CM
in
r^
CM
O
\o
rH
O
-3-
rH
O
CM
rH
O
O^
m
vO
o
CM
rH
O
O^
in
vO
o
-3-
o
CM
£>
•rl
3
O-
CU
Prf
/•x
TJ Xi
M X rH
cd o v-'
O FQ
X> CO
M 4-14-1
CU 0 C
a cu
•H • 4J
I-J 4-* CJ
S o
o
•
rl TJ
S3
o
vO
o
vO
o
VO
O
VO
O
CM
rH
O
CM
i-H
O
rH
rH
O
0
rH
O
CT\
m
f-s*
O
O
i-H
O
m
I*-*
o
vO
O
XI
4-1
»rj
1 iH
C £3
cu
e +
iH
fi XI /-s
4-1 •
CU W) CJ
T3 C -H
•H 0) ^-*
CO F-4
C XI
H " 4J
CO P,
• C CU
X 0 Q
cd -H
S CO +
vO
CM
rH
O
rH
rH
O
oo
H
oo
en
rH
^j-
vO
CM
O
CM
CM
CM
CM
vD
CM
rH
O
rH
rH
CM
CT*
0
OO
rH
00
en
H
^
oo
m
CM
*
4J
MH
MH o"
O co
• O
4-> O
& O
rH
Tj *^v.
CU XI
C rH
,' I ^^
^^ ^^
XI
O CO
CJ 00
c
• -H
C CJ
•rl Cd
O
en
in
r«^
CM
o
en
m
r-
CM
I
O
o
vO
O
O
m
o
m
en
m
r^*
CM
O
o
CM
0
in
en
in
r-
CM
o
o
CM
m
rH
m
CM
i
i— t
MH /-v
O vH
CO
4-* Pt
co ^-'
cu
c^ *C)
M
60 cd
C 0
•rl «
4-1
CO T)
l-l CU
s n
• x>
C 0
•H O
S 0
1
1
1
1
O
o
rH
H
1
1
1
1
1
1
1
1
1
1
MH
O /"^
^4
4J Cd
CO CU
CU 4-1
H
TJ MH
CU IH O
)-i cd
j3 O •
4-1 pQ _3
CJ -H
a -a -»
3 CU N
FM £ O
•H 1
• ,£* •
C 0 C
•H O -H
SO--'
4J
C
cu
g
o
o
cu
0
rl
3
o
CO
cu
XI
4-)
c
•H
T3
cu
•H
MH
•H
i-H
cd
3
cr
cu
cd
co
0
cu
cu
ca
0)
x;
cu
c
•H
cd
4-1
G
O
CJ
rH
cd
Jj
1
CU
p.
•rl
^
-a
3
i
cu
rH
Xi
3
0
T)
<4H
O
00
C
•H
O
ed
rl
CU
4—1
c
cu
CJ
00
c
TJ
3
rH
O
C
cd
•H
a
o
co
ca
cu
O
o
EC
K
o
PQ
M
cu
W
O
111-20
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Unbleached kraft linerboard produced in the United States (typically
at a basis weight of 42 lb/1000 sq ft) fully provides the strength re-
quired to meet Rules 41 and 222. The pulp furnish for recycled liner-
board usually consists entirely of recycled corrugated containers and
container converting plant clippings. The short-fiber corrugating med-
ium component of these containers (about 30% of the furnish) coupled
with the fiber degradation which takes place in repulping, makes it nec-
essary to increase the basis weight of recycled linerboard somewhat
above 42 lb/1000 sq ft if this material must match the strength of the
typical 42-pound kraft. linerboard. Alternatively, dry-strength chemicals
may be added to obtain equivalent strength at the same basis weight.
(See Section VIII-C-1.)
The chief function of corrugating medium is to provide a low-cost material
for the corrugated inner layer. Minimal tearing resistance and folding
properties are required, since these properties are provided by the
linerboard layers.
Semi-chemical corrugating medium is made from a high-yield, partially
cooked pulp that employs a neutral sodium- or ammonia-base sulfite
pulping liquor.
Recycled corrugating medium, as defined by the API, is fluting material
containing more than 25% waste paper. In fact, most recycled corrugating
medium is made entirely from waste paper of various grades, including
waste news, old corrugated containers, and mixed waste paper. The most
common basis weight for corrugating medium is 26 lb/1000 sq ft.
Container chip and filler board is used to form the partitions or to line
the inside of a corrugated box. Chipboard is the major product in this
category; it consists of paperboard that is lighter than 26 lb/1000 sq ft,
employed either as single sheets or as the facing of corrugated materials
used for interior packaging such as partitions, dividers, pads, and
cushioning.
The only real competitive threat to corrugated containers has come from the
use of heavy-gauge shrink plastic film. This film can be wrapped around
a pallet of packages and then shrunk by the application of heat to hold
the load securely. However, shrink film now competes only in limited
applications. Little substitution of other products for corrugated
containers has been achieved.
Although folding-carton-type kraft paperboard should properly be placed
in the folding boxboard group, its use in folding cartons is relatively
small; we have included it here in order to completely represent the
unbleached kraft paperboard sector.
2. Industry Structure
Containerboard is the largest single product category in the U.S. paper
industry. Demand for the products in this group is directly related to
the shipping container requirements of the full spectrum of American
industry; thus, it is strongly influenced by the national economic activity.
111-21
Arthur D Little, Inc
-------
There are no significant imports of any of the containerboard materials.
Large amounts of linerboard are exported, however. (Linerboard is the only
product in this group that is exported in significant quantities.) Domestic
kraft linerboard producers are in a favorable export position, because
they have generally cheaper wood and larger, more efficient mills than
competitive producers in Canada, Scandinavia, and Russia, the only other
major producing regions. U.S. exporters ship from the Pacific Northwest
to Asian and Latin American markets and from the South to the Latin
American and Western European markets. The economics of manufacturing and
shipping do not favor export of recycled linerboard, chipboard, or corrugating
medium; thus, these products are not significant export items.
While about 70 U.S. companies produce linerboard, corrugating medium, or
both, the 13 largest account for nearly 80% of the U.S. production
capacity for these materials, as shown in Table III-7. All of these
firms are vertically integrated from control of a significant portion
of the woodlands that support their pulp mills to the production of liner-
board and semi-chemical corrugating medium. All but one, Great Northern
Nekoosa, is further integrated to the production of corrugated containers.
Only four—Container Corporation, St. Regis, Inland Container, and Crown
Zellerbach—produce linerboard or corrugating medium entirely from waste
paper.
The major producers have made a large commitment to woodland ownership
and pulp and paperboard mills, which gives them a vested interest in
containerboard made from virgin wood pulp. Moreover, these companies
have a substantial share of the U.S. corrugated container market by
virtue of their forward integration to container converting. In the
past, this combination of factors has inhibited the use of recycled
fiber in the manufacture of containerboard. To the extent that the
comparative economics favor the use of recycled fiber, we expect the
larger producers to use it either as a partial substitute or 100% replace-
ment for virgin fiber to achieve incremental additions to production.
Container chipboard is generally produced as a relatively small portion
of the product mix of recycled paperboard mills. Thus, there are no clearly
dominant factors in the production of this material. Although it is
made from 100% waste paper, it has a low growth rate because of the trend
toward eliminating partitions and inner liners in corrugated containers.
In terms of geographical distribution, about 85% of U.S. kraft liner-
board production is in the South and the remainder is in the West. Pro-
duction of semi-chemical corrugating medium is distributed roughly 60%
in the Northeast and North Central regions, 35% in the South, and 5%
in the West, in approximate relationship to the distribution of the hard-
wood timber used for this product. Recycled corrugating medium, liner-
board, and chipboard production is located close to the major population
centers.
111-22
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE III-7
MAJOR CONTAINERBOARD PRODUCERS
Company
International Paper
Container Corporation
Weyerhaeuser
St. Regis
Westvaco
Union Camp
Owens-Illinois
Mead
Inland Container
Crown Zellerbach
Continental Can
Great Northern-Nekoosa
Hoerner-Waldorf
1973 Linerboard and
Corrugating Medium Capacity
Total
(Tons/Day)
5,605
5,105
4,400
3,940
3,435
3,100
2,970
2,890
2,540
2,440
2,410
2,100
1.625
42,560
(% of U.S. Capacity)
9.9
9.0
7.8
7.0
6.1
5.5
5.3
5.1
4.5
4.3
4.3
3.7
2.9
75.4
Source: Lockwood's Directory of the Paper and Allied Trades, 1974
111-23
Arthur D Little, Inc
-------
On balance, there is a net flow of linerboard from the South to the North
Central and Northeastern regions and from the West to the North Central
region. Each region is essentially self-sufficient in its combined pro-
duction of semi-chemical and recycled corrugated medium and chipboard.
3. Supply/Demand Trends
Table III-8 compared our projections of containerboard demand with pro-
ducers' expectations of capacity expansion through 1977. This indicates
that unbleached kraft paperboard (mainly linerboard) was in extremely
tight supply in 1973 and should be in equally tight supply as the
economy fully recovers from the current recession (which we assume will
occur by 1976). The capacity for recycled linerboard is expected to
grow rapidly from a very small base, and its producers should continue
to enjoy relatively high operating rates through 1977, in light of the
tight supply which we foresee for kraft linerboard. If it were not
for the capacity constraint in unbleached kraft paperboard, exports
of kraft linerboard would probably grow at a higher rate than we have
projected, since there has been a similar slowdown in linerboard capacity
expansion throughout the world.
Corrugating medium was in tight supply in 1973, but it is now in over-
supply due to the recession. Since announced capacity expansions indi-
cate a rate of growth significantly higher than our demand projections,
the oversupply is likely to continue through 1977. Beyond 1977 we expect
that demand will exceed installed capacity. We believe that a large
part of this additional demand will be met by the manufacture of recycled
medium.
However, it is possible for some producers of semi-chemical corrugating
medium to make linerboard on their machines; similarly, those who make
recycled corrugating medium can shift to linerboard or folding boxboard.
Such shifts in product mix may entail some economic sacrifice, but
perhaps not as much as if the producers continued to make only corrugating
medium at a low operating rate.
Container chipboard was in plentiful supply in 1973 and should remain
so through 1977. This product is generally made on relatively old, slow
cylinder machines; economical production does not require as high an
operating rate as does linerboard or corrugating medium. Here again,
producers could shift to other recycled paperboard products; this con-
tributed to a relatively tight supply condition in 1973 and should help
to alleviate the low operating rate projected for 1977.
4. Market Characteristics
a. Selling Prices
Containerboard material prices are highly sensitive to the supply/demand
ratio. Table III-9 shows the price increases which have occurred between
111-24
Arthur D Little, Inc.
-------
1
1
1
•
1
1
•
1
1
1
1
1
1
1
1
•
1
1
TABLE III-8
CONTAINERBOARD SUPPLY/DEMAND TRENDS
UNBLEACHED KRAFT PAPERBOARD3
Production
Linerboard
Other Unbl. Kraft Board
Exports (Linerboard)
Capacity
Apparent Operating Rate
RECYCLED LINERBOARD
Production
Capacity
Apparent Operating Rate
CORRUGATING MEDIUM
Production
Semi-Chemical
Recycled
Export
Capacity
Semi-Chemical
Recycled
Apparent Operating Rate
CONTAINER CHIPBOARD
Demand
Capacity
Apparent Operating Rate
Preliminary
1973
(000 tons)
13,560
11,340
574
1,646
13,898
98%
284
306
93%
5,303
4,302
981
20
5,564
4,386
1,178
95%
247
349
71%
Average
Growth
(%/Year)
3.0
3.0
2.8
4.7
3.0
18.0
18.9
3.0
6.1
4.3
12.1
3.0
5.4
Projected
1977
(000 tons)
15,300
12,680
640
1,980
15,623
99%
550
612
90%
5,915
4,600
1,290
25
7,050
5,187
1,863
85%
280
430
54%
a
Excludes tube, can, and drum paperboard
SOURCE: Capacity - American Paper Institute
Demand - U.S. Department of Commerce (1973)
1977 Projections - Arthur D. Little, Inc.
111-25
Arthur D Litt
-------
1971, when operating rates were relatively low (85-90% of capacity),
and 1974, when operating rates were extremely tight (about 95-99% of
capacity, a practical maximum) for a full year.
TABLE III-9
CONTAINERBOAKD PRICE TRENDS
120
100
104
100
130
120
120
120
145
135
140
135
195
190
190
190
(Fourth-quarter contract prices, $/ton)
Product 1971 1972 1973 1974
Unbleached Kraft Linerboard
Recycled Linerboard
Semi-Chemical Corr. Med.
Recycled Corr. Med.
Container Chip and Filler 100 120 135 190
Source: Paper industry contacts
The price increases since 1971 are unprecedented in the industry since
World War II. They reflected not only a tightening supply situation
but accumulated cost inflation since 1969, which the producers had been
unable to pass on because of low operating rates.
Since linerboard operating rates are expected to remain relatively high
over the next several years, the price of this material should continue
to increase rapidly after the current recession. Corrugating medium
and chipboard prices probably will not rise as rapidly by 1977, in view
of the projected overcapacity for these materials.
b. Profitability
As is typical of other product sectors in the paper industry, there are
no publicly-held companies that produce only containerboard materials.
Therefore, we can only discuss subjectively current product-line profit-
ability based on prices and operating rate trends.
We estimate that the profitability of kraft linerboard is above the
paper industry average and that semi-chemical corrugating profitability
is close to average. Profitability is probably below the industry average
in the recycled paperboard sector. Except for linerboard, profitability
varies widely among mills in these sectors, due to variations in mill
sizes and other site-related factors.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
111-26
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Profitability in all containerboard sectors has improved considerably
since 1971, when low operating rates and weak prices prevailed. We
expect that profit margins will continue to improve, particularly for
kraft linerboard, in response to the protracted tight supply conditions
foreseen through 1977. Semi-chemical and recycled corrugating medium
are two of the few products whose production will probably decline
through 1977; hence, the spread in profit margins between these products
and kraft linerboard is likely to widen over the next several years.
5. Factors Affecting Increased Utilization of Waste Paper
Several important factors affect the potential utilization of waste
paper in linerboard. First, the kraft linerboard producers who dominate
the market have a vested interest in the large-scale pulp and paperboard
mills that are integrated to their pulpwood supplies and operations in
the South and Pacific Northwest. Also, since mill locations have been
determined by pulpwood accessibility, they do not necessarily have
access to an economical supply of waste corrugated containers. On the
other hand, pulp mill expansion involves large capital costs, pulpwood
costs are rising rapidly, and the extension of woodland ownership is
also costly; therefore, if producers are able to obtain an economical
supply of waste paper, they are likely to look favorably upon supple-
menting their virgin pulp furnish with OCC and thereby expand their
capacity incrementally.
Another factor that influences the likelihood of waste paper use is the
high degree of forward integration in this sector. Integration from
linerboard production through box converting limits the independent growth
of board production. Despite the high consumption of linerboard, inde-
pendent markets are limited. This has placed an additional constraint
on the growth of 100% recycled linerboard by independent producers.
Waste paper prices have historically shown wide fluctuations. This has
placed a constraint on production of 100% recycled linerboard by making
financial performance unpredictable. Some believe that the railroad
and trucking rules on corrugated containers call for an overdesigned
package; it is far superior to the shipping containers used in Western
Europe, for example. There may be some opportunity for reducing product
strength requirements, thus creating an attractive market for 100%
recycled linerboard. As softwood pulpwood costs and linerboard prices
continue to increase, there should be greater incentive to increase
recycled linerboard capacity if waste corrugated container prices can
be stabilized and held to a lower rate of growth than virgin pulp costs.
A substantial amount of waste paper is already used in corrugating
medium, both semi-chemical and 100% recycled. The biggest obstacle to
its increased use is the abundant supply of hardwood timber for semi-
chemical corrugating medium in the North Central, Northeastern, and
Southern states. Because of this, a substantial increase in the use of
recycled corrugating medium will require that the costs of hardwood pulp-
wood rise faster than those of OCC and kraft clippings.
111-27
Arthur D Little, Inc.
-------
As the costs of controlling air and water pollution increase, and as
semi-chemical pulping facilities face shutdown unless they are equipped
with chemical recovery systems, there is a greater incentive to use
more waste paper in both linerboard and corrugating medium.
D. GROUNDWOOD PAPERS
1. Products Included
The products in this category utilize a substantial amount (usually
greater than 50%) of mechanically ground wood pulp in their fiber furnish.
Groundwood-content papers are utilized in printing applications that do
not require archival properties, because they will discolor when exposed
to ultraviolet light. Thus, groundwood papers are used for products such
as newspapers, telephone directories, some mail-order catalogues, and
other printed articles that are generally discarded within one year.
This category includes newsprint, uncoated groundwood paper, uncoated
book paper, and groundwood-content stock for coated printing paper.
Newsprint is by far the largest of the two grades, with a total U.S.
consumption of nearly 11 million tons in 1973. It is generally made
from a pulp furnish consisting of about 80% unbleached groundwood and
20% unbleached sulfite or semi-bleached kraft pulp. (Groundwood pulp
from the West Coast is often lightly bleached.) Using thermo-mechanical
pulping, some producers have been able to reduce the chemical pulp
content of their newsprint furnish to below 20%. Three U.S. newsprint
mills produce newsprint entirely from waste newspapers.
Most newsprint is sold direct to the daily newspaper publishers and
the multiple-newspaper printing plants. A small portion (less than
5%) is distributed via paper merchants to small users such as small
weekly newspaper publishers, shopping newspaper publishers, and general
commercial printers.
Uncoated groundwood paper is generally made from a furnish consisting
of 20-50% of bleached chemical pulp and 50-80% of bleached groundwood
pulp. Its principal applications are for telephone directories,
catalogues, paperback books, low-priced magazines, comic books, and
general commercial printing. Most of this product is distributed
directly to the large end-users, such as catalogue and directory pub-
lishers and the large paperback book publishers; however, a substantial
amount (probably more than 25%) is distributed through paper merchants
to small users, such as the smaller magazine publishers and general
commercial printers.
2. Industry Structure
Canadian newsprint mills play a pivotal role in supplying U.S. needs
and hence must be included in the industry's structure. In 1973,
111-28
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Canadian mills supplied about 69% of the U.S. demand for newsprint,
and U.S. mills supplied the remaining 31%. Table 111-10 lists the
capacities of the major North American newsprint suppliers.
Table 111-10 indicates that the recent acquisition of the Price
Company by Abitibi Paper Company has given it a dominant share of
North American capacity; Abitibi-Price operates two mills in the United
States and six in Canada. Until this merger, International Paper
Company had the largest share of the North American market. Southland
Paper Mills has the largest U.S. capacity and is a dominant factor in
the market region around southeastern Texas. Garden State Paper and
FSC Paper Corp., in which Garden State has an interest, currently
operates the only three U.S. mills that make newsprint from 100% waste
newspapers; these mills represent only 2.6% of North American capacity
but 10% of U.S. newsprint capacity.
The newsprint market is relatively concentrated. The top 14 firms in
North America have nearly an 80% share of total North American capacity
and about an equal share of the North American market. Most of the
Canadian producers have substantial exports outside of North America,
particularly to Europe and South America. International trade in
newsprint is facilitated by the fact that most countries have little
or no import duties on this product.
Table III-ll lists capacities of the U.S. uncoated groundwood paper
producers. Imports of groundwood paper from Canada or elsewhere are not
significant (126,000 tons in 1973); the import duty, coupled with the
freight advantage enjoyed by U.S. producers, make it difficult for
exporters to compete.
Traditionally, the uncoated groundwood paper market has been viewed
as a specialty application for newsprint machines that are no longer
competitive in the newsprint market. This is the route of entry used
by all current suppliers. Recently, however, Great Northern-Nekoosa
and Fraser Paper have installed new machines to supply this market and to
increase their market share. These two companies, along with International
Paper, are the major U.S. producers.
All of the newsprint producers and all but a few of the smaller uncoated
groundwood paper producers control (via ownership or lease) at least a
portion of the woodlands needed to supply their mills and are vertically
integrated to the production of groundwood and often chemical pulp,
paper production, and the marketing of the final product. Garden State
and FSC Paper operate their own waste paper collection organizations,
which supply a portion of their raw material requirements.
3. Supply/Demand Trends
Table 111-12 shows projections of U.S. supply/demand trends for newsprint
and uncoated groundwood papers through 1977. Both products had extremely
111-29
Arthur D Little, Inc.
-------
TABLE 111-10
CAPACITIES OF MAJOR NORTH AMERICAN NEWSPRINT SUPPLIERS, 1974
Capacity (OOP
Company U.S.A. Canada
Abitibi-Price 235 2,179
International Paper 243 1,156
MacMillan-Bloedel 1,380
Consolidated Bathurst 1,043
Bowaters 437 603
Ontario Paper 731
Kimberly-Clark 420 174
Boise Cascade 212 317
Southland Paper Mills 474
Crown Zellerbach 217 256
Great Lakes Paper 439
Garden State & FSC Paper 372
Great Northern - Nekoosa 360
Publishers Paper 360
Total
Source: "Newsprint Statistics", American
April 12, 1974
111-30
tons/yr)
Total
2,414
1,399
1,380
1,043
1,040
731
594
529
474
473
439
372
360
360
Newspaper
Percent of North
American Capacity
17.0
9.9
9.7
7.4
7.4
5.2
4.2
3.7
3.3
3.3
3.1
2.6
2.5
2.5
78.5
Publishers Assn.
Arthur D Littl
1
1
1
1
1
1
1
1
•
"
1
1
|
••
1
1
1
1
1
1
e,Inc. •
-------
TABLE III-ll
Percent of
I
I
I
I CAPACITIES OF U.S. UNCOATED GROUNDWOOD PAPER SUPPLIERS. 1973
I Capacity
f*rvn\r\r*mr f (\C\r\ 4-y»*-*<-* /w
I
I
I
I
I
I
I
I
• Source: Lockwood's Directory of the Paper and Allied Trades, 1974
I
I
I
I
I
Company
International Paper
Great Northern-Nekoosa
Fraser Paper
Boise Cascade
Appleton Papers
St. Regis Paper
Manistique Pulp and Paper
Inland Empire
Hennepin
Mountain Paper Products
Unidentified and Other
Total
(000 tons/yr)
235
225
175
161
140
116
35
35
28
8
245
1403
U.S. Capacity
16.7
16.0
12.4
11.5
10.0
8.3
2.5
2.5
2.0
0.6
17.5
100.0
111-31
Arthur D Little, Inc.
-------
TABLE 111-12
GROUNDWOOD PAPER SUPPLY/DEMAND TRENDS
Preliminary Average
1973 Growth
(000 tons) (%/yr)
NEWSPRINT
U.S. Demand3 10,726 2.6
Less: Net Imports 7,313 2.4
Demand for U.S. Production 3,413 2.7
Capacity 3,597 2.2
Apparent Operating Rate 95%
UNCOATED GROUNDWOOD PAPERS
Demand 1,560 2.2
Less: Net Imports 99 19.2
Demand for U.S. Production 1,461 0.7
Capacity 1,403 1.0
Apparent Operating Rate 104%
^.S. consumption of newsprint in 1973 was reported as 10,
the American Newspaper Publishers Association ("Newsprint
April 1974)
Projected
1977
(000 tons)
ll,900b
8,100b
h
3,800°
3,925b
97%
1,700
200
1,500
1,462
103%
504,000 tons by
Statistics,"
Tonnage figures are based on 31.5 pound/ream newsprint; data should
be reduced by about 5% to reflect 30 pound/ream newsprint
now the predominant basis weight.
SOURCE: Capacity - American Paper Institute; Demand - U.S
, which is
. Department
of Commerce (1973) and Arthur D. Little, Inc. projections.
111-32
Arthur D Little. I
1
1
1
1
1
1
1
1
•
1
1
1
1
•
1
1
1
I
••
nc 1
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
high operating rates in 1973. (A 95-97% average operating rate is con-
sidered maximum capacity for newsprint mills over a full year.) The
104% apparent operating rate for uncoated groundwood paper suggests that
some was made on newsprint machines in that year. In part, the tight
supply of newsprint in 1973 was caused by newsprint-mill and railroad
strikes in Canada, particularly during the third quarter.
Our projections of U.S. demand and net imports of newsprint and uncoated
groundwood papers indicate that, in light of the capacity expansion
plans reported by the American Paper Institute, a tight supply situation
will again be reestablished by 1977 as the economy recovers from the
current recession. We have also examined the capacity expansion plans
for the Canadian producers, as reported by the Canadian Pulp and Paper
Association; these indicate that the Canadian producers will be hard
pressed to supply the requirements of the United States, their principal
regional market, through 1977. To stretch the available fiber resources
and thereby facilitate incremental expansion of existing mills, news-
print producers began reducing basis weights in 1974 from the historical
32 pounds to 30 pounds, and some are now making 28-pound paper. This
trend has also helped newspaper publishers to hold down their costs some-
what.
While the markets for newsprint and uncoated groundwood paper are
extremely mature, demand is currently being bolstered by the fact that
the price differential between the groundwood-free printing papers and
the groundwood papers has widened appreciably over the past year with
the rapid increase in bleached pulp prices. For example, there is
currently a $205/ton differential between No. 3 offset uncoated book and
catalog-grade groundwood paper; a $275/ton differential exists between
uncoated book and 30-pound newsprint. In January 1974, the differentials
were about $100 and $115 respectively. Thus, newsprint and uncoated
groundwood paper have become more price competitive with the groundwood-
free papers and are finding greater use in printing applications where
long-range storage of the paper is not required. One such relatively
new application for groundwood paper is in business forms, where approxi-
mately 100,000 tons of groundwood paper was substituted for the traditional
register bond in 1974.
4. Market Characteristics
a. Price Trends
Because of the substantial world trade in newsprint, selling prices for
this product respond directly to shifts in the world supply/demand balance
expressed as a composite operating rate of producers. As a result, when
the world supply tightened in mid-1973 and 1974, newsprint prices rose
rapidly to their present levels.
Table 111-13 shows the rapid sequence of price increases that took
place as industry operating rates approached maximum levels in 1973 and
111-33
Arthur D Little, Inc
-------
TABLE 111-13
NEWSPRINT CONTRACT PRICE TRENDS. 1970-1975
Eastern U.S.
Western U.S.
$/Ton Effective
1970
1971
1972
1973
1974b
1975b
152
160
165
175
200a
200 (213)
220 (235)
244 (260)
Jan. 1
April 1
Feb. 1
Mid Year
Nov. 1
March 1
Aug. I
Jan. 1
$/Ton
147
155
163
173-200
a
Effective
Jan 1
Jan. 1
Jan. 1
Sept.-Dec.
200 (213) March 1
230 (245) Aug. 1
262 (280)
Canadian-produced newsprint, free of U.S. price controls.
""Figures in parentheses reflect prices for 30-lb newsprint,
which became the industry standard in 1974.
SOURCES: American Newsprint Publishers Association and industry
contacts.
111-34
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
particularly after U.S. price controls were fully lifted In June 1974.
Western producers, who traditionally sold newsprint at a discount below
Eastern prices, instituted a price premium in 1974; this was made possible
both by the tight market conditions and the fact that only a few producers
dominate the Western market.
Table 111-14 shows a similar trend of price escalation in uncoated ground-
wood paper, as typified by the catalog grade. As we shall see later,
prices of groundwood-free printing and writing papers increased even more
rapidly than the uncoated groundwood grades; this indicates that the prices
of the uncoated groundwood grades are more closely patterned after that of
newsprint, to which they are more closely related. The resulting wider
price differential between the groundwood-free grades and uncoated
groundwood papers makes the latter more price competitive and should stimulate
their demand. However, the extremely tight supply situation foreseen
through 1977 indicates that the demand for the uncoated groundwood grades
will not be completely filled; thus prices will continue to escalate,
possibly narrowing the gap with the groundwood-free grades.
b. Profitability
We estimate that the current profitability for newsprint production is
currently close to the average for the overall paper and allied products
industry. Profitability for uncoated groundwood paper is highly variable,
because of the wide range of company sizes and the fact that both
integrated and nonintegrated producers participate in this sector. We
believe that Great Northern-Nekoosa is the industry leader from the
standpoint of profitability and that it earns a better return on its
uncoated groundwood papers than the average paper industry profitability.
On the other hand, some of the smaller producers appear to be making only
marginal profits at present.
5. Factors Affecting Increased Waste Paper Utilization
Three U.S. mills are currently producing newsprint from 100% waste news-
papers in the vicinity of New York, Chicago, and Los Angeles. These
mills account for about 10% of U.S. newsprint capacity but only 2.6%
of North American capacity. All three have been successful in penetrating
the market; however, forward integration of the industry from newsprint
production through newspaper publications restricts the volume of newsprint
that they can market independently.
The use of waste news as a supplement to virgin fiber in the manufacture
of newsprint is a new and, we believe, significant growth opportunity
for recycled fiber. (See Section VIII-D.)
111-35
Arthur D Little, Inc.
-------
I
I
I
I
UNCOATED GROUNDWOOD PAPER PRICE TRENDS. 1971-1974 I
I
TABLE II1-14
Year Price ($/ton)
1971 Year End 190 I
1972 Year End 195
1973 Year End 237
1974 - January 247
March 262
April 270 I
July 300
October 320
Sources: H.C. Wainwright & Company surveys of producers
and industry contacts
111-36
Arthur D Little, Inc
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
E. TISSUE AND OTHER MACHINE CREPED PAPER
1. Products Included
The tissue sector primarily includes sanitary grades (toilet, facial,
napkin, toweling, sanitary napkin, wiper, and special sanitary papers)
that are sold both to the consumer and industrial markets. Table 111-15
shows U.S. shipments of tissue by type in 1973.
The channel of distribution for consumer sanitary tissue is usually
via direct sales from the paper converter to grocery stores or chain
stores, either under a brand name or under the private label of the chain
store. Industrial sanitary tissue is typically distributed through paper
merchants or industrial maintenance supply houses.
The tissue sector also includes nonsanitary tissue papers, such as waxing
tissue, wrapping tissue, cellulose wadding, and miscellaneous products.
Most waxing tissue is waxed and converted by the paper manufacturer, who
then sells it to commercial distributors to reach the fast-food and
institutional markets or sells it directly to the chain stores to reach
the consumer market. Wrapping tissue and industrial cellulose wadding
are usually sold through paper merchants or jobbers.
All of the above grades are usually made from a combination of various
bleached pulps, including sulfite and kraft (both softwood and hardwood),
groundwood, and deinked or high-grade waste paper. A limited amount of
100% deinked waste paper is used for sanitary tissue products.
Thin papers, such as carbonizing tissue and condenser tissue, are not
included in the tissue paper sector but rather in the printing, writing,
and related papers sector.
2. Industry Structure
Table 111-16 shows the 1973 capacities of the major U.S. tissue producers.
Procter & Gamble and Scott Paper are the leading tissue producers, with
about an equal share of U.S. capacity. Both these companies and
Kimberly-Clark have national market coverage for the consumer sanitary
tissue products in which they specialize, and all advertise their brand-
name products on national network television. American Can has nearly
national market coverage except in the Northeast. The remaining large
suppliers of consumer sanitary tissue (Georgia-Pacific, Crown Zellerbach,
Brown Company, and Hudson Pulp and Paper) sell in selected market regions.
Nearly all of the above companies sell some of their sanitary tissue
to the industrial market, but the major factor in this market is Fort
Howard Paper Company. In total, the above nine firms account for about 88%
of the total U.S. tissue capacity.
111-37
Arthur D Little, Inc.
-------
TABLE 111-15
U.S. TISSUE SHIPMENTS BY PRODUCT TYPE. 1973
Preliminary 1973 % of Total
Product Type Shipments Tissue
(000 tons)
Sanitary Tissue Papers
Toilet Tissue 1,412 35.4
Facial Tissue 362 9.1
Napkins 440 11.1
Towels 1,279 32.1
Wipers 61 1.5
Other 181 4.6
Sub-Total 3,735 93.8
Nonsanitary Tissue Papers
Waxing Tissue 51 1.3
Wrapping Tissue 70 1.7
Industrial Cellulose 36 0.9
Miscellaneous Tissue 91 2.3
Sub-Total 248 6.2
TOTAL 3,984
SOURCE: American Paper Institute, "Statistics of Paper
and Paperboard," 1974.
111-38
Arthur D Little, Inc.
-------
TABLE 111-16
I
I
I
CAPACITIES OF MAJOR U.S. TISSUE PRODUCERS, 1973
•Capacity % of Total
Producer (OOP tons/yr) U.S. Capacity
I
I
I
I
I
I
I a
Arthur D. Little, Inc., estimate
I SOURCE: Lockwood's Directory of the Paper and Allied Trades, 1974
I
I
I
I
I
I
Procter & Gamble
Scott Paper
American Can
Kimberly-Clark
Fort Howard Paper
Georgia-Pacific
Crown Zellerbach
Brown Company
Hudson Pulp & Paper
l,075a
1,000
405
400
280
215
200
110
105
TOTAL
25
23
9
9
6.5
5
3
3
2
87.5%
111-39
Arthur D Little, Inc
-------
All of the above firms are integrated at least partially to the production
of bleached chemical wood pulp; American Can, Kimberly-Clark, and Georgia-
Pacific also operate waste paper deinking facilities.
About 45 other companies also operate tissue mills in the United States.
Most of them are not integrated to chemical pulp production but rely
instead on purchased market pulp for their raw material. A number of
these firms also operate waste paper deinking facilities to provide a
portion of their fiber requirements. All of these firms tend to
concentrate their marketing on private-label consumer tissue, industrial
sanitary tissue, and nonsanitary tissue. Thus, they avoid the heavy
marketing expenses associated with brand-name advertising in the consumer
tissue market.
There are virtually no imports of tissue paper products, and exports
are very minor (less than 1% of U.S. production). Thus, foreign sup-
pliers or customers are not a factor in the U.S. tissue paper market
structure.
Tissue paper production tends to be located relatively close to the major
population centers because of the high cost of shipping the relatively
bulky sanitary tissue products. The West North Central region is the
only area that does not have tissue capacity. The largest regional
concentration of tissue paper mills is in the East North Central region,
which accounts for about 25% of U.S. capacity and is a net exporter
to the West North Central and other surrounding regions. Other
major importing areas are the South Atlantic, West South Central, and
Mountain regions. Appendix A-l includes a breakdown of tissue paper capa-
city by state and region.
3. Supply/Demand Trends
Table 111-17 shows our projection of the operating rate in the tissue
paper sector through 1977. The operating rate is likely to be very high
in 1977 because of slow capacity expansion and an assumed recovery from
the current recession by 1976. In this sector of the industry, an average
95% operating rate over a full year is a practical maximum.
Our demand projections might be optimistic, in light of the current
recession, the rapid price increase for tissue products, and the
slowing of population growth. However, even if the sanitary tissue sector
were to grow only 2% annually, the tissue industry operating rate would
average around 92% of capacity in 1977, which is still a relatively
high operating rate.
Both the sanitary and nonsanitary tissue product categories have reached
nearly full maturity and are now growing at only slightly above the
population growth rate. In the 1950's and the 1960's, sanitary tissue
demand grew an average of 5% per year; at that time, it was still displacing
cloth products, particularly in the napkin, towel, and facial tissue
product areas. There are no cheaper substitutes for sanitary tissue
111-40
Arthur D Little Inc.
-------
TABLE II1-17
I
I
I
TISSUE PAPER SUPPLY/DEMAND TRENDS, 1973-1977
I
Preliminary Average Projected
11973 Growth 1977
(OOP tons) (%/Year) (OOP tons)
Demand for U.S. Production
| Sanitary Tissue 3,735 3 4,200
Non-Sanitary Tissue 248 2 270
I Total Demand 3,983 2.9 4,470
• Capacity 4,303 2.2 4,697
Apparent Operating Rate 93% 95%
I
™ SOURCE: American Paper Institute (1973 shipments and capacity
data) and Arthur D. Little, Inc., demand projections
I
I
I
I
I
I
I
111-41
• Arthur D Little; Inc
-------
products, but rising prices are likely to cause consumers to economize on
their use; i.e., there is some elasticity to the demand. However, demand
for industrial sanitary tissue products is likely to be less price-elastic.
In the nonsanitary tissue area, waxing tissue is being displaced by plastic
films and foil packaging materials. However, consumption of wax paper
has already declined to such an extent that the substitution trend has
probably nearly run its course. The growth of wrapping tissue and
industrial cellulose wadding is likely to parallel industrial production.
4. Market Characteristics
a. Selling Prices
Most of the tissue paper producers have on-site converting facilities;
very little tissue paper is sold in the form of jumbo rolls. Therefore,
price trends are best measured on the basis of converted product prices.
This, however, poses a problem in that there is a wide variety of converted
products with significant brand-name and quality differentiations. To
illustrate price trends, we have employed the Bureau of Labor Statistics
Wholesale Price Indexes for the converted sanitary paper group as a whole
(Table 111-18).
Like most other paper products, tissue paper experienced relatively little
upward price movement until late 1973. At that time, a tight supply/
demand balance, coupled with rising costs of pulp and other materials
and labor, caused the producers to establish higher prices. Between
November 1973 and October 1974, sanitary tissue prices increased by 30%.
We understand that prices of nonsanitary tissue rose by about the same
amount. Prices of products that utilized a large proportion of deinked
waste paper in their fiber furnish generally remained somewhat below
those of products made largely of chemical wood pulp fiber; this reflects
a somewhat lower consumer acceptance of tissue made from waste paper,
apparently because of its slightly off-white color.
b. Profitability
Since none of the publicly owned tissue companies produce tissue paper
alone, it is difficult to develop composite data on tissue-sector profit-
ability. We believe, however, that the biggest producers—Procter &
Gamble, Scott Paper, American Can, Kimberly-Clark, and possibly Fort
Howard Paper—are achieving a level of profitability in their tissue business
that is above average for the paper and allied products industry. Profits
of the other major tissue producers are probably about in line with the
industry average, and the smaller producers are below average.
We understand that many of the tissue paper producers that are not inte-
grated to pulp are achieving only marginal profits at present, because
the price of the market pulp they use has increased much more rapidly
than they have been able to raise tissue paper prices. Although con-
111-42
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE 111-18
WHOLESALE PRICE INDEX FOR CONVERTED
Year
1965
1966
1967
1968
1969
1970
1971
1972
1973
1974
SOURCES :
(Index 1967=100)
Average
Average
Average
Average
Average
Average
Average
Average
Average
November
January
March
April
August
October
Bureau of Labor Statistics
Wholesale Prices and Price
SANITARY TISSUE
Index
92.2
95.0
100.0
104.2
109.1
115.1
119.5
121.0
124.8
127.2
130.6
134.3
139.8
149.8
165.4
(1965-1973),
Indexes, U.S. De]
of Labor; Arthur D. Little, Inc., computations for
November 1973-October 1974, based on H.C. Wainwright
and Company industry price surveys.
111-43
Arthur D Little, Inc.
-------
tinued high operating rates are likely to increase the profitability
of the integrated producers by 1977, it is questionable whether the
nonintegrated producers will participate in this trend, since market
pulp prices will probably continue to increase at a more rapid rate
than tissue paper prices.
5. Factors Affecting Increased Waste Paper Utilization
In 1973, about 1.2 million tons of waste paper (about 30% of total fiber
furnish) was used in making tissue paper. Most of it was combined with
bleached chemical pulp, although a significant amount went into 100%
waste paper products. The biggest opportunity for increased waste
paper consumption in this sector probably lies in using a larger proportion
in the pulp blends. Tissue producers should be encouraged to engineer
their products for each application by taking advantage of the strength
and brightness of the virgin chemical pulps and the absorbency and bulk
of secondary fibers.
One factor that will stimulate the use of waste paper in the tissue paper
sector is the projected rapid price increase for bleached market pulp.
Higher pulp prices will increase the demand for the pulp-substitute and
high-quality deinking grades typically used in tissue manufacture. Old
news is an alternative source of recycled fiber for this application;
however, we do not expect a major change in the tissue fiber furnish to
include significant amounts of groundwood fiber. (See Sections VIII-E
and X-C.)
The companies with the greatest incentive to shift to secondary fiber
are those that are not integrated to chemical pulp. However, these
are usually the least profitable smaller firms, many of which do not
have sufficient capitalization or profitability to enable them to invest
in deinking facilities. Another consideration is that many of the existing
mills may not be able to build deinking facilities because they cannot
cope with any added water pollution loadings at their present sites.
F. HOLDING BOXBOARD
1. Products Included
Table 111-19 lists the major products which we have included in the folding
boxboard category. These include bleached paperboard or SBS (solid bleached
sulfate), bending combination (recycled) paperboard, and nonbending
combination paperboard. The table also shows that almost 30% of the
bleached paperboard is used in a variety of applications other than
folding carbons, and we have included these to maintain full coverage
of the bleached paperboard grade category.
Similarly, even though nonbending combination paperboard is primarily
used to make set-up boxes, we have included it in the table because
111-44
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE 111-19
U.S. PRODUCTION OF BLEACHED AND WASTEPAPER BOXBOARD BY TYPE, 1973
Boxboard Type
Bleached Paperboard
Folding Carton Type
Milk Carton
Heavyweight Cup Stock
Plate, Dish and Tray
Linerboard
Other
Subtotal
Combination Paperboard, Bending
Combination Paperboard, Nonbending
TOTAL
Preliminary 1973
Production
Percent of Total
Boxboard
(000 tons)
1,755
1,069
414
340
182
204
22.7
13.9
5.4
4.4
2.4
2.5
3,966
2,763
991
7,720
51.4
35.8
12.8
100.0
SOURCE: U.S. Department of Commerce, Bureau of the Census, Pulp, Paper
and Paperboard, Series M26A.
111-45
Arthur D Little, Inc.
-------
these boxes compete with folding cartons in certain applications and be-
cause paperboard manufacturers often produce both the bending and non-
bending types in the same mill.
Bleached paperboard is made from a combination of hardwood and softwood
pulp fibers made by the sulfate or kraft process. Most of this board is
coated with clay pigment and/or polyethylene film to improve its printing
characteristics and/or barrier properties.
Combination paperboard is generally made from 100% waste paper fiber
furnish. The bending type is usually pigment-coated or lined with
deinked pulp to enhance its appearance and printing characteristics.
The nonbending type, which is heavier and stiffer than folding boxboard,
is seldom coated or made with a white liner but often has a coated paper
outer liner; its principal applications are set-up boxes for shoe boxes,
department store boxes, and hardware boxes.
Bending combination board competes directly with folding-carton-type
SBS. The SBS dominates in food applications (e.g., frozen food, ice
cream, and sugar.) Recycled paperboard is used in most food packages
that have an inner lining, such as those for dry cereals and crackers,
and in unlined packages for such dry foods as rice and macaroni. In
nonfood applications, SBS tends to be used for high-margin products such
as drugs and cosmetics because of its esthetic appearance. (See Section
VIII-F.)
SBS must compete with plastics in a number of applications. Frozen food
cartons are being gradually displaced by plastic bags. Milk cartons
and paper cups, trays, and plates are facing significant competition
from plastic blow-molded milk containers and from thermoformed plastic
cups, trays, and plates.
Plastics are having less effect on the demand for recycled paperboard
folding cartons, although they often are used in conjunction with recycled
paperboard in such applications as bubble packaging of hardware parts
mounted on a printed piece of paperboard.
2. Industry Structure
Table 111-20 lists the major U.S. producers of bleached boxboard and
their current share of U.S. capacity for this product. It can be seen
that this sector of the paper industry has a relatively few large pro-
ducers, and is therefore quite concentrated. One reason for this is
that the minimum economic scale of operations is quite large (about
800 tons/day^ ; hence a large amount of capital is required to gain entry
by building a new mill.
*The approximate output of two large board machines
111-46
Arthur D Little, Inc.
-------
1
1
I
1
••i
1
1
1
1
1
1
1
1
1
i
i
i
i
TABLE III- 20
MAJOR U.S. BLEACHED BOXBOARD PRODUCERS
Producer
International Paper
Westvaco
Potlatch Forests
Continental Can
Eastex
Weyerhaeuser
Champion International
Federal Paperboard
American Can
Gulf States
Container Corp.
Subtotal
Other
TOTAL
SOURCE: Lockwood's Directory
1973 Capacity
(000 tons/yr)
720
360
245
240
225
220
220
215
190
170
168
2,973
955
3,928
of the Paper and Allied Trades
111-47
Percent Total
U.S. Capacity
18.3
9.2
6.2
6.1
5.7
5.6
5.6
5.5
4.8
4.3
4.3
75.7
24.3
100.0
, 1974.
A»-fV«ii»- r
-------
I
I
All the producers of bleached paperboard are integrated to on-site pulp _
production. All are also integrated to some degree forward to the pro- I
duction of folding cartons, milk cartons, or other end products. Most ™
bleached paperboard mills are located in the South, although several are
situated in the Pacific Northwest. •
Table 111-21 lists the major U.S. producers of recycled boxboard and
their 1973 capacities. This sector is much more fragmented than the tm
bleached paperboard sector. Only two producers have capacities •
greater than 10% of the U.S. total, and there are at least 45 producers
of folding or set-up boxboard. Federal Paper Board Co., Fibreboard
Corp., and Container Corporation of America are key producers and make I
both recycled boxboard and bleached paperboard for folding cartons. •
Most producers of recycled boxboard are self-sufficient in their fiber •
requirements since they rely upon on-site repulping of waste paper as |
their principal source of fiber. In recent years, some of the smaller
producers purchased market pulp to form the top liner, but all the «
major producers stopped this practice over ten years ago. Because of •
its high cost, we doubt that any recycled board producers still use
market pulp. All of the recycled boxboard mills are located near major
population centers in order to obtain the required supply of waste paper M
raw material and to be near the major folding carton and set-up box con- •
verting plants. Most of the recycled boxboard producers are integrated
forward to some degree to the production of folding cartons and/or
set-up boxes.
I
Imports of both bleached paperboard and recycled boxboard are insignifi- _
cant or nonexistent. There are no significant exports of recycled box- •
board, since the waste paper furnish is available in all industrialized ™
regions; however, there are some exports of bleached paperboard (about
7% of 1973 production) to markets where U.S. producers are competitive I
by virtue of their large-scale mills and relatively low wood costs. |
Figure III-4 shows recent trends in the production of SBS and recycled H
paperboard. It can be seen that not only has recycled (combination) •
board lost market share to SBS, but production has actually declined since
1966. Our market projection through 1977 indicates no sharp change in the
respective role of these two products. •
Table 111-22 quantifies the share of recycled paperboard in specific
market areas. It indicates the major role of recycled board in all •
categories except "wet" food packaging and perishable bakery appli- |
cations. (This table was issued by Midwest Research Institute in
early 1973 and may not reflect current competitive positions.) C|
3. Supply/Demand Trends
Table 111-23 shows projected supply/demand trends to 1977 for bleached •
paperboard and folding and set-up recycled paperboard. Both bleached •
paperboard and folding recycled paperboard were in extremely tight
111-48
Arthur D Little, Inc.
-------
1
I
1
1
1
1
1
1
1
1
1
1
1
1
1
1
I
1
TABLE 111-21
MAJOR U.S. RECYCLED BOXBOARD
1973 Capacity3
Producer (000 tons/yr)
Container Corp. 422
Whippany 388
Federal Paperboard 282
Packaging Corp. 258
Sonoco Products 179
Fiberboard Corp. 170
Brown Company 151
Consolidated Packaging 142
Simkins Industries 107
Subtotal 2,096
Others (about 35) 1,086
TOTAL 3 , 182
Includes folding and set-up boxboard
SOURCE: Lockwood's Directory of the Paper and
111-49
PRODUCERS
Percent Total
U.S. Capacity
13.3
12.1
8.9
8.1
5.6
5.3
4.7
4.5
3.4
65.9
34.1
100.0
Allied Trades, 1974
A *.4-t-k. w «
Arthur D Littlejnc.
-------
c
o
o
o
'
3
73
Q
Total
Boxboard
Solid Bleached Paperboard
Combination Paperboard
(bending and non-bending)
1962
1964
1966
1968
1970
1972
FIGURE 111-4 U.S. PRODUCTION OF COMBINATION PAPERBOARD
AND SOLID BLEACHED PAPERBOARD, 1962-1973
111-50
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CM
CM
H
H
h4
5
H
!/l
H
H
W
55
W
C/3
P
/^
^^
W
H
23
o
H
S
o
PK
H
t/3
W
H
S
d
g
§
F*
O
W
W
&
1
o
H
S
H
3
§
Crt
OS
O
H
O
IT
c
4!
i
u
0)
•«4 *J O
Ul ,-i 4J
CO cfl O
O 01 n>
(fa 33 tfa
^
X C
4J O
60 *J -i-4
C X 4-t
4) 00 CO
l-l -f-4 i— 1
w at OS
1 a.
C u
^a
s <
01
o
0) cfl
bO **-< E
n ^i E
O X **^
(8
01
t-l
(0
X
CL CL. W - 01
... .- C
" £ tj en
nl m - * 41
J-i _! c o w
W -O 4»
(/) VI 01 0)
330,* X X
-y -*: *•* *
o T; •*•• eo 01 c
(0 CO Ui "O l-i C 'H
»- v- 00 01 ? c B
W) 00 1 V* -o -r4 co
TJ -O 01 3 O. 0) 41
oioj^cr o.c>x
•>-li-lpV4 V-HX1-^
crcT-iyw lyX10^
» E^ - " -a S .2
.3" .5* 'H * « «
^ ,1; --4 o x tn .^
m _, nj •— * 3 •— ' U
SS^Sjg^^"
*J iJ X -H O t-4
XX > >X^*J4-i X
oobocatacnotuiuito
•H -H OJ 01 Ul O O Id
U.^3 ==333
3Z33 3333
tfa^^JS 3ZOS5
^3»lfa^3 3^)^.0
^D U- tfa frU ^)ZPui[fa
3££§ 2SS5
X
.^
O
« tfl
•O J^
H 01
3 ^
o- u x
H CO M
J l-l 41
a ^
CX •* CO
O tn c
c/1 X H co 4)
«-* w *-* O —i
« O T3 Q Z W XI
c -H ai *-> co
_y 4» oi X 3 in
•awjO O C w M
JJOOO O «| -H ai
Z U a. tfa U, (_) « OL,
4J O ,,
CO w 0>
"TO -^
§ ° Jd «
41 U Ol
S;i";r
•S M » J3 TJ
2 H 14 H
y ^ *J nj
0) —. 4-4 O
Q. ^ J3 0 XI
•^ m *J t, tl
a TO bo .* u
. x c a
„, o -ix^cv44-i
•4-1 >W H) 4) a) 4) W
^ t, 1. -r^ AJ >H (U
°t!t!«i>K>»
o*o-5So»6
^•r « s B .c S x;
OJ „ t. .H Ul
"i 3 o ^ ^ X n
4>>.u^^ cn^-r-i
M>^
c *•*
co -0
c
M 3
O J
' 3 ?
ai ao 01 nJ
O H C «
0 tfl -r^ ^ -•
U j *-* -H -H
co *a u* 4J *fl
XI Ui O X 4J
o t« a. « 41
H 3S tyj H Ot
H
4>
a.
«
y
t-i
•1-4
>
01
(fa
[fa
[fa
[fa
(fa
£
0)
4>
60
CO
V
00
0 0
y
0> (0
Q M-l
W X
C>0
X
Ul
C w
g en
O
0 -o
o S
•^ x)
4-t
Ul '"
J c
a o
o ^
u
4-1
to 0)
O N
Ul
0) Ol
^ 00
M U
1 5
fc b.
3 3
Z U.
En 3 -a)
0) CQ
•rf c
•" ca
>
01 a
u "°
3 Pu 01 O
f e
O CO
01 TJ
tn ai
3
Ol
x; 01
IS oo U ""
o c
u
01 H
* 1
U -f-4
C >*-<
> -o
•O 0)
tn y
* X
41 O) 1
CO 01 Ui X) --I
O T3 O CO td
§> l-i t-i
flj O 4J
00 O «** > 3
to C (0 41
t-t M 3 bu Z
41 4>
> O. ill
00 ftl 3 [fa Z
*.
V V
X U
w 3
U
O -H
4J 4J
« S
a*
CD O
.8
m DO
« £
.-4
1 U
O CO
H T3
.'«
iH ••
XI •
S^
o -
4J
^s
4J
0)
14-1 (0
og
•S &
l£
.. §
II
*H M
O On
«S2
a *J
fi«M
0
(T rH ON
t-( -H ON
iH O
^ P 4.
23 .
[fa X~s
W CO O\
CO iH
•H -a x*
f-H *H O
isi
..
4)
CJ
5
111-51
Arthur D Little Inc.
-------
TABLE 111-23
BOXBOARD SUPPLY/DEMAND TRENDS
Product Category
BLEACHED PAPERBOARD
Domestic demand
Exports and other
Total demand for U.S.
Production
Capacity
Apparent Operating Rate
FOLDING RECYCLED PAPERBOARD
Total Demand for U.S.
Production
Capacity
Apparent Operating Rate
SET-UP RECYCLED PAPERBOARD
Total demand for U.S.
Production
Capacity
Apparent Operating Rate
Preliminary
1973
(OOP tons)
3,655
265
3,920
3,928
100%
2,763
2,664 '
100.5%
465
518
Average
Growth
(%/yr)
2.0
3.0
2.1
1.9
2.0
1.6
-1.0
0.4
Projected
1977
(OOP tons)
3,960
300
4,260
4,237
100.5%
2,990
2,836
105%
450
527
90%
85%
OTHER COMBINATION BOARD - NONBENDING
Total demand for U.S.
Production 526
Capacity 584
Apparent Operating Rate
90%
2.0
1.6
570
620
92%
SOURCES: Capacity and 1973 Demand - American Paper Institute; Demand
Projections — Arthur D. Little, Inc.
111-52
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
supply in 1973; hence these should be similarly tight in 1977 as the
economy recovers from the current recession. However, a number of
recently announced bleached paperboard expansions due to come on stream
in 1978 could cause a modest oversupply in that year. Demand for set-up
recycled paperboard is declining slowly, partly due to competition from
folding cartons and plastics; this trend is likely to cause an over-
supply of set-up recycled boxboard by 1977 unless the equivalent of one
mill is closed or shifted to other products by that time.
In years past, bleached paperboard displaced recycled paperboard in
a number of folding carton operations. Because of this and the growth
of its other markets, bleached paperboard demand grew about 5% per
year during the 1950's and 1960fs while the demand for recycled paper-
board hardly grew at all. Now, however, the extremely rapid cost/price
increases for bleached pulp have made bleached paperboard less cost-
competitive with recycled paperboard in folding applications. Also,
we expect renewed competition between plastics and bleached paperboard
in milk cartons, cups, plates, and trays. Therefore, we project that
bleached and recycled paperboard will grow at about the same rate,
albeit a relatively slow one (roughly 2% per year).
4. Market Characteristics
a. Selling Prices
Table III-24 shows the recent price history of bleached paperboard and
recycled boxboard. This points out the increasing price differential
between the two products since 1973. Even at its current price, however,
bleached paperboard is selling at about the same price as bleached market
pulp, although it costs considerably more to produce. Therefore, bleached
paperboard prices are likely to rise even higher relative to recycled box-
board, thus slowing the growth of the former and increasing the demand
for the latter.
The prices in Table 111-24 overstate the cost competitiveness of recycled
boxboard. A smaller proportion of bleached paperboard is usually used,
since it is stronger and has a lower density than recycled boxboard; thus,
less bleached paperboard tonnage is needed for a given application.
b. Profitability
Like most other paper industry sectors, there are no publicly-held
firms that specialize in either the bleached paperboard or recycled box-
board product lines. Therefore, profitability data are not published
for these sectors. However, our previous experience with companies in
these sectors indicates that the profitability of the bleached paperboard
producers has been fairly consistently near the paper industry average,
but the profitability of recycled boxboard producers has been below the
industry average. The reasons are probably that (1) large capital
requirements limit entry into the bleached paperboard sector, (2) its
mills are more modern than most recycled boxboard mills, and (3) demand
111-53
Arthur D Little, Inc.
-------
Year
1973
1974
TABLE III- 24
BLEACHED PAPERBOARD AND RECYCLED BOXBOARD PRICE TRENDS
1975
January
January
March
May
September
October
November
January
($/ton)
Solid Bleached
Paperboard
210
250
280
280
320
350
350
350
Recycled Boxboard
(20-Point Clay-Coated)
152
190
220
230
260
260
280
280
SOURCE: H.C. Wainwright and Company, industry price surveys.
111-54
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
for bleached paperboard has traditionally grown somewhat faster than the
industry average. Conversely, entry into the recycled boxboard area has
been relatively easy because of lower capital requirements; the result
has been chronic oversupply in this traditionally very slow-growing
product area.
5. Factors Affecting Increased Waste Paper Utilization
There appears to be relatively little prospect for using substantial
amounts of waste paper in bleached paperboard. All the producers of this
product are currently integrated to bleached kraft pulp and further
integrated to the ownership of a substantial portion of the woodlands
needed to support their pulp mills. Moreover, most of their mills are
far from any metropolitan areas where a significant supply of waste paper
might be obtained. Finally, this product requires a pulp substitute
or a deinkable grade of waste paper, which traditionally has been in
short supply relative to other grades. Another consideration is that the
use of waste paper would probably necessitate costly testing procedures
to guard against the introduction of impurities, so that the paperboard would
be suitable for packaging food that comes in contact with the board. For
the above reasons, we expect that only small amounts of waste paper will
be utilized in bleached paperboard under special circumstances where an
economical supply is available and where the paperboard is to be used
primarily in nonfood applications.
The key factor to greater utilization of waste paper and recycled box-
board is to increase the demand for this packaging material vis-a-vis
bleached paperboard and plastic. Several factors suggest that the growth
of recycled boxboard can be stimulated: (1) the currently increasing price
differential between recycled boxboard and bleached paperboard noted,
(2) the possibility of making a higher quality board with the newer
multi-ply board forming devices, and (3) removal of the stigma against
recycled products.
In conclusion, for the reasons cited above and because of the high cost
of building new grass-roots facilities for the manufacture of SBS board,
we expect recycled board to maintain its competitive position with respect
to the virgin fiber product.
111-55
Arthur D Little, Inc.
-------
G. PRINTING, WRITING AND RELATED PAPERS
1. Products Included
The printing, writing, and related papers sector consists of four product
groupings: coated printing and converting paper, uncoated book paper,
writing and related papers, and bleached bristols. All of these papers
employ bleached pulp and are used primarily for printing, publishing,
stationery, and a variety of paper converting applications. Some of this
is sold by the producer directly to large customers; the rest is sold
through paper merchants or other wholesalers to small printers, pub-
lishers, and paper converters. The paper is usually cut by the paper
mill in rolls or sheets ready for final use. Table 111-25 shows the
1973 production volumes and principal grades included within these four
categories.
Two-side coated printing and converting paper is used primarily for mag-
azine and textbook printing. The kind used in magazines, which constitutes
about 70% of the volume, utilizes a groundwood-content base paper
containing about 50% groundwood and 50% chemical pulp. Textbooks and
publications such as corporate annual reports and advertising brochures
generally utilize a 100% chemical pulp base sheet. The coated one-side
papers are generally used for labels and packaging wraps, such as on cans;
these generally utilize a 100% chemical pulp base sheet. Since most
coated papers are used by large customers, they are generally sold direct
by the paper manufacturer.
Uncoated book paper is used for many applications in addition to book
printing. These include a wide variety of commercial printing applications
that require uncoated paper as well as the paper used to produce envelopes
and tablets. With the exception of the envelope and tablet converting appli-
cations, most purchases of uncoated book paper are relatively small accounts,
and hence a large volume of this paper is sold through paper merchants.
Few manufacturers have the breadth of product line or dominant share of the
large accounts to economically sell direct to this market, which consists
of over 15,000 commercial establishments. These papers are differentiated
from the uncoated groundwood papers in that they contain no more than
25% groundwood pulp in their furnish.
Writing and related papers are primarily used for business writing papers,
stationery, and business forms. Forms for computer printing and a variety
of other business forms is the largest volume grade in this category,
accounting for over 25% of 1973 production. The cotton-fiber papers have
furnishes containing 25% or more of cotton, rags, linters, flax, or
similar fibers. They are more expensive than the chemical wood pulp
writing papers and hence are used in higher-value specialized applica-
tions, such as chart papers and special stationery. Thin papers include
carbonizing tissue, condenser tissue, cigarette paper, pattern paper and
the like.
111-56
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE III-25
U.S. PRODUCTION OF PRINTING, WRITING, AND RELATED PAPER PRODUCTS, 1973
Product Category
Coated Printing and Convering
Coated, two sides
Coated, one side
Subtotal
Uncoated Book Paper
Publication and Printing
Body Stock for Coating
Other
Subtotal
Writing and Related Papers
Writing, Chemical Wood Pulp
Writing, Cotton Fiber
Cover and Text
Thin Paper
Subtotal
TOTAL
Production
000 Tons
3,389
457
3,846
2,011
27
1,024
3,062
3,091
124
221
345
3,781
10,689
% of Total
31.7
4.3
36.0
18.8
0.2
9.6
28.6
28.9
1.2
2.1
3.2
35.4
100.0
111-57
Arthur D Little, Inc.
-------
We expect the highest rate of growth in demand to occur in the uncoated
book, chemical writing, and thin paper category, although only slightly
111-58
Arthur D Little, Inc.
I
I
Forms bond and thin papers are generally sold direct, since most of the •
customers are large converters. A significant volume of bond and sta- |
tionery paper, however, is sold through paper wholesalers, because the
stationery converting market is highly fragmented. •
2. Industry Structure
Table 111-26 lists the 14 major U.S. printing and writing paper producers •
and their share of U.S. capacity in 1973. The market is relatively frag- •
mented compared with most other paper and paperboard product sectors:
the 14 largest producers account for only 47% of U.S. capacity, and at
least 60 other firms compete in this sector.
I
A look at specific grades within the printing and writing category, however, _
reveals that some companies have a more dominant position. Consolidated •
Papers, for example, has nearly a 10% share of the total U.S. capacity ™
for coated papers and an even larger share of the magazine paper market,
in which it specializes. Great Northern-Nekoosa focuses primarily on B
the writing paper sector, and even more specifically on forms bond, in •
which it is the leading producer; however, it has only a 5% share of the
uncoated book and chemical wood pulp writing papers category. The bleached •
bristol category is particularly concentrated: Boise Cascade, Eastex, and •
Scott Paper Company (all of whom produce bleached paperboard for packaging
applications at the same mills) are the only significant U.S. producers. _
All of the bleached bristol producers are integrated to chemical pulp *
production on site, as are most of the printing and writing paper
mills operated by the 14 largest companies in this sector. However, a sub- •
stantial number of nonintegrated printing and writing paper mills rely |
primarily on purchased chemical pulp and, to a far lesser degree, on pulp
substitute grades of waste paper. In this sector, only Bergstrom Paper •
Company relies entirely on deinked waste paper, and it currently has about I
a 1% share of total U.S. printing and writing paper capacity.
3. Supply /Demand Trends I
Table 111-27 shows 1973 operating rates for major product categories within
the printing, writing, and related paper sector and projects their oper- •
ating rates to 1977. It indicates that with the anticipated recovery from I
the current recession, the coated paper, uncoated book, chemical writing
and thin paper, and solid bleached bristol product categories should «
reestablish by 1977 the extremely high operating rates they enjoyed in 1973. I
Cotton fiber writing paper is the only category that is likely to exper-
ience a drop in operating rates by 1977; however, the mills in this •
category characteristically maintain relatively low operating rates •
compared with other categories in the printing and writing paper sector .
I
-------
1
1
1
1
1
1
1
•V
1
1
1
1
1
1
1
1
1
TABLE III- 26
CAPACITIES OF MAJOR U.S. PRINTING AND WRITING PAPER PRODUCERS, 1973
Capacity* % of U.S.
Company
Mead Corp.
International Paper
Hammermill
Weyerhaeuser
Westvaco
Scott Paper
Consolidated Papers
Great Northern Nekoosa
Potlatch Forests
Oxford Paper
Allied Paper
Champion International
Georgia-Pacific
Finch Pruyn
Subtotal
Others
TOTAL
(000 tons)
688
557
473
438
437
420
399
333
285
280
280
270
259
245
5,364
5,713
11,077
^Excludes capacity for bristols which are usually produced by
making solid bleached paperboard
SOURCE: Lockwood's Directory of
•
the Paper and Allied Trades,
111-59
Capacity
6.2
5.0
4.3
4.0
3.9
3.8
3.6
3.0
2.6
2.5
2.5
2.4
2.3
2.2
48.4
51.6
100.0
mills
1974.
Arthur D
-------
TABLE 111-27
PRINTING, WRITING, AND RELATED PAPER SUPPLY/DEMAND TRENDS
Preliminary Average Projected
1973 Growth 1977
Product Category (OOP tons) (%/Yr) (OOP tons)
COATED PRINTING & CONVERTING
Total demand for U.S.
Production 3,846 3.5 4,410
Capacity 4,045 3.4 4,621
Apparent Operating Rate 95% 96%
UNCOATED BOOK, CHEMICAL WRITING,
AND THIN
Total demand for U.S.
Production 6,719 4.0 7,860
Capacity 6,883 4.4 8,162
Apparent Operating Rate 98% 97%
COTTON FIBER WRITING PAPERS
Total demand for U.S.
Production 124 - 120
Capacity 149 0.6 153
Apparent Operating Rate 83% 78%
SOLID BLEACHED BRISTOLS
Total demand for U.S.
Production 1,133 1.4 1,200
Capacity 1,199 2.1 1,279
Apparent Operating Rate 96% 94%
SOURCES: Capacity and 1973 Demand - American Paper Institute;
Demand Projections - Arthur D. Little, Inc.
111-60
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
above that of our assumed growth of real GNP of 3.5%/year. Within this
category, computer forms bond is growing at an above-average rate,
while uncoated book and stationery paper is growing at about an average
rate and thin papers are below average. In the coated papers sector,
magazine applications are growing only about 3% per year,but somewhat
higher growth is expected in textbooks and other coated paper applications,
4. Market Characteristics
A. Price Trends
As with most other paper products, printing and writing paper prices
rose rapidly after price controls were lifted in March 1974. Throughout
most of the 1960's, prices had been very stable in comparison with the
all-commodity price index. Table 111-28 shows the trend in printing
and writing paper prices since 1970.
The recent price increases were caused by a very tight supply/demand
balance for printing and writing papers, coupled with rapidly rising
costs, particularly for bleached chemical pulp. In fact, producers that
were not integrated to pulp production were barely able to maintain
their profit margins in the face of rising market pulp prices, in spite of
the price increases they obtained on their end products. Producers that
were integrated to pulp, however, were able to obtain significant profit
margin improvements.
b. Profitability
Only a few publicly-owned paper companies specialize in the printing
and writing paper product line. According to their earnings statements,
companies that are integrated to pulp production have fairly consistently
had profit margins close to the average for the paper and allied products
industry. On the other hand, companies not integrated to pulp have been
fairly consistently below the industry's profitability average. The
profits of Bergstrom Paper Company, the only firm that uses a 100%
waste paper furnish, have been consistently above the industry average.
5. Factors Affecting Increased Waste Paper Utilization
A substantial amount of waste paper is already used in making printing
and writing papers, primarily in blends with bleached chemical pulp.
In 1973, about 940,000 tons of waste paper, primarily the pulp substitutes
or deinking grades, were used in printing and writing paper and accounted
for about 7% of the total fiber furnish. The current waste paper
utilization rate, coupled with the fact that the demand for printing
and writing papers is growing faster than for most any other paper
products, make this sector a promising one for increased waste paper
utilization. Furthermore, many printing and writing paper mills are
relatively close to areas of concentrated population from which they
can obtain an economical supply of waste paper.
111-61
Arthur D Little, Inc.
-------
TABLE III -28
January 1973
February
March
January 1974
February
March
April
July
October
January 1975
PRINTING AND
WRITING PAPER PRICE
TRENDS
(Dollars Per Ton)
Uncoated
Tablet Paper
(16 Ib.)
222
222
250
260
265
290
290
350
350
360
Register Bond
(12 Ib.)
n.a.
n.a.
324
363
n.a.
n.a.
n.a.
n.a.
470
490
Uncoated
Book Paper
(No. 3 Offset)
n.a.
n.a.
365
412
n.a.
n.a.
n.a.
475
500
535
Coated Publica-
tion Paper
(34-36 Ibs.)
255
264
270
280
285
300
340
360
400
400
% Growth (3/73-1/75) 44%
51%
47%
48%
n.a.—not available.
SOURCE: H.C. Wainwright and Company, producer surveys.
111-62
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Perhaps the most important factor affecting increased waste paper
utilization is the rapidly rising price of bleached market pulp. Many
of the printing and writing paper mills are not integrated to pulp,
and as its price continues to rise, it increases the incentive for
these mills to substitute waste paper for virgin pulp.
On the other hand, most grades of printing and writing papers require an
extremely clean, white pulp, To obtain these qualities from waste paper,
the mills must almost invariably install deinking facilities, since the
supply of pulp substitute grades of waste paper is already spoken for.
Deinking facilities are costly to build (although not as costly as a
minimum economic-sized chemical pulp mill) and create a substantial
water pollution problem; the latter necessitates the expensive primary
and secondary treatment facilities, which add to the cost and space
requirements.
A second inhibiting factor is that the easily obtainable supply of
deinking grades of waste paper has already been tapped, and higher
waste paper prices will be required to attract a significant supply
of sorted post-consumer waste paper suitable for deinking. However,
the continued rise in the price of bleached chemical pulp is likely
to cause a corresponding increase in deinking waste paper prices.
H. INDUSTRIAL PACKAGING AND MISCELLANEOUS CONVERTING PAPERS
1. Products Included
Table 111-29 lists the major products comprising the industrial pack-
aging and miscellaneous converting paper functional group. The group
consists of three major categories:
• Unbleached kraft paper, used primarily for wrapping
paper, shipping sacks, multi-wall bags, and grocery
sacks and bags;
• Bleached kraft (and, to a lesser extent, sulfite) pack-
aging papers which are utilized for a variety of specialty
wrapping, bag, and food carton inner-wrap applications; and
• Other converting paper and paperboard applications, including
special industrial paper, tube, can, and drum paperboard,
and other specialty recycleid paperboard applications.
The unbleached kraft paper sector is characterized by long, large-
volume production runs. Most of the manufacturers produce linerboard
(and other containerboard materials as well) since these products use
the same type of pulp, i.e., primarily unbleached softwood southern pine.
The producers also have a major share of the multi-wall bag and grocery
111-63
Arthur D Little, Inc.
-------
TABLE 111-29
PRODUCTION OF INDUSTRIAL PACKAGING AND MISCELLANEOUS
CONVERTING PAPERS. 1973
Production
Grades OOP tons % of Total
Unbleached Kraft Packaging and
Industrial Converting
Wrapping 248
Shipping sack 1,133
Bag and sack, excluding
shipping 1,987
Other converting 643
Subtotal 4,011 50.6
Packaging and Industrial
Converting, Excluding
Unbleached Kraft
Wrapping 168
Shipping sack 102
Bag and sack exc, shipping 254
Other converting 497
Glassine, greaseproof, and
vegetable parchment 236
Subtotal 1,258 15.9
Other Converting Paper and
Paperboard
Special industrial paper 564 7.1
Tube, can and drum
paperboard (recycled) 901 11.4
Special combination
paperboard 1,191 15.0
TOTAL 7,925 100.0
Source: Bureau of the Census, Industry Division, Pulp, Paper and Board
and American Paper Institute (tube, can and drum and special
eombination paperboard.)
111-64
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
bag and sack converting markets. Substitution of plastic film, particularly
for the multi-wall bags and, to a lesser extent, shopping bags, has
caused demand for unbleached kraft paper to remain static in these areas.
Bleached packaging and industrial converting papers have much the same
applications as unbleached kraft paper, but the end uses are highly frag-
mented and more in the nature of commodities. Glassine, greaseproof,
and vegetable parchment are used as inner linings for packages (e.g.,
dry cereal and cake mixes), specialty bags, and a variety of other products.
They are produced from a variety of bleached and unbleached softwood kraft
and softwood sulfite pulp. Substitution by plastics has been even more
substantial here than with unbleached kraft paper and is likely to continue.
The other converting paper and paperboard sector consists of a number of grade
categories which utilize waste paper extensively. The special industrial
paper category is made up of a variety of paper and paperboard grades designed
for specialized end uses such as abrasive paper, absorbent paper, cable paper,
electrical insulation, vulcanized fiber, and resin impregnating stock. The
tube, can, and drum paperboard category consists of the recycled paperboard
component only. Unbleached kraft paperboard use in this application is
included in the containerboard functional group, because tubes and drums
are small-volume application. This material is used to produce spiral-
wound cans and drums. The special combination paperboard category consists
of uses for recycled paperboard not included elsewhere, such as tags, file
folders, match stems, tablet backs, toys, etc.
Although substantial amounts of waste paper are used in the production of
special industrial grades, many grades use 100% chemical pulp, often of the
long-fiber variety made by the kraft or cotton linters process.
2. Industry Structure
Table 111-30 lists the 1973 capacities of the ten largest producers of
unbleached kraft and other packaging and industrial converting papers.
These firms concentrate on the production of unbleached kraft grades as
opposed to the other packaging and converting grades. Together, they
account for over 50% of U.S. unbleached kraft paper capacity. All are
vertically integrated from woodlands to the converting and marketing of
multi-wall grocery and other bags.
Thilmany Pulp and Paper Company is the largest producer of packaging and
converting papers other than unbleached kraft and is one of the few that
specialize in this product line. This industry sector, however, is much
more highly fragmented than the unbleached kraft papers sector; many
companies produce these grades as a small part of their total production.
In addition, there is a much lower incidence of complete vertical integration
of woodlands to converted product.
Table 111-31 shows the major producers of special industrial paper.
Although the average producer is relatively small (under 100,000 tons/year),
there is a fair degree of concentration in this sector: the top ten firms
111-65
Arthur D Little, Inc.
-------
TABLE 111-30
CAPACITIES OF MAJOR PRODUCERS OF UNBLEACHED KRAFT AND OTHER
PACKAGING AND INDUSTRIAL CONVERTING PAPER PRODUCTS, 1973
Company
International Paper
St. Regis
Union Camp
Crown Zellerbach
Longview Fibre
Hudson Pulp and Paper
Gulf States Paper
Hoerner Waldorf
Georgia-Pacific
Thilmany Pulp and Paper
Subtotal
Other Producers
TOTAL
(000 tons)
568
441
320
411
230
195
177
177
156
142
2,817 +
2.613
5,430
Capacity
'(% of Sector Total!
10.5
8.1
5.9
7.6
4.2
3.6
3.3
3.3
2.9
2.6
51.9 +
48.1
100
SOURCE: Lockwood's Directory of the Paper and Allied Trades, 1974, and
American Paper Institute capacity survey.
111-66
Arthur D Little, Inc.
-------
I
I
I
_ CAPACITIES OF MAJOR PRODUCERS OF SPECIAL INDUSTRIAL PAPER. 1973
™
TABLE 111-31
Capacity
Company (OOP tons) (% of Sector Capacity)
Homosote Company 113 17.9
Riegel Products Corporation 55 8.7
_•
™ Standard Packaging 42 6.7
• Hollingsworth and Vose 39 6.2
Fitchburg Paper 32 5.1
I Schoeller Technical Division
of Mead 24 3.8
I Allied Paper 24 3.8
Nicolet Industries 23 3.7
I Beverage Paper 23 3.7
•j Rochester Paper 23 3.7
Subtotal 398 63.3
I Other Producers 231 36.7
TOTAL 629 100.0
I
• Source: ADL calculations based on data from Lockwood's Directory, 1974
I
I
I
111-67
• Arthur D Little, Inc.
-------
account for over 60% of the total capacity in this highly specialized product
line. Most producers are not integrated to pulp production but rely on
purchased pulp or waste paper for their fiber requirements.
3. Supply/Demand Trends
4. Market Characteristics
a. Price Trends
I
I
Tube, can, and drum paperboard and special combination paperboard are often •
produced as a relatively small portion of the product lines of the recycled •
boxboard companies. Sonoco Products Company is one of the few major firms
to concentrate their production of several of its mills in this product _
area. Sonoco has about a 12% share of U.S. capacity for recycled tube, •
can, and drum paperboard and about a 5% share of this sector plus special *
combination paperboard. Thus, the market is relatively fragmented. In
most respects, it has the same characteristics as the recycled folding •
boxboard sector, except that there is little or no forward integration |
to converting.
I
Table 111-32 shows the projected 1977 supply/demand balances for each of
the major grades that make up the Industrial Packaging and Converting Papers •
functional group. In each case, 1977 operating rates are expected to be B
about equal to the fairly high rates that prevailed in 1973.
The rate of growth in demand for unbleached kraft and other packaging |
papers is very low, as we have noted earlier, primarily because of dis-
placement by plastic films. However, since the rate of capacity expansion •
for these papers is also low, a tight supply/demand balance should be re- •
established when the U.S. economy recovers from the current recession.
Because of its specialty product nature and the highly fragmented lines of •
most producers, special industrial paper is not a typical pulp and paper I
product: a 90-92% operating rate is about the practical maximum for this
grade over the course of a year. Here again, the growth in capacity •
approximates the projected growth in demand between 1973 and 1977, |
indicating that a relatively tight supply/demand balance will prevail.
A similar projection holds for special recycled packaging and converting •
paperboard.
The key implication of these trends is that the upward movement in prices I
and profitability in these grades that occurred in 1972-1974 should be I
reestablished with the anticipated recovery of the U.S. economy in 1976.
I
I
Table 111-33 shows price trends in the major unbleached kraft packaging
paper grades since January 1973. It indicates that the prices of both the
multi-wall bag and grocery bags have risen 61%, mostly since March 1974, •
I
111-68
Arthur D Little, Inc. •
-------
1
1
1
1
1
1
1
1
1
•i
1
1
•
1
TABLE 111-32
SUPPLY /DEMAND TRENDS FOR INDUSTRIAL PACKAGING, CONVERTING,
MISCELLANEOUS PAPERS
UNBLEACHED KRAFT PAPER
Demand for U.S. Production
Capacity
Apparent Operating Rate
OTHER PACKAGING PAPER
Demand for U.S. Production
Capacity
Apparent Operating Rate
SPECIAL INDUSTRIAL PAPER
Demand for U.S. Production
Capacity
Apparent Operating Rate
Preliminary Average
1973 Growth
(000 tons) (% Year)
4,011 1.2
4,138 1.0
97%
1,258 0.2
1,292 0.3
97%
564 3.5
629 3.2
90%
AND
Projected
1977
(OOP tons)
4,200
4,303
98%
1,270
1,306
97%
650
713
91%
SPECIAL RECYCLED PACKAGING PAPERBOARD*
Demand for U.S. Production
Capacity
Apparent Operating Rate
1,540 4.0
1,637 3.7
94%
1,800
1,895
95%
* Includes tube, can, and drum stock; 1973 data from API
1
f
1
1
1
1
111-69
Ar-fVii.*- P\ I ittlo
-------
TABLE I I 1-3 3
PRICE TRENDS FOR UNBLEACHED KRAFT PAPERS
($/ton)
50- Ib Multi-Wall 57- Ib Grocery Bag
January 1973 165 155
March 175 165
August 180 170
March 1974 200 180
August 240 220
November 250 230
December 250 235
January 1975 265 250
Total Increase 61% 61%
Source: H.C. Wainwright & Co., producer survey.
111-70
ArthnrDI ittlf
1
1
1
I
1
1
1
1
I
1
1
1
1
1
1
1
1
1
- Inr 1
-------
I
I
I
I
I
I
I
I
I
I
I
I
f
I
I
I
I
I
I
when price controls were partially lifted for the U.S. pulp and paper
industry.
The prices for these grades had been essentially stable during the 1960's
because of the general condition of overcapacity, intense competition from
plastics, and productivity improvements in kraft paper production. How-
ever, as the supply/demand balance tightened in 1973, the producers found
that they could pass on their cost inflation as well as improve their
profit margins by increasing prices.
Published data are not available on price trends for specialty packaging
papers and special industrial papers and paperboard. Many of these grades
are produced from purchased and/or bleached pulps whose prices have risen
faster than those of commodity products produced in mills fully integrated
to pulp production. Therefore, we believe that the rate of price increase
for these grades since January 1973 is comparable to that of the printing
and writing paper grades.
Price trends for recycled tube, can, and drum paperboard and special
combination board also are not published, but we believe them to be
somewhat steeper than the recent increases in recycled folding boxboard.
b. Profitability
As there are a variety of products, so also are there several general
profitability levels in the industrial packaging and miscellaneous
converting paper group. The most profitable product line in this group
appears to be the specialty packaging and industrial converting papers
made by fully integrated producers; their profitability probably exceeds
that of the entire paper and allied products industry.
On average, the large producers of unbleached kraft packaging and con-
verting papers are currently achieving a profitability close to the
industry average. Probably ranked immediately below them are producers
of special combination paperboard, followed by producers of recycled
tube, can, and drum paperboard. The average special industrial paper
producer probably ranks last in terms of profitability in this sector,
well below the paper industry average; most producers in this sector
rely extensively on purchased market pulp and have been unable to pass
on all of the price increases they have had to pay for this raw material.
5. Factors Affecting Increased Waste Paper Utilization
The unbleached kraft papers are analogous to kraft linerboard from the
standpoint of being a large-volume commodity group grade which, while
attractive from a volume standpoint, will be very difficult for waste
paper to penetrate substantially, either as a pulp substitute or as a
product replacement. Most producers of this material also make liner-
board, often in the same mill, so their orientation to the use of virgin
111-71
Arthur D Little, Inc.
-------
I
I
fiber as a result of their backward integration to woodland control applies
to both products. Unlike the case with linerboard, however, we know of no I
producer who makes unbleached kraft paper from 100% waste paper; this •
demonstrates that unbleached kraft paper, which is a lighter product and yet
has quite stringent strength requirements, poses even greater obstacles
to a 100% waste paper product.
I
There is likely to be greater opportunity for higher waste paper ratios in _
the specialty packaging and converting papers area, particularly for •
nonintegrated pulp producers that are facing steeply rising market pulp ™
prices.
Substantial quantities of waste paper are already used in the special |
industrial paper, special combination paperboard, and tube, can, and drum
paperboard areas. Somewhat higher usage ratios might be used by noninte- M
grated producers of special industrial papers to help offset the rapid rise •
in market pulp prices, but most of the increase in waste paper utilization
is likely to result from greater production of these products. This sub-
ject is further discussed in Sections VIII and X. •
I
I. CONSTRUCTION PAPER AND PAPERBOARD
1. Products Included
The Construction Paper and Paperboard functional group consists of a number •
of fibrous materials that are primarily used in the building industry.
For the purposes of this report, the group is divided into three subcategories—
construction paper, gypsum wallboard, and hardboard/insulation board. •
Construction paper includes sheathing paper, felts (roofing, floor covering,
automotive, sound deadening, industrial, pipe covering, refrigerator, etc.), •
asbestos and asbestos-filled paper, and flexible wood-fiber insulation. |
Except for asbestos paper, these materials are usually made entirely of
waste paper. Almost all forms of construction paper are intermediate products. _
Gypsum linerboard, another intermediate product, is the facing material on —
gypsum wallboard. It is made entirely from waste paper. Gypsum wallboard
is used chiefly for interior wall and ceiling panels and as a base for •
plaster. •
Hardboard and insulation board are quite dissimilar to the other products m
in this functional group. Neither is produced on a conventional Fourdrinier |
or cylinder board machine nor in any way resembles a paper product. They
are generally not made by the manufacturers of paper or paperboard, and —
they are sold to different markets. Waste paper has not been used in •
these materials in the past; they are usually made from wood residues or ™
sometimes waste wood. However, recent experimental work indicates that
substantial amounts of secondary fiber could be used. (See Section VIII, •
Substitutability of Secondary Fiber.) I
I
111-72
Arthur D Little Inc. •
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Hardboard (or hard-pressed board) is usually made from long-fiber mechanical
pulp into a fiberboard that may be treated and/or tempered. Typical den-
sities are in the range of 40-90 pounds per cubic foot. This product is used
for such applications as cabinet backing and wall paneling.
Insulation board is a homogeneous wood fiber panel made by interfelting
the fibers from defibrated pulp. The semi-rigid variety has a density of
9.5 pounds per cubic foot or less and is used for insulation purposes such
as ceiling tile and acoustical tile. Rigid insulation board has densities
ranging from 9.5 to 31 pounds per cubic foot and is used for such applica-
tions as exterior sheathing, interior wall paneling, and as a base for
plaster or siding.
2. Industry Structure
Tables 111-34 and -35 show the capacity shares of the major producers of
construction paper and gypsum linerboard respectively. Both markets, par-
ticularly the latter, are highly concentrated from a supply standpoint.
All of the construction paper producers are integrated forward to the con-
version of final products such as shingles, tar paper, and sheathing paper;
their plants are generally near major metropolitan areas, which provide
a supply of waste paper as well as the primary market for the end product.
Similarly, all the gypsum linerboard producers make gypsum wallboard in
plants that are close to a source of gypsum.
Table 111-36 lists the major producers of hardboard and insulation board
and their share of total production capacity. The hardboard market is
highly concentrated, as the five top producers account for about 52%
of total capacity. The insulation board sector is almost as concentrated,
with the five top producers accounting for 48% of capacity.
The largest centers of hardboard and insulation board production are in the
North Central, Western, and Southern regions. Most of the major producers
are integrated back to woodland control, although not specifically for
these products, since they are made primarily from sawmill and plywood mill
wood residues.
3. Supply/Demand Trends
Table 111-37 shows projections of supply and demand for the various sectors
of the Construction Paper and Paperboard functional group. In all of these
sectors, 1977 operating rates are likely to be about as high as those that
prevailed in 1973. Demand in all sectors is highly sensitive to construct-
ion industry activity, and our demand projections assume that housing starts
will return to an annual level of about two million by 1977.
111-73
Arthur D Little, Inc.
-------
TABLE 111-34
MAJOR PRODUCERS OF CONSTRUCTION PAPER
1973 Capacity
Company (000 tons) % of Sector Total
Celotex Company 358 17.0
GAF Corp 367 17.5
Lloyd A. Fry Roofing 240 11.4
Certain-Teed Products 218 10.4
Bird & Son 175 8.3
Johns Manville 195 9.3
Subtotal 1,533 73.9
Other Producers 549 26.1
TOTAL 2,102 100.0
SOURCES: Lockwood's Directory of the Paper and Allied Trades,
1974, and American Paper Institute Capacity Survey,
1974.
111-74
Arthur Dl it
1
1
1
1
1
1
1
1
I
1
1
1
I
1
1
1
•^B
tip Inr •
-------
TABLE 111-35
MAJOR PRODUCERS OF GYPSUM LINERBOARD
I
I
I
I
I
1973 Capacity
I Company (OOP tons) % of Sector Total
• National Gypsum 411 37.6
U.S. Gypsum 259 23.7
• Georgia Pacific 121 11.1
Celotex 104 9.5
I Subtotal 895 81.9
• Other Producers 198 _JL8.1
TOTAL 1,093 100.0
I
I SOURCES: Lockwood's Directory of the Paper and Allied Trades, 1974
and American Paper Institute Capacity Survey, 1974.
I
I
I
I
I
I
111-75
* Arthur D Little, Inc.
-------
TABLE 111-36
CAPACITIES OF MAJOR PRODUCERS OF HARDBOARD AND INSULATION BOARD
Percent of Total
Company Industry Capacity
a
A. Hardboard
Masonite 34
Abitibi 8
Superwood 6
U.S. Plywood (Champion International) 5
Georgia-Pacific 5
U.S. Gypsum 5
Celotex (Jim Walter) 5
Evans Products 4
b
B. Insulation Board
Celotex 19
Boise Cascade 13
Armstrong Cork 12
Weyerhaeuser 8
U.S. Gypsum 8
Temple Industries 7
SOURCES: a. Annual reports, company data, and contractors'
estimates .
b. Arthur D. Little, Inc., "Economic Analysis
of Proposed Effluent Guidelines,"
EPA 230/2-74-029, August 1974.
111-76
Arthur D Lit
1
1
1
1
1
1
I
1
1
1
1
1
1
1
1
1
tie. Inc. •
-------
1
1
I
1
1
1
VI
1
1
•
1
1
1
1
1
1
1
1
TABLE I I 1-3 7
CONSTRUCTION PAPER AND BOARD SUPPLY/DEMAND TRENDS
Preliminary Average
1973 Growth
(000 tons) (%/yr)
CONSTRUCTION PAPER
Demand for U.S. Production 1,812 3.2
Capacity 2,102 1.8
Apparent Operating Rate 86%
GYPSUM LINERBOARD
Demand for U.S. Production 1,050 1.2
Capacity 1,093 0.9
Apparent Operating Rate 96%
HARD PRESSED BOARD
Demand for U.S. Production 2,087 3.6
Capacity 2,247 2.2
Apparent Operating Rate 93%
INSULATING BOARD
Demand for U.S. Production 1,659 3.6
Capacity 1,837 3.8
Apparent Operating Rate 90%
Source: 1973 demand - API Statistics of Paper
1973 capacity - API Capacity Survey Data, 1973-1976
Projected
1977
(000 tons)
2,060
2,258
91%
1,100
1,135
97%
2,400
2,452
98%
2,000
2,136
94%
1977 projections - Arthur D. Little, Inc., calculations
of apparent operating ratios
111-77
Arthur E
-------
4. Market Characteristics
a. Price Trends
Most forms of construction paper and all gypsum linerboard are, as pre-
viously mentioned, intermediate products and therefore have no established
selling price. Although the retail prices of the final products could
be ascertained, they would not necessarily reflect trends in the cost
of the intermediate materials.
Prices of hardboard and insulation board have been depressed because of
the economic slowdown and are presently around $60/MBF. (Since these
products are not commodities, various prices apply to both, depending
on the characteristics of the specific grade considered.) Prices are
expected to recover in the foreseeable future with the upturn in the
economy but are unlikely to return to the high levels reached in early
1974.
b. Profitability Trends
The profitability of most of the products in this functional group varies
chiefly in accordance with construction industry cycles. Since the
construction industry is now in a slump, the profitability from producing
insulation board, hardboard and, to a lesser extent, construction paper
is below the current average for the paper and allied products industry.
Construction paper is somewhat sheltered from dips in the housing market,
because it is buoyed up by increased use in reconstruction, remodeling,
and roof replacement. These activities tend to keep the supply/demand
balance in relative equilibrium.
Gypsum linerboard is an exception to the above generalization. There is
no market for gypsum linerboard per se, since all of the producers are
integrated to the production of gypsum wallboard. Thus, the profitability
of gypsum linerboard depends on the internal transfer prices that are used.
Basically, however, it is tied to the profitability of gypsum wallboard,
which fluctuates in accordance with the U.S. supply/demand balance. Be-
cause of the softness in the construction market, wallboard profits are
down.
5. Factors Affecting Increased Waste Paper Utilization
There is already substantial use of waste paper in the building paper
and board functional group, except for hardboard and insulation board, which
currently use no waste paper at all. In these two product areas, waste
paper would have to compete economically against the even less expensive
wood residue now used as raw material. In addition, if waste paper is to
be used, new technology must be developed to obtain the extremely low
density yet adequate bonding required for insulation board and the very
dense, highly bonded properties of hardboard. Penetration into these
product areas would result in significant tonnage utilization, because
111-78
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
of the large size of the market and reasonably rapid growth rate, par-
ticularly for hardboard.
With regard to construction paper and gypsum linerboard, increased
waste paper utilization will depend upon the growth of these product
lines, since waste paper has probably reached its maximum share
of the total raw materials used for these products. As indicated
in subsection 3, both gypsum linerboard and construction paper are
mature products, but have a reasonably attractive growth outlook,
about in line with the overall construction industry index.
J. MARKET PULP
The purpose of this section is to analyze the supply/demand/price
trends for pulps sold as an intermediate product for papermaking (i.e.,
market pulp) and against which waste paper competes as a substitute
raw material.
1. Products Included
Market pulp includes all grades of papermaking pulp that are sold for
subsequent fabrication into paperboard or other disposable products.
The principal grades include bleached, semibleached, and unbleached
sulfate (kraft) and sulfite pulps and bleached and unbleached ground-
wood pulps. In fact, the only grade not included is semichemical pulp,
which to our knowledge is entirely produced captively by paperboard
and paper producers.
In this analysis, we will focus our attention on the bleached and semi-
bleached grades of kraft and sulfite pulp, as these currently constitute
about 86% of the total pulp purchased by U.S. mills that are not
integrated or are only partially integrated to on-site pulp production.
The primary products produced by such mills are printing and writing
papers, sanitary tissue, and related papers. We have excluded dissolving
pulps, which are used primarily in nonpaper applications such as rayon
and acetate fibers, cellophane, and a variety of cellulosic chemicals.
Most dissolving pulp mills, however, also produce bleached paper-grade
pulps and thus are considered from the supply point of view.
Although data are not readily available concerning the quantities of market
pulp used in the manufacture of the various functional groups studied in
this analysis, the information previously presented indicates that it is
used primarily in the nonintegrated printing, writing, and tissue mills
located in the North Central and Northeast regions. The relative amounts
of softwood and hardwood pulp used in these grades are discussed in Section
VIII-F and G.
111-79
Arthur D Little, Inc.
-------
2. Supply/Demand Trends
Table 111-38 shows trends in U.S. capacity, production, imports, exports,
and apparent consumption of bleached paper-grade pulps over the past
five years. During this period, the capacity for bleached sulfite pulp
declined and then grew modestly, while the rate of capacity expansion
for bleached kraft pulp slowed appreciably to a 3.3% annual average
between 1971 and 1974. In .contrast, bleached pulp capacity grew 5.7%
per year between 1969 and 1971 and 7.9% per year during the previous ten
years. The recent slower growth, coupled with a strong surge in the
U.S. and world consumption of bleached pulps in 1972 and 1973, brought
about an extremely tight supply condition with shortages in 1973 and the
first half of 1974.
Market pulp currently accounts for 32% of the total U.S. consumption of
bleached paper-grade pulp; the remaining 68% is produced and consumed
by paper and paperboard mills integrated to pulp. Canadian imports
currently supply 53% of the bleached market pulps consumed in the
United States. In the past, the supply from Canada has been ample:
throughout the 1960fs and through 1971, Canadian pulp producers operated
at 83-90% of capacity, while meeting the needs of the U.S. market. In
1973 and 1974, however, Canadian producers operated at near full
capacity except during mill and railroad strikes, which retarded Canadian
exports, especially during 1973.
Since market pulp is traded internationally, the world supply/demand
situation strongly affects the price and consumption of this commodity
and, thus, the likelihood that nonintegrated paper manufacturers may
elect to use recycled fiber as a substitute.
Bleached sulfite pulp mills currently supply about 16% of the world
demand for bleached papermaking pulp. According to the latest survey
of producers' expansions plans by the Food and Agricultural Organization
of the United Nations (FAO), world capacity of bleached sulfite pulp mills
is expected to remain constant at about 6.2 million metric tons through
1978 (Table 111-39). In fact, this capacity projection may be optimistic
in light of the potential closings of sulfite mills (particularly in
Canada and Scandinavia) that are too small to justify the cost of
installing water pollution abatement facilities. Therefore, demand
will be supply-constrained, and the only potential new supply of
bleached sulfite pulp will come from a shift in product mix on the part
of sulfite dissolving pulp mills.
Currently, about 2% of the world demand for bleached papermaking pulp
is supplied by mills that predominantly produce dissolving pulp. We
foresee a gradual decline in the demand for dissolving pulp, because
its major applications (cellulosic fibers) are being displaced by
polyester and nylon and its next largest application (cellophane) faces
continued substitution by plastic films. This, coupled with an antici-
pated increase in free-world dissolving pulp capacity of only 3.7%
111-80
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
oo
CO
1
M
M
H
W
tH
1
§ \&
^3 CTN
H
W *
^\ p i
^ hJ
CM r^
H CM
* w
[2! Q
O ^4
H p£
Hr ^1
^-*
0 1
O H
O P-i
§5 o5
• P
t~* ffi
H 0
C_3 <
•H Cd
O N
cd -H
P, rH
Cd -H
O 4-1
*D
13
>• cue
^ -0
•H o
0 CO
cd cu
P tH
co pa
o
T)
cu
r~°.
CJ
cd
cu
rH
pa
a
o
»_j
•M
•M
O*
gd
3
ca
C
O
o
CO
4J
M
O
co
4-1
^
O
a
M
/~^
&-2
^-^
C
o
•H
4-1
a
3
T3
P-4
rH
cd
4J
O
H
d
4-1
cd
^
cu
j-i
•H
4-1
rH
3
c/>
^.
ON
vO
in
rH
O
r— 1
CM
M
LO
\£)
cr\
CM
00
-d"
o*>
o^
oo
Q^
*
CO
(V,
o
^
^-f
iH
M3
o
«\
CM
tH
tH
0
O
CM
ON
VD
ON
00
vO
vD
*
in
rH
VO
CM
ON
tH
tH
rH
VD
CM
vO
.
vD
ON
CO
oo
ON
*
**
VO
O
f,
in
H
oo
CO
m
n
CO
iH
00
VO
ON
*
rH
O
|*x.
ON
CO
CO
O
M
vD
rH
vO
iH
CM
iH
ON
ON
m
CM
i^
•
o
O^
o
m
vO
•s
"*
m
m
H
vO
tH
vO
O
CM
*
^^>
tH
ON
^J-
ON
ft
rH
tH
p^
ON
vD
oo
tH
A
1^.
tH
vD
f»^
cn
rH
VO
ON
r--
CM
tH
•
^3-
ON
vO
vO
r--
in
CO
ON
VD
vo"
rH
oo
iH
d"
•
vo
ON
CO
oo
J«*^
M
vO
CO
rH
M
pl^.
rH
VO
CO
^>
f,
m
rH
(^^
px»
ON
tH
CO
r*«.
ON
00
CM
tH
*,
ON
tH
oo
<3"
m
iH
%^-
H
CM
^
ro
Is**
•
oo
ON
CM
VO
^j-
*
I--
^
ON
vO
r-
rH
p^
s3-
VO
m
rH
tH
ON
ON
iH
a
r*^
ON
.
ft,
iH
3
P.
4J
•4-1
cd
M
v^
*T3
0)
pCj
0
cd
cu
rH
f>
1
•H
&
CU
CO
CD
CU
13
3
rH
O
c
H
cd
co
4J
o
ft,
X
cu
CO
3
C
•H
S
CO
4-1
}^
O
ft.
G
•H
CO
3
rH
ft.
C
O
•H
4-1
0
3
13
O
FH.
&
*
CU
4J
cd
M
rH
cd
3
C
(3
cd
4-1
iH
cd
I
4-1
CO
•H
Pn
O
American Paper Institute
• •
£3
o
•H
4-1
O
3
O
P.
T)
a
cd
t^M
4_)
•H
a
cd
ft.
cd
C_}
• •
co
cu
CJ
3
O
C/3
reau of Census, U.S. Department of Commerce
r*
3
pa
••
CO
4-1
l-l
0
ft,
^
cu
TJ
cd
Cfl
4-1
^
o
p.
e
M
111-81
Arthur D Little, Inc
-------
TABLE 111-39
WORLD CAPACITY
Country or Region
United States
Canada
Sweden
Finland
Other Western Europe
Eastern Europe
Latin America
Others
TOTAL
TRENDS FOR
(000 metric
1973
1,782
585
1,025
560
1,695
377
117
90
6,231
BLEACHED
tons)
1978
1,561
710
860
520
1,991
425
86
96
6,249
SULFITE PULP
Change
Tonnage
(221)
125
(165)
( 40)
296
48
(31)
6
18
Percent
(12.4)
21.4
(16.1)
( 7.1)
17.5
12.7
(26.5)
6.7
0.3%
SOURCE: FAO Capacity Survey, 1974
111-82
Arthur D Little Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
over the period 1973-1978, means that the dissolving pulp mills are
likely to shift to paper-grade pulp to maintain full production and thus
provide a modest additional supply of bleached paper pulp.
Kraft pulp mills currently have about an 82% share of the world market
for bleached paper-grade pulp and have supplied most of the growth in
demand since World War II. However, the rate of capacity expansion
for bleached kraft pulp through 1978 will drop appreciably from past
trends: the 1974 FAO Capacity Survey indicates a growth rate of 4.6% per
year for 1973-1978, in contrast to 10.4% per year for 1965-1972. The
slowing growth of supply will be particularly critical for softwood
pulp, where capacity will increase 24% in 1973-1978 compared with a 28%
growth over the same period for hardwood kraft pulp.
Tables III- 40 and 111-41, which show world bleached kraft capacity
growth by region, indicate that one of the principal reasons for the
slowing trend is a comparatively slow rate of capacity expansion in
the United States, which currently accounts for about 43% of the total
world supply.
A number of factors are acting to restrict pulp mill capacity expan-
sion in the United States, and thus encourage the use of a substitute
raw material. These include (1) price controls (until they were
removed in mid-1974), (2) increasingly stringent and costly pollution
control regulations, (3) a growing scarcity of suitable and available
mill sites that have an adequate supply of wood and water, (4) concern
over future operating cost inflation, and (6) increasing capital
investment required to expand or build new pulp mill capacity. As a
result, fewer and fewer firms have available mill sites and the finan-
cial or woodland resources needed to make major capacity expansion.
Most of these constraints also apply in varying degrees to Canada and
other major pulp-producing regions.
We conclude, therefore, that most pulp suppliers require higher prices
and profit levels to offset these constraints and the added risks they
incur before they will undertake a major expansion. In view of the
three- to four-year lead time required for major capacity expansions,
it is unlikely that a significant amount of expansion beyond that already
planned can be achieved until after 1978.
Because of the above obstacles to major pulp and paper mill capacity
expansion, most of the new capacity plans in 1978 will call for
incremental additions to existing mills. As part of this incremental
expansion, many pulp producers are integrating their pulp mills by
adding paper machines. Thus, while paper and paperboard capacity
is being expanded much slower than the historical trend, it is increasing
faster than pulp capacity (Table 111-42).
The chief conclusion we draw from these trends is that a relatively tight
supply will be reestablished with the recovery of the world economy
that is expected in 1976 and will remain tight at least through 1978.
111-83
Arthur D Little, Inc
-------
TABLE III-40
WORLD CAPACITY TRENDS FOR SOFTWOOD BLEACHED KRAFT PULP
Country or Region
United States
Canada
Sweden
Finland
Other Western Europe
Japan
U.S.S.R.
Eastern Europe
Latin America
Other
(000 metric tons)
1973 1978
8,211 9,234
5,900 6,690
2,330 3,325
1,120 1,540
301 442
609
Change
507
450
110
267
217
950
381
402
425
TOTAL 19,413 23,998
SOURCE: FAO Capacity Survey, 1974.
TABLE 111-41
4,585
WORLD CAPACITY TRENDS FOR HARDWOOD BLEACHED KRAFT PULP
(000 metric tons)
Change
Country or Region
United States
Japan
Canada
Sweden
Finland
Other Western Europe
Latin America
Eastern Europe
Other
1973
1978
5,998 6,304
3,223 3,871
845 1,040
840 875
680 1,060
1,340 1,906
416
109
249
1,947
205
345
TOTAL 13,700 17,553
Percent
5.1
20.1
23.1
4.2
55.9
42.2
368.
88.
38.6
28.1
SOURCE: FAO Capacity Survey, 1974
111-84
Arthur D Little, Inc.
-------
1
1
1
1
•
1
1
1
1
1
1
I
1
1
1
1
1
1
1
1
TABLE I I 1-4 2
AVERAGE ANNUAL INCREASE IN WORLD PULP AND PAPER CAPACITIES
(percent)
1963-1968 1968-1973 1973-1977
Total Paper and Paperboard 5.8 4.7 4.1
Total Paper Pulp 6.2 4.2 3.7
Printing and Writing, } ^.0
excl. Newsprint ( , _ _
f D • U 3 • £
Other Paper and Paperboard ) 4.4
Semi-Chemical Wood Pulp ) 4.5
> 7.4 4.8
Chemical Wood Pulp j 3.8
Bleached Pulp 4.3
Source: FAO 1974 Capacity Survey
111-85
Arthu
-------
I
Table 111-43 shows the major applications for bleached paper-grade pulp
and our projections of each through 1980. This analysis points to an
average annual growth in demand of 4% over the five-year period, com-
pared with 6% per year in 1968-1973. Bleached kraft pulp will fill most
of this increased demand, since sulfite pulp capacity will rise slowly,
if at all. Thus, bleached kraft pulp demand should increase at an average
of about 5% per year between 1975 and 1980.
Table 111-44 compares our projections of free-world bleached kraft pulp
demand with announced capacity expansion plans through 1978. It indicates
an apparent world operating rate of 93% of capacity in 1973, a year in
which pulp shortages began to develop. In part, these shortages were
caused by a combination of labor strikes in Canada and an inventory build-
up by market pulp consumers, particularly in Europe. On the other hand,
1973 conditions indicate that a 93% operating rate is near the practical
maximum for the total world bleached kraft pulp industry; as this extremely
tight supply/demand balance developed in 1973 and continued through most
of 1974, pulp prices rose at an unprecedented rate.
Our projections indicate that the demand for all bleached paper-grade
pulps will be supply-limited through 1978. These projections reflect the
world recession in 1974 and 1975 as well as a general tempering of demand
in response to rapidly rising pulp prices. Nevertheless, the demand
projections still point to operating rates of 93-94% of capacity for
1977-1978, which is about as high as the industry can attain.
Beyond 1978, an oversupply condition is likely to develop, possibly
in 1979 and 1980 as producers respond to the recent rapid rise in
pulp prices and profitability. North American pulp and paper industry
profits reached an all-time high in 1974. In the past, periods of
rapidly rising profitability have always led to overcapacity several years
later; on the other hand, the mounting obstacles to major capacity expansions
militate against a serious and prolonged period of overcapacity. These
obstacles suggest that if an oversupply condition does develop, it should
last for no more than two years before the supply/demand balance again
tightens.
3. Market Pulp Price Trends
Pulp prices were at about their lowest levels of the last decade in 1971
when world-average pulp mill operating rates were around 89% of capacity
and North America, Europe, and Japan were in a business recession. There
were modest price increases of $5-15 per short ton in 1972 as the
economy and operating rates began to improve. Then in 1973 and 1974,
prices increased at unprecedented rates as operating rates reached max-
imum levels. For example, in North America between the third quarters
of 1972 and 1974, average contract prices for bleached softwood kraft
pulp increased 100% ($160/ton) and bleached hardwood kraft pulp 165%
($200/ton). Spot prices for relatively small orders throughout the
world were considerably above contract prices. These increases have
111-86
Arthur D Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE 111-43
FREE-WORLD BLEACHED PAPER-GRADE
(000
Application
Printing & Writing Papers
(exc. Newsprint)
Tissue
Bleached Paperboard
Newsprint
Fluffing Pulp
TOTAL
Kraft
Sulfite
metric
1975
22,850
4,500
5,000
4,800
750
37,900
32,000
5,900
PULP DEMAND,
tons)
1980
27,800
5,200
6,000
5,400
1,300
45,700
40,000
5,700
1975-1980
Average
Annual Growth
(%)
3.9
2.9
3.7
2.3
11.5
3.8
4.6
-0.7
Source: FAO Capacity Survey, 1974
TABLE III- 44
FREE-WORLD BLEACHED KRAFT PULP
(million
1971
1972
Proj ected
1973
1974
1975
1976
1977
1978
metric tons ,
Demand
25.8
27.9
30.1
31.5
32.0
34.0
37.0
38.5
DEMAND/CAPACITY,
except as noted)
Capacity
28.7
30.5
32.4
34.3
35.8
37.5
39.6
41.1
1971-1978
Apparent
Operating Rate
(%)
89.7
91.4
92.9
92.0
89.0
91.0
93.0
94.0
Source: FAO Capacity Survey, 1974
111-87
Arthur D Little, Inc.
-------
allowed the producers to cover the accumulated cost inflation they
previously were un*
record high level.
4. Factors Affecting Increased Waste Paper Utilization
K, SUMMARY
I
I
previously were unable to pass on and brought their 1974 profits to a •
I
In view of the tight supply/demand balance which we foresee for bleached
paper-grade pulps through 1978, there is little question that prices
will continue to escalate, but it is more difficult to predict how much.
The rate of cost inflation is the most critical factor here. The predicted «
high mill operating rate indicates that existing mills should increase •
their profit margins after passing on all of their operating cost infla-
tion. Because of the current rapid inflation of capital costs and high
interest rates, the projected cost of new mills now determines the I
prices producers must be assured of getting before making an expansion •
commitment. We conclude, therefore, that bleached market pulp prices
will rise faster than cost inflation in the pulp industry and that profit
margins on pulp will increase in 1976-1978.
I
Expansion decisions that have not yet been made will strongly influence _
the world supply/demand balance for market pulp and thus the prices that •
will be charged for it. For the reasons previously cited, market pulp *
should continue to be in short supply; however, in the unlikely event
that production capacity were to be greatly expanded over a short per- I
iod, prices would inevitably drop and the prospects for increased use •
of secondary fiber would become less favorable. On the other hand, any
price erosion that does occur is likely to be short-lived, because of •
the increasing constraints to making major capacity expansions in any of •
the bleached chemical pulps.
I
This analysis indicates that market pulp will be in short supply world-
wide. The major conclusions that can be drawn are that its selling price •
will increase substantially and that nonintegrated manufacturers will |
seek an alternative raw material. To the extent that waste paper
provides a more economical source of fiber and meets the end-use product •
requirements, the worldwide shortage of virgin market pulp will serve •
to stimulate the use of waste paper.
I
This section summarizes the industry structure and market characteristics
that influence the choice between virgin and secondary fiber raw mater- •
ials. (Technical considerations are discussed in Section VIII, and ||
economic comparisons are given in Section IX.)
Historically, the vertical integration of larger producers from the •
production of pulpwood through converting operations has limited the
use of secondary fiber in products where it competes directly with
virgin fiber. Vertical integration of paper producers to other forest . •
products industries and woodlands operations establishes a minimum base •
level of virgin fiber use which would always be economically preferable
I
111-88
Arthur D Little, Inc. •
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
to secondary fiber pulping. A significant portion of the virgin fiber
used by the paper industry comes from the residues from other forest pro-
ducts industries; this is economically and environmentally desirable
under any circumstances, but it is particularly economical under condi-
tions of corporate integration that permit consolidation of physical
facilities.
Forward integration of paper production to converting operations and
other end-use applications is another important aspect of overall in-
dustry structure. In the containerboard and newsprint categories, parti-
cularly, this integration has limited the market available to independent
paper producers and specifically restricted the marketing of secondary
fiber products by manufacturers who do not have the benefit of forward
integration. To the extent that forward integration to consumers and
vertical integration to woodlands exist within the same corporation,
paper product applications have been linked directly to forest resources,
and there has been limited opportunity for independent mills that use
secondary fiber to penetrate this structure. For reasons that have been
described both in this section and elsewhere in the report, we do not
believe the historical constraints on secondary fiber usage imposed by
vertical and forward integration will continue.
Historical and current market patterns and the high capital cost of new,
grassroots virgin fiber pulping facilities favor incremental capacity
expansion. This kind of expansion has several advantages:
• It minimizes total capital requirements at any given time
(although it does not necessarily minimize unit capital
costs per ton of new production capacity).
• It protects producers from cycles of oversupply and falling
prices; these have plagued the paper industry in the past,
and the industry is obviously anxious to avoid them during
the present period of acceptable prices and profits.
• It provides an opportunity for waste paper to supply the
incremental fiber requirements, since producers usually
find it more feasible to add papermaking capacity than to
add virgin fiber pulping capacity.
The factors that discourage overexpansion also contribute to the reduced
availability and high price of market pulp. This world-wide condition
creates a demand for pulp-substitute grades of waste paper, which can
encourage growth in both domestic reuse and exports.
Historical growth patterns and changes in the paper industry have resulted
in a concentration of small, nonintegrated mills in the Northeast and
North Central regions of the country. These mills have not shared in
the recent increases in paper industry profitability. Since they depend
on market pulp as a fiber source, their raw material costs have increased
more rapidly than their product prices. The reduced availability of
111-89
Arthur D Little, Inc.
-------
market pulp will maintain, or even aggravate, this condition. However,
the demand for market pulp by nonintegrated mills ca
in the use of pulp-substitute grades of waste paper.
111-90
I
I
the demand for market pulp by nonintegrated mills can encourage growth •
In many instances, smaller and older integrated facilities may have viable •
papermaking capacity integrated to less economically or ecologically viable |
pulping capacity. This is especially true in the case of small groundwood
and semi-chemical pulp mills. An alternative source of fiber, such as waste _
paper, can encourage the maintenance of papermaking capacity despite the •
necessity for pulp mill closures.
As the prices of paper products rise, users are encouraged to accept lower •
quality standards rather than pay more. This condition could cause the •
demand for secondary fiber products to grow faster than that for virgin
fiber products, since secondary fiber is often preferable for products •
where quality is not critical. Social changes which have removed the |
stigma once associated with recycled products and which now encourage reuse
can also contribute to increased demand, or at least tolerance, for second- _
ary fiber products. •
Table 111-45 summarizes the consumption and production patterns for paper
products for 1973, 1977, and 1983. In the containerboard and groundwood •
groups, recycled products are shown separately for 1973 and 1977, since •
this represents existing or announced capacity; for 1983, however, we have
indicated only the total demand, as these products are competitive and can m
be made from either virgin or secondary fiber. The total demand is sus- •
ceptible to penetration by waste paper products, within the constraints of
competitive economics and existing industry characteristics.
Table 111-46, which summarizes the location and number of pulp and paper ™
mills by major manufacturing process, points up the large number of estab-
lishments in the Northeast and North Central regions. I
Table 111-47 summarizes by geographic region the number of mills that pro-
duce each of the seven functional product groups used in this analysis. •
The number of mills that are integrated with the on-site manufacture of •
virgin pulp is listed under "I"; the nonintegrated ("N/I") mills rely ex-
clusively on market pulp or a combination of market pulp and recycled
fiber. (Note that the total number of mills is greater than that pre- I
viously indicated, for the reason given in the footnote.) In addition to •
regional differences within each functional group, this table clearly
shows the predominant role of nonintegrated mills in the production of •
tissue, folding boxboard, and industrial packaging. I
Arthur D Little, Inc
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
co
00
ON
rH
4-1
Is
D -H
C
O
O
1
0 p
3 0
"X3 *rH
o
PM
O
O
o
CN
O
o
CM
O 0 O O O
H o ca -3- m o
m oo co co oo
vo r-» m
rH rH
O O O O O
oo o cfl r-» m o
ON OO CO CO i-H
oo r- vo
i-H
o o o o
CN CM OO O
OO OO ON CM
CO CO rH in
i-H rH
O O O O
o o o o
-* • rH -*
in ON rH
in
-a-
i
M
M
M
[V]
rH
H
£5
O
H
H
CJ
P
0
pi
PM
p
*jr.
^
p
1
P
•
(I/D
•
$D
P
Pd
H
CJ
w
0
Pi
PM
1
l
P
~y
0
PQ
Pi
Pd
^q
PM
P
5
53
Pd
PM
^^
PM
r^
f-s.
ON
rH
a (3
g 0
3 -H
co
C
O
CJ
O
O
•t
O
CM
O O O O O O O
oo ^- ^. | — , ^.
ft ft f, f.
i-H rH rH , * *
-* t~~ rH
1
4-J
CO
f—
rH
CX t-j
g 0
3 -H
t/1
S
O
CJ
00
CM
r^-
f.
r**
H
O -* "* CN H r- v£>
-* r~ oo o oo co -H >> a, o
HOBO cfl
01 X> 4H IH E I-i O 33
CO CO 3 cfl O CJ
4-1 IH O -H O [S <;
HH W Xi T3 XI T3 S
CO rl .0) PH Pi
S
^J
0
1
^
rH
<£
g
O
o
rl • Ol S -H K
& T3 i-H p! X! Pd
IH xi -H 60 CJ PM
T3 cfl CJ ^J C *£
Oi O & -H l-i PM
Xi Xl T3 4J 0)
U I-i M 01 cfl p p
CO 0) 0) r-H 60 -H O
O> C X! CJ 3 cfl O
rH "rl 4J p>i I-J 4J ^
XI rJ O 0 rl P P
P 01 o o S
13 pS O O PD
o
o
3 Pd
z s
O H
4-1 T3 O
p 0> TJ
•H p H (U p
I-l -H CJ 4-1 Z
O. 60 >-, CO Pi p t>
CO
rH
H
^
cd ujj
o
PQ 60
p M.5
O 01 4-1
13 -H OH -H CO
M •« 4J p
CO ^ CO pd
0 CO P EH
Xi O -H *£
^j Q (^ I_J
01 p g Pd
PH 0) O Pd
0) T3 tfl PH CJ
3 |-i pn cfl p
CO cfl PM 00 S
CO O 13 p <1
01 -H Xi O> T3 -H
3 EH IH rH 01 T3 O
CO P
CO >-, K
•H H <
EH cfl O
4-1 PQ
rl 'p O
cfl cfl PQ
4-1 CO
•H I O
P P S
CO O M
cots P
o
PH
0) CJ rH P &
PH >S O 01 M
CO O >-, XI H
PM 0) O 1 H
Pd 0) p pi
T3 Pd O g
0) 60 P
x; P & H
CJ tH 3 rl O
co -o i o) a
OJ rH 4-1 XI H
rH O 0) 4-> EH
PQ PH CO O S3
H
Pd
PM
CO IH H
CM ? CU
• rH CO CO
> Cfl PM rH
P O O
O -H 00 4J
CJ B P CO
OJ -H -H
t3 XI 4-1 M
CJ -H PQ
60 t-i
P ^ ^ T3
•HA! 01
4-1 0 U Xi
P O O> U
•rl PQ Xl Cfl
>H T-I 0>
PM TJ P"-l rH
0) pq
tJ 4-1 P
OJ Cfl O T3
4-1 O 4-1 -H
CO O 4-1 rH
O P O O
CJ PD CJ CO
111-91
Arthur D Little Inc
-------
-d
C
o
o
m
I
H
M
H
W
1
4-1
CO
oo
ON
rH
ft a
§ °
3 iH
CO
C
O
U
O
O
r^
«
o\
O
•^
CM
•K
in
1
4J
o c
3 0
Tt -H
O
M
PM
o
o
A
o\
o
o
0^
in
|
r-
ON
rH
4J
ft C
6 o
3 -rl
CO
C
O
u
o
in
rH
*
oo
0
0
*t
•«
rH
O O
co co
m oo
*
rH
O O
0 0
*
rH
0 0
00 O
CM r-^
*
i— i
O 00
CM r->
CO *^
*
rH
oo -tf
m VD
CN m
*
rH
01
ft
rl CO
01 PM
P*
CO rH
PM Cd
•H
60 U
C 4-1
•H CO
60 3
tO 'O
f* Cd
O H
CO
PM rH
CO
VJ !H
01 U
,e cu
4J ft
O C/3
o
00
o
A
CM
0
rH
CM
O
m
r-^
A
rH
O
O
oo
M
rH
m
•d-
*^
•s
rH
0
m
«v
rH
TJ
rl
cd
O
M
CU
&
PM
t>
(U
60
Cd
CJ
cfl
PM
t3
0)
rH
U
CJ
CU
rH
Cd
•H
a
cu
c/>
o
o
CO
*
ON
o o
I/*)
p»^
O
^^
o
f,
o^
vO
O
o
o
ft
[**.
VD
o
o
r-.
*
rH
VD
C/>
S
2
PM
9
1 1
^ "I
^4
*t
rJ
H
O
H
•
4J
CJ
3
T3
O
rl
14-1
O
4-1
O
g-
0)
rl
O
4-1
rl
O
g
•H
0)
cd
u
•H
P!
•H
C
o
•H
4-1
ft
rj
CO
C
o
0
T3
C
CO
C
O
•H
•O 4J
rl U
CO 3
O T3
,0 O
t-l I-l
0) ft
C
•H C
rH CU
01
C S
•H 4J
60 0)
V^ rO
•H
> CO
cu
,0 0
4J C
•H CU
£ rl
0)
0) M-l
nb "H
3 Q
rH
0
C
H W
H
0
cd tt
^
CO
C
o
•H
4-1
a
o1
rl
ft
00
00
ON
, 1
nn
^
p-x
ON
rH
• *
CU
o
n
(U
I
o
o
14-1
o
4-1
c
0)
e
4-J
rl
cd
ft
Q
•
C/3
•
l~>
*
* CO
p3 d)
O 4J
•H CO
4-1 3
tu
3 co
co o)
c
o •
U 0
*-> c
C M
o
•H -
4J CD
CJ rH
3 4-1
TJ 4-1
0 -H
rl hJ
PM
•
CO Q
ON •
iH
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
w
8
o
H
g
H
fn
W
PQ
H
Pi
PM
O
PQ
poowpunoag
s-[iTW
CTiC30CM ITICMCMOCMON
<" pa M c in
J4JJ3H4-I Hl-lrlrH H ca-HCflCO
Co o t*. PS coooc
^iw-ac w^7§ ° nJC-HO
-------
s~^
T3
01
3
0
•H
j-J
pj
O
U
^^
vO
H
M
M
W
3
H
snoauBTTsosfw
P
CO
CO
w
§
PH
O
55
M
Pi
H
U
n
oo co
m CM
CM rH
i-H vO
CO rH
CM
rH
rJ
3
g
W
u
cd
p"j JJ
H 0
Pi co
O 01
nl
g
IrHIIII inCMIIrHl-HCOIII
II III) COIrHI-d-lin-^-rHOO
CO i-H
I 1 1 1 1 1 rH 1 1 1 1 1 1 1 1 rH
rHIIIII CMIIIinlCMCMCMrH
rH
rHCMl 1 1 1 COIrHICMICOCMCOCM
rH
Illlll ST 1 1 1 rH 1 1 CM rH 1
CMCOI 1 1 | OCMCNICOrHCOOr^CNJ
t-~ i-H rH i-H H i-H
cor^i i ico i-Hvoinimcooooo-d-
C?\ H rH i-H CM rH
COCTil 1 ICO OOt^f-rHr-COOOCOO
O rH CM rH CM CM
,_|
i-H rH rH rH rH
•H
i_(
U cd 0 0
Cd Cd U «H -H iH
•U 4-1 H HH 0 i-H i-H
O O H O iH O O
X & & 00 r< ri
*rH cd cd cd ^i 01 *^ 4^ cd w cd cd
^J (~\ f*\ .^ iJ ^4 0 CJ *iH *rH r ^ r_"i (fl (H
3 COCO E-'CdCd*H0£> THTJ
O*0t0CdCd <4^rH!H'*H ,0,000^
3COV43,Q0 tCirHf-tCOHCQMDOO
O'HOOCUcd HOI^iH-HQJOOOIrH
O
CO
CO 1 CO 1 1
rH CM CM CO -*
CM rH
1 1 1 1 1
VO rH CO CM I
vD 1 CM i-H CO
VO 1 CM CO rH
CM CO CM > Q) -rl
H AJ CO cd CO
tD CJ CO 0 CO
O 3 Ol cd -H
CO 4-1 0 JD CO
0 0 Cd CO
co*H
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
e
X— \
T3
0>
3
•H
4->
c
O
a
N^X
VO
1
H
H
H
W
|_J
PQ
H
snoauBTTaosTW
p
T T"BJt\r
W
W
W
u
o
05
p*
o
55
M
as
to
H
U
<3
f2
J3
J3
3
*^4
PH
£
PH
>-<
pq
CO
hJ
h4
M
S
g
^
P^
Q
z
^
P-I
r4
CJ
P-I
PU
O
B
PQ
2
5
J£5
• •
b
a;
|j
s
5
w
arjTUdtns
feopiretpjuias
TBOTtlBUOaW
O
poowpunoif)
(~[e:iox) S~[~[TH d^n^
QTTTT»T T £n>flT* J
Oil L^U •4.OVJ- Ofi
*l
(s^Tun f)H IOUT)
o -| TT ^TTTI TQTTQ'P'1 ^rJ
"^ ^ H • LH "^ il
safueduioo
0)
4-1
03
4-1
W
A
c
o
•H
60
QJ
P4
COICMrHI rHIIIIIl-HI r--rHrH>DrHrHvO CO H i-H 1 1 1 i-H 1 00r-t---*ll 4J ^3 rH
CM rH rH O O 03
H cd O
c
to M 03
4J (U ,C
•H P- CJ
C 03 (U
Illll Illlllll in Oi -* 1 CM 1 3 CL, 6
H 1
*
C O 4J 4-1
ONCMCMCMCO Illlllll >a-cMvovoil 3 cd-cc
rH O tO rH -H
O tO T3 O rH
oi 01 a
0) rH 4J C
(-1 13 Cd •> O
03 • J-i cj T3 4-1
at cd o 01 4-i
W 4-1 60 rH 13 O
vOrHCSIIrO rHIIIIIrHI rHinvOIII 0)030) T3CJ
rH -H 4-1 rl 0) 0)
C to »-i ri -ra
Cd » Cd fi C
P, 0) T3 to cd
S C rl 0>
O O Cd rH •> •>
O O rH T) 0)
C ^3 iH Q) CO
r-OSrHinCM u-lrHrHI 1 IrOI rHr-.p~mCMrH 4-1 Cd ^1 0 tj CO
-JCNH F^-CNCMrH CrCOIOCd
0) 4J P. ft rH 60
rl Cd rH ft 03
01 fl) Q, D id .0
Pu rl ft Q)
Or!
m g o a> «x
O rl T3 Cd
inrHOvOOO f--rHCN|rHrHCMI CO OS r-» i— 1 1 rH CTJOOlrH
in rH CM rH 00 rH CM *3" CO *H C^ 3 4-1 'I 1
C cd cd
O CO >-l J-l -
•H 0) t-t O ^2 Q)
tn 6 o) -H p< «a-
•H cd p, CD MH o r-»
^> fj cd fj ci) M OS
•H O, O T3 rH
OSCMrHf-'Cri OSrHCMICMrHrOI CMOmrOCMCM T3<4H •>
in rH CM i— 1 CMfimm O604JrlCdt>l
rH CO C O 0) 13 V-i
3 C -H C 4-> O 0
o o t-> cd to 4->
6 -H 3 ri ^ a
O 4-J 4-> O • 0)
C Cd 0 4-1 60 rl
o a cd >-i o cd -H
4J -H 4-1 Q) ,C J-l O
OOOinm iHCMICMrHCMI OS^J-OSCMCM 3rH3^3
rH rH rH rH CM CO Cd P< £2 4-1 rO *^ CO
3 cd 0) C 60 -
•VJ T3 S J2 cd C TJ
C & -rl 0
1-4 Cd >4H CO 6 A! O
< O rH MH cd C 3
K CO i-H O CU -H Ai
H 0) C -H 4J 0) O
5S O-HOgCOCO-rJO
W O CCdOrl'lHCOrJ
CJcd y OiH-Hcd4-icno)coto
coccd o-ri 4JCp^^a)(1)I_|Qj(l)
P3CdCdp Cd OO'rJXcd 60 )-t 'OCfT3TrJpOfrJ«»
Hco-HO C qicdcUCcd CCocdO-H-H3»-i33W
£3 (3 CO fC tO 55 Cd O *H ^4 ^ O *rj C-3 «H O MH *^ 4J CO S rH Cd rH rH C-3
OCd'rlCdfd M4JI£30O NCd rHfJ360*HCOVl rO^HOOOUCJ pj
!-l O Ai (1) HOTJi^ODt-lQ) M CO )-i CO rH 3 C/lCUHMrHM O
H<3r3OE-i zSrH[2CJ55
-------
o
Hi CO
rH
to
o —
4-1 Z
3
rH
C
0 H
•H -0
4-1 tJ
cj to
3 0 rH
4-1 ^ Z
C P.
o to
UP* I-H
£
CO
o°<
r--
ro
CN
rH
o
CN
PS Hi' ro
O rH CO
to oc
•H C
I— 1 V4 *rl M
a u M -^
n! to rg z
% 3 ^
O -oo
H C «
H M ^ M
0
C
fa OH
» 4-1
Sj 00 01
''^ C •*
PQ -H OC M
4-1 C -^
^ "rt 4-1
l-J U -H
M ^ 3 H
a
CN
„
rH
ro
O
CN
rH
rH
. s
•^
1
H
H
M
H
rJ
•^3
H
PH ^
2 00 I*
PH 1-1 o M
•0 J3 --
SrH X Z
rS<§
H
W
H H
^
H
% 0) H
O 3 -~.
2 to z
•^ to
IH
j^r rH
^
i-H
CN
rH
1
CN
CN
rH
Q\
0
m
rH
^
M
i-H
CO
CO
O"!
CN
00
rH
rH
i-H
CN
VO
CN
CO
m
CN
^
rH
0>
0
CM
o-\
rH
rH
in
CM
o
CM
in
W Hi O"1 CO
H 0
2 | M
O c z
w -^
r . O
E >H
^ OH
H
o "2
rH
00
rH
1
CO
0 HI rH rH
w fi
JX 01
C3 CM
5 n z
^ c
o
U M
C
O
01
Oi
00
fO
•0
to
rH
00
C
w
*
01
z
oo
rH
rH
CJ
•H
4J
C
CO
iH
^J
1
•O
iH
a
o>
rH
St
O
rH
m
>o
m
CM
o*\
M
CM
m
CM
-cr
rH
-a-
oo
rH
ro
CN
CM
CN
i-H
CN
f
rH
•3-
•H
vC
00
CO
1
CO
m
CO
m
rsj
o
rH
I-H
CO
( 1
c
01
£
4J
O
Z
4-t
CO
H
CM
i-H
rH
^
rH
CM
rH
rs
m
CM
i-H
rH
CO
1
CO
r-4
r-l
1
1
1
1
CO
1
CO
CM
CN
rH
CO
1 1
C
01
CJ
f.
0
4-1
to
01
CO
o
^
ro
o>
^
00
rH
1 —
i-H
00
Ov
*
VTJ
CM
^
00
rH
00
C
rH
^
•*
CO
CN
,
CN
CO
^
C
r^
CJ
•rt
4J
c
4
rH
4J
^
X
fi
o
C/3
00
-a-
m
rH
CO
rH
rH
»3-
"
-
ro
in
rH
^.
vO
rH
m
CO
rH
CN
CN
1
CN
CN
rH
CN
O
rH
rH
n)
J-.
4J
§
U
o
en
4J
CO
n)
pa
00
m
o\
i-H
o>
ro
rH
CN
CO
rH
00
O
rH
CN
00
-*
1
^
in
rH
*^
rH
I
i-H
^
1
<±
CO
rH
CO
O
rH
rH
CO
rl
U
c
(U
u
, 0
w
4->
en
(U
3
2 g
rH -O-
m in
m
rH O\
CN
rH r-
0 0
rH r-.
rH £)
iH ui
in ro
ro
00 -3-
CO
1 rH
OO CO
ro
s± CM
CN m
i-H
O CN
rH f-
-* O
rH 00
rH
ID
4J
0
4J 4J
10 ,0
01 S
tz en
&
o
IH
00
tO
C
O
•H
4J
U
C
3
4H
01
§
C
.2
4J
01
^1
O
e
o
4J
C
°H
•0
rj
•H
•H
to
CO
U
CO
iH
4J
rH -H
4J <4H
01
U CJ
C
H O
c
•o x
01 4J
4-1
CO 01
00 O
oi e
4J
C 13
•H 01
C 4J
0 C
C 3
0
H 0
M 01
S5 ^
0) rH
4J rH
ffl -rl
h B
00
01 <
4-i
C
•H
01
II 4J
O
M Z
a
|
UL
r-t
i
•H
0
9
O
4J
C
•H
*
U
H
flT
rH
4J
•H
Q
rl
3
j:
«£
^
J3
01
4J
01
14
3
M
^^
<•
O^
^
^^
o
u
o
0)
rl
O
O
•
"O
o
,ai
U
t-t
1
M
*4~l
CO
«
>c
01
u
o
CA
111-96
Arthur D Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
IV. WOOD RESOURCE CONSIDERATIONS
This section deals with the cost and availability of pulpwood. It is
intended to complement Sections VI and VII, which give similar information
for waste paper, and thereby provide perspective on the competitive
positions of these alternative raw materials for pulp and paper manufacture.
Other sources, notably the U. S. Department of Agriculture Report No. 20
entitled "The Outlook for Timber in the United States" (October 1973)
provide a detailed analysis of the potential wood supply.
A. BACKGROUND AND APPROACH
Invariably, the most important cost consideration in the manufacture of
pulp and paper is the cost of wood; thus, a clear understanding of wood
cost and availability is critical to the assessment of the competitive
opportunity for waste paper as an alternative raw material.
Pulpwood is obtained as a by-product from the manufacture of primary timber
products (lumber and plywood) and directly from standing timber. While
the percentage of pulpwood obtained from manufacturing plant and logging
residue has increased substantially over the past 20 years, the industry
still relies on a substantial amount of pulpwood from standing timber
(roundwood) to meet its wood requirements. In general, roundwood is ob-
tained from smaller sizes and lower grades of timber than those used
for primary timber products; however, a substantial volume of timber
suitable for lumber is also consumed in the production of paper and
paperboard. In many cases, the latter comes from areas in which saw
timber is uneconomical to harvest—i.e., where saw-timber trees are
scattered, or where pulpwood is harvested by small producers from small
tracts. Combined, these sources of timber constitute a considerable
volume of saw timber used in pulp manufacture. Thus, regardless if
pulpwood is obtained as a by-product from the manufacture of primary timber
products or directly from standing timber, its cost and availability are
tied intimately to the demand for primary timber products.
The analysis of market demand and growth trends of these primary wood
products is beyond the scope of this study. The Forest Service study
previously cited deals with the broad and complex interrelationship of
overall demand and supply for the various timber products. It concludes
that while the domestic supply is adequate through the studied period
of this report (even at the 1970 level of forest management), more
intensive forest management is required to meet the total U.S. timber
requirement beyond 1985.
Accordingly, this section provides a brief summary of the Forest Service
report with specific emphasis on how the overall timber resource
affects the cost and availability of pulpwood. It examines the ownership
IV-1
Arthur D Little, Inc.
-------
B. OWNERSHIP PATTERNS OF COMMERCIAL TIMBER AND TIMBERLAND
IV-2
I
I
patterns and regional supply/demand relationships for timber to shed light I
on its possible cost and competitive position with respect to secondary I
fiber. Appendix B-l lists some pertinent reports, publications, and recent
articles related to wood resources. •
Our analysis is based upon current forestry management methods and result-
ant timberland yields; subsequently, data are given on the timber growth _
that could be obtained with the most modern forest management techniques. •
In analyzing wood cost, we have supplemented published data with infor-
mation from various public agencies and associations and from private 9
communications with key industry contacts. All costs are expressed in |
second-quarter 1974 dollars.
Figure IV-1 shows the major sections and regions used in the presentation I
of the data. The regions that make up the sections have been reaggregated
from the traditional grouping (North, South, Rocky Mountain, and West) to
the Northeast, North Central, South, and West sections in order that the •
wood resource data would be based on the same area categories used in other •
parts of this study.
Another change made in the original Forest Service data was to convert |
wood volumes reported in cubic feet to cunits (hundreds of cubic feet).
This was done so that the inventory and timber growth would be expressed ^
in the terms commonly used by pulp and paper mills in reporting their wood I
consumption data. Where original data was reported in cords and converted
to cunits, it was done on the basis of 83 cubic feet per cord for softwood
and 79 cubic feet for hardwood. I
I
Commercial timberland is defined as that available and suitable for growing
continuous crops of sawlogs or other industrial timber products at a rate _
of at least 20 cubic feet per acre per year. In 1970, 500 million acres, •
or about 22% of the total land area of the United States, was classified as ™
commercial forest. This figure has not changed significantly in the past
20 years. •
The following is a general discussion of the timberland characteristics
of the four major geographic sections considered in this analysis. •
(1) Northeast: This section includes some 82 million acres, or
about 16% of the total timberland area. The timber in this
region is about a 50/50 mixture of northern softwood—spruce, •
pine, tamarack, cedar, etc.—and hardwood species—oak, •
maple, poplar, aspen, paper birch, etc. Most of the timber
is of pole size; the larger, sawlog-class timber was •
removed many years ago. |
I
Arthur D Little, Inc •
-------
I
I
i i! a
» c
Z LU
I
| 2* O
^B *^^^P
I
I
I
I: £
z
z
lil CJ .•-:-' 3
' : 2
-= ^ c
|c " S
S£i LJ
I
CD
*- -^
») ">
M $ JS
• <^ 1 <
• £ K T5
ra ,§ C
0- Z '•=•
I
I
I Arthur D Little Inc
8
Q-
*
I
IV-3
-------
I
I
(2) North Central: This section includes some 96 million acres, _
or 19% of timberland. In the northern tier of states (the •
Lake States) the forest is characterized by a mixture of the
same softwood and hardwood species that are prevalent in the
Northeast; in the lower tier (the Central States) the hard- I
wood species predominate. Also, as in the Northeast, much •
of the timber in this region is pole-size, the larger sawlogs
and peeler logs having been removed long ago. •
(3) South: This section includes some 192 million acres, or about
39% of the total commercial timberlands. The northern and _
western tier of states includes predominantly hardwood •
species, the southern tier predominantly the southern pines *
(shortleaf and loblolly). In this area, the hardwood species
include sweet and black gum, cottonwood, and hickory, as H
well as the oak and maple species located in the northern area. •
(4) West; This area includes two major sections, the Rocky m
Mountains and the Pacific Coast; combined, these sections •
include some 130 million acres, or about 26% of the total
timberlands. The Rocky Mountain area includes the Western
Forest, which consists chiefly of softwoods (spruce and pine); •
the Pacific Coast includes the West Coast Forest, which is '
predominantly Douglas fir. These regions supply the bulk of
primary wood products, i.e., lumber and plywood. •
Ownership of these timberlands and the volume of timber on them varies
significantly from section to section. Figure IV-2 summarizes the timber- «
land ownership patterns and indicates the relative importance of public •
lands in the West. Table IV-1 is more detailed and indicates the owner-
ship data by specific regions within each major section.
Forest products industries own only a small segment of the total area; •
however, a number of them control substantially more timberlands through
long-term leases or cutting rights. Table IV-2 lists the timber holdings •
of major firms in the forest products industries. Unfortunately, one ||
cannot simply compare these figures with production data for each of
the companies to make a definitive assessment of their actual pulpwood _
supply/demand situation. Published data of this kind give only a •
primary indication of a company's resources; they do not take into con-
sideration such factors as the timber inventory and timber class on
the lands that are owned or leased, other possible applications for I
standing timber in primary forest products (lumber, plywood, poles, I
etc.), or the distance from pulp manufacturing facilities. Clearly,
however, some of the major firms are in more favorable balance with •
their pulpwood requirements than are others. From our knowledge of the •
additional factors mentioned above, we can say that Weyerhaeuser,
International Paper, Georgia Pacific, Potlatch, and Louisiana Pacific _
are among those with a favorable wood supply situation; other major •
firms, notably Fibreboard, Federal Paper Company, and Crown ™
Zellerbach, appear to be in a less favorable situation.
I
IV-4
Arthur D Little Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
200
160
120
-------
i-H
i
i
h- 1
W
t-J
PQ
H
O
CT\
1 '
>H
Pj
g
-1 O
-1 M -rl
3 01 rH
U r! n
M 4J 3
O PH
^
a«
o 01
•H 41
1.2
CO
4-1
o
H
C
O
•H 01
rH 41
rH I-l
•rj 0
83 <
O o CM -a-
O m in 01 4-1
S3 33 01 co co
0) r-l 41
O O ^ • W
0 0 U rH 3
**.3gfi
EC -H
rl CJ N^ CJ
41 41 -H -H
•£ £• 4^ 14-1
4J 4J iH -rl
rl 3 O O
O O CO CO
55 en pu PH
NO
rH 0
rH O
rH
-------
I
I
I
I
I
I
I
1
I
I
I
I
I
I
I
I
I
I
I
CN
I
W
PQ
co
O
cj
CO
H
CJ
o
o
PL,
H
CO
W
Pi
s
CO
o>
O
1-3
CO
O
Cfl
Tl
§
CO
o
n
o
PC
CA
W
M
H
•> 60
to c co
c
o
cd
0
^1
CU
JJ
£
H
y
oration
C ft
cd M
ft O
e u
0
CJ ^
Jj
(-1 Cfl
CU rH
co o
3 1
cu >,
Cfl rH
J3 rl
rl CU
QJ r£i
^ B
OJ -H
nal Corporation
0
•H
4-1
Cfl
C
M
CU
4-J
C
H
1
C
o
•H
ft
B
fj
CJ
ration
o
ft
J_j
c o
0 CJ
•H
4-1 0)
Cfl 13
rl Cfl
0 0
ft CO
*•* cfl
0 CJ
U 1
CU
T3 CO
CO -H
CU O
a po
poration
M
o
u
0
•H
U-4
•H
O
CO
Fn
1
cfl
•rl
00
t-i
O
cu
o
pany
rporation
B o
5 cj
CJ
J-l O
CU CO
ft ,0
cO U
PM 0)
rH
CO rH
•H CU
00 ts]
0)
5
• O
W CJ
^
c
Oj
S
o
CJ
j_,
01
ft
cO
4-J
4-1
O
a
osa Corporation
orporation
O CJ
CU CJ
S3 *rH
1 >4H
C iH
M U
cu cd
4J 1
)-i co
o c
'Z CO
•H
4-1 CO
cfl -H
cu 3
V-i O
ion
al Corporation
4-J p4
cd o
^ -H
O 4-)
ft cfl
o cu
4J
ft C
B ^H
Cfl
O T3
C
C 0
o B
•H CO
C -H
P P
p!
O
•rl
4-1
CO
M
O
ft
M
O
0
«•£•*
a
4-1
cd
rH
4-1
O
•P-i
C
o
•H
4-1
CO
rl
o
ft
o
CJ
O
O
Cfl
>
4-1
CO
CU
1
c i*
0 0
•H U
4J
Cd rl
M 01
O ft
ft cd
rl CM
O
0 -H
rH
CU -rl
4-1 S
•H S
C CU
O £j
CO g
cd cd
S SB
cd
4-1
O
H
N
cd
£
fi
CO
cd
n3 'H
cd N
p! cfl
Cfl rl
O PQ
O
P!
st
r-
in
rH
^
I
cd
oo
co
o>
o
fu
W
CJ
Pd
O
CO
IV-7
Arthur D Little, Inc.
-------
I
I
The net volume (i.e., inventory) of timber on these commercial timber-
lands is about 7.2 billion cunits, of which some 4.6 billion (64%) and •
2.6 billion (36%) cunits are softwood and hardwood respectively. The |
dominance of the West as the major timber supplier is evident; it con-
tains some 3.6 billion cunits, or fully 50% of the total U.S. timber •
volume. Furthermore, it contains 73% of the total supply of softwood •
timber (Table IV-3). Figure IV-3 summarizes timber ownership by major
geographic section, and illustrates the percentage of growing stock on
public and private holdings. Again, the dominant role of the West as •
the major timber supply is illustrated. Table IV-4 is a more detailed •
analysis of the ownership patterns by subsections (regions) and components
of the private sector. •
C. SUPPLY/DEMAND FOR TIMBER
Figure IV-4 summarizes the total removals (demand) in 1970 for all timber I
products by wood species in the four major geographic areas. Table IV-5
presents the same data in greater detail by subsections (regions). Note m
that with the exception of the West, the annual growth of timber exceeded •
removals.
Historically, the yield of timber per acre in all regions has been well •
below the potential growth. The Forest Service estimates that with more •
intensive forest management, annual growth in all major producing regions
could be about doubled (Figure IV-5). Some companies are now using the •
most modern forest management practices, but it will have no substantial ||
effect upon the supply of timber over the next decade.
Although the demand for timber products was greater in 1973—i.e., removals •
increased—growth still exceeded removals in all but the Western section.
Furthermore, the recession of 1974 caused a sharp decline in timber demand;
hence, the 1970 data provide a reasonable basis for assessing the overall •
fiber balance. ti
Pulpwood is only one end-use requirement of the annual timber harvest; in •
fact, it is often the byproduct of primary timber products and not the |
principal reason for timber removals. This is clear from an inspection
of Figure IV-6, which shows pulpwood requirements in relationship to _
total timber growth and removals. (Total growth and removals are based on •
historical 1970 data; pulpwood requirements are based on recent 1973 and
projected 1977 data. We used 1970 data for timber growth and removals
because they are the most complete that are readily available*; however, •
the increased demand that occurred in 1973 does not alter the overall I
findings of the analysis. On the other hand, pulpwood demand data are
available for 1973; hence, we used those data to show the relationship
between total removals and specific pulpwood requirements.)
I
Figure IV-6 includes 1977 projections to show that the increase in _
pulpwood consumption between 1973 and 1977 will be small compared with the •
* The complete data from USDA sources are reproduced in Appendix B-2.
IV-8
Arthur D Little, Inc. I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
total growth and removal of timber. The bars that indicate pulpwood
consumption are segmented to show the relative amounts of timber harvested
for pulpwood purposes and the residue derived from primary lumber man-
ufacture or logging residue. (The increased use of residue to augment
supplies of pulpwood is discussed in Section V.) Table IV-6 summarizes
the API data on pulpwood use in 1973 and projections to 1977.
D. PULPWOOD PRICES
1. Sources of Variation
Pulpwood may originate from any of the following sources:
• Roundwood, i.e., pole-size timber harvested specifically
for pulpwood;
• Chips or other forms of waste wood produced as a by-product
in the manufacture of primary timber products;
• Logging residue, i.e., pulpwood salvaged from logging oper-
ations, including slash, culls, and saplings; and
• Rotten or culled trees not suitable for the manufacture
of primary timber products.
This pulpwood may be transported to the pulp mill by truck, rail, barge,
river drives, etc., and in a variety of forms (short wood, long logs,
chips, shavings, sawdust, etc.). All these factors—the origin of the
wood, transportation method and distance, and the form of the wood—
as well as other factors subsequently discussed, influence the price of
delivered wood to a pulp mill.
Tables IV-7 and -8 illustrate the effect of origin, species, and form on
the prices paid by various consuming mills. These data also show how de-
livered prices tend to be higher where the competition for pulpwood is
greater. (Although the concentration of pulp mills is not evident from
the tables, reference to Appendix A shows that the concentration is much
greater in Washington and Oregon than in California.) The exporting of
chips from the Pacific Northwest further increases the competition for wood
in that area and enables those who sell it to command higher prices.
A recent survey of pulpwood costs in the Northwest has substantiated
the inherent variation of pulpwood procurement practices and delivered
cost to a mill.* Although the delivered price of pulpwood was found to
vary over a wide range for a number of reasons, in general the survey
respondents cited the following four major determinants:
(Continued on page IV-20)
*J. W. Austin, "Price Trends in Fiberwood Used by Mills in Northwest",
Pulp and Paper. March 1973, p. 63.
IV-9
Arthur D Little, Inc
-------
ro
PQ
o
1-S-
ON
CO
r-.
ON
T-,
O
O
&
t*
M
W
*•— s
^^s
rH
O 00
• •
f^ ON
rH
00 CM 00
• • •
VO CM rH
CM i-H rH
O ON r^. vO O
• • • • •
. co m m
CO O vO s± ON
CM vo -st !•»• m
vO CO H CM CM
in i-H ON O VO
rH ON *^- r^s O
sr m CM * CO
co
a)
4J
cd
4J rH
en cd
t-l
CU 4-1
Vyi CJ
cd cu
|J CJ
0
ft
*^-
CM
m
CO
CM
vO
oo
•
CM
3
O
CO
rH
cd
4-1
Q
£-4
H
C/3
3
-*
O
rH
ON
•
in
r-l
t-H
CO
O
r^
O
CD
H
CM
CM
rH
r***
c
•H
cd
4-1
C
Q
JjrJ
&
O
O
&
c
VJ
CU
4-1
M
0
O
CM
ON
-j
m
o
•
vO
CM
in
I-.
CM
vO
^
CM
O
co
CO
c
•H
cd
4-1
C
3
0
•&
j£
0
o
a
rl
CU
js
4-1
3
O
CO
ON
**
O
r-
CM
rH
rH
•
O
•st
vO
«;(•
CM
CO
ri
CO
r^
CM
VO
H
in
ON
•s
rH
^-s
cd
CO
cd
rH
^
•
rH
a
(3
•3
N»^
4J
CO
CU
J;
4J
M
O
£7J
u
•H
M-4
•H
O
cd
P-l
VO
rH
.
CO
VO
O
•^f
•
rH
rH
vO
i-H
co
CM
0
•
ro
r~-
CO
,_!
CM
m
ON
^
OS
i-H
VO
m
CM
•*
CM
co
co
00
o\
.
m
in
m
*t
CO
4-1
ca
Q)
&
i-H
cd
4-1 O
co H
CU
,C!
4-1
3
0
CO
CJ
•H
<4H
•H
CJ
cd
Pi
o
o
, — 1
r-.
CO
ON
m
CM
O
O
rH
r«.
rH
m
m
-*
O
O
rH
•o-
m
s^
rH
*\
r-~
•
CO
•
£3
. 1
3
£_|
O
H
T3
O
1
J-l
cd
ffl
vO
CO
T3
O
O
4J
O
CO
si-
vO
4J
a
4J
cd
&
P
•
CO
o
CM
CO
cu
4-i
cd
JJ
CO
0)
4-1
CU
a
0)
I
o
o
i-H
4J
£
CU
H
w
CJ
o
CO
IV-10
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
c
O
c
o
Source: "The Outlook for Timber in the United States," FRR 20, U.S. Dept. of Agriculture,
October 1973.
FIGURE IV-3 OWNERSHIP PATTERN OF GROWING STOCK ON COMMERCIAL TIMBERLANDS, 1970
IV-11
Arthur D Little, Inc.
-------
TABLE IV-4
NET VOLUME OF GROWING STOCK ON PUBLIC AND
PRIVATE COMMERCIAL TIMBERLAND
(million cunits)
NORTHEAST
New England
Middle Atlantic
Total Northeast
NORTH CENTRAL
Lake States
Central
Total North Central
SOUTH
South Atlantic
East Gulf
Central Gulf
West Gulf
Total South
WEST
Northern Rocky Mtn.
Southern Rocky Mtn.
Pacific Northwest
(incl. Alaska)
Pacific Southwest
Total West
TOTAL U. S.
SOURCE: USDA, op. cit.
TOTAL
' SW
201.9
66.9
268.8
108.9
13.4
122.3
190.9
187.4
182.2
223.5
784.0
631.1
246.1
1754.9
511.6
3143.7
4318.7
HW
150.2
456.4
606.6
291.8
267.2
559
284.6
118.4
220.6
187.5
811.1
7.2
37.9
114.9
33.3
193.3
2170
PUBLIC
SW
8.8
9.2
18.0
55.7
5.6
61.3
19.5
23.8
25.3
31.9
100.5
482.3
200.0
1317.6
302.4
2302.3
2,482.1
" HW
15.4
70.9
86.3
102.3
24.2
126.5
29.8
10.9
20.0
20.2
80.9
3.4
25.0
34.8
15.8
79.0
372.7
PRIVATE
Forest Ind.
SW
91.6
5.1
96.7
15.4
0.3
15.7
32.0
44.6
41.0
88.6
206.2
50.8
1.5
274.0
86.9
413.2
731.8
HW
41.6
25.5
67.1
28.2
5.0
33.2
33.5
23.8
27.5
41.0
125.8
0.4
0.2
32.9
5.8
39.3
265.4
Other Private
SW
101.5
52.7
154.2
37.8
7.5
45.3
139.5
119.0
115.9
102.9
477.3
98.0
44.6
163.4
.122.3
428.3
1105.1
HW
93.2
360.0
453.2
161.3
238.0
399.3
221.2
83.7
173.2
126.4
604.5
3.5
12.6
47.2
11.9
75.2
1532.2
IV-12
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
1
1
100
80
1
I 60
1 !
g
1 40
1
1
1
0
1
1
cm
Growth y/[
Removals jj||||
// in
v m
|| ra ||
T- ' / / . ;:•>}•:•• // «yi.T5i // •/?•?.
Sj / X ' X "•''••> / fc'l'iv / *••::.-•-
% X^ //i|^^//li
/> // y^ yM yM
'/ /. r>™ // ;,^ ^/ £££;'• ^/ r.-^i.x;
SW HW SW HW SW HW SW HW
Northeast North Central South West
Source: "The Outlook for Timber in the United States," FRR 20, U.S. Dept. of Agriculture, October 1973.
• FIGURE IV-4 NET ANNUAL GROWTH AND REMOVALS OF GROWING STOCK ON
COMMERCIAL TIMBERLAND IN THE UNITED STATES, 1970
1
1
1
IV- 13
1 Arthur DL
-------
TABLE IV-5
NET ANNUAL GROWTH AND REMOVALS OF GROWING STOCK ON
COMMERCIAL TIMBERLANDS IN THE UNITED STATES BY SECTIONS AND REGIONS
(million cunits)
All Species Softwood
Section, Region Growth
NORTHEAST
New England
Middle Atlantic
Total Northeast
NORTH CENTRAL
Lake States
Central
Total North Central
SOUTH
South Atlantic
East Gulf
Central Gulf
West Gulf
Total South
WEST
North Rocky Mountain
South Rocky Mountain
Pacific Northwest
(incl. Alaska)
Pacific Southwest
Total West
10.8
18.0
28.8
15.7
10.9
26.6
21.4
18.9
24.2
21.6
86.1
10.2
3.4
24.3
6.3
44.2
Removals
5.6
6.0
11.6
6.8
5.9
12.7
15.8
12.8
17.7
18.5
64.8
7.3
2.0
32.5
9.3
51.1
Growth
7.1
1.9
9.0
4.2
0.6
4.8
10.6
14.1
14.1
15.2
54.0
10.1
2.8
20.4
5.4
38.7
Removals
3.4
1.0
4.4
1.6
0.3
1.9
8.4
9.6
10.2
11.8
40.0
7.3
2.0
31.6
9.0
49.9
- 1970
Hardwood
Growth
3.7
16.0
19.7
11.5
10.3
21.8
10.8
4.8
10.1
6.4
32.1
0.1
0.6
3.8
0.8
5.3
Removals
2.2
5.0
7.2
5.2
5.6
10.8
7.4
3.2
7.5
6.7
24.9
0.9
0.3
1.2
TOTAL U. S.
185.6
140.3
106.7
96.2
79.0
44.1
SOURCE: USDA, op. cit.
IV-14
Arthur D Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
North
South
Rocky Mountain
Pacific Coast
••a
^Sajja^H^y3lg^^Ji^^^^^^^^^^^^^^^^^^_
W////////A
I
I
25 50 75
Net Growth (cu ft/acre/yr)
100
Current
Potential
Note: The geographic sections reported by U.S. Forest Service are dissimilar
from those used in this presentation.
Source: "The Outlook for Timber in the United States," FRR 20, U.S. Dept.
of Agriculture, October 1973.
FIGURE IV-5 POTENTIAL AND CURRENT NET GROWTH PER ACRE
IV-15
Arthur D Little, Inc
-------
90
80 —
70
60 —
50
o 40
30
20 —
10 —
Legend:
Net Annual Growing Stock
(1970)
Total Removals (1970)
Pulpwood Consumption:
Manufacturing and Logging-*
Residue
Roundwood and Chips *>
from Roundwood
%
1 1
I L
%$ ~r %$
ffl
orth
Central ^"*
/
:
\
\
/
J^™*"
/ /
0;
•^ X
) __
s 2
yt
%
\ /
- 1 \
^ ,. -
.1
\
i -
A-
\ '
1977
1]
U2.
r*w
South
**•*«
\ ^
/ ^
•'i
/ 1"
^ \
/ —
\ /
\"/_
i -
i/
19734I,7
W7?^
West *"
Sources: "The Outlook for Timber in the United States," FRR 20, U.S. Dept. of Agriculture, October 1973
(growth and removals); API Capacity Survey data (pulpwood usage)
.FIGURE IV-6 TIMBER GROWTH, REMOVALS AND PULPWOOD CONSUMPTION BY MAJOR GEOGRAPHIC
SECTION
IV-16
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
f-
r-~
ON
rH
cd
4J
O
J_
o
H
G
<
o
jr^
tH
u
w
C/J
CJ>
H~i
P3
PM
r?
O
C
o
'"^J
s
M
Z
O
M
H
fe
CD
oo
Z
0
o
o
i
£D
PH
Q
W
H
cj
r-1
o
§
PM
5
PRESENT
H
rH
ON rH
ND £>
CO
•H
0 CJ
O
TJ 0
{3 O
3 S
O TJ
Pi d
0
Pi
r~-
r^
ON
rH
C? 0
CO i-l
in
oo
r>
rs
CN rH
rH
\O
i-f
*<
•J"
4-1
o
•H
60
0)
Pi
(3
O
•H
4-1
y
cu
00
CO
y cd
•H 01
4-1 43
(3 4J
•x) cd s-i
C H 0 hJ
cd 4J z ^
H CO) cd Z
CO W rH 4-1 W
•< 13 O CJ
W S T3 H
EC 0) -H (rj
0 0
Z Z
O CN
CN CTN
r-t O^
r>
<•
CN
rH
rH
ri
m
ON 1 — 1
oo m
isD ON
co
c
-a-
*
-*
-* CN
co m
CN
VC
oo
CN
in r-
00 rH
rH
-* f~
r~~ rH
OO CO
rx|
O
CN
rH
2
•H
rH O
CN 00
r^ CN
rH
0
O
rH
CN CO
i— 1 CN
CO **D
f-
CO
in
CO
NO
n
co
CO *^
oo m
r\
CN
r-
co
r.
CO
cd
i—t 1— 1 4J
cd cd c
(-J l-i 01
4-14-1 CJ
13 (3
01 0) 43
O O 4J
43 43 0
4-1 4-J Z
S-J M
0 O rH
Z Z cd
4-1
4-1 4J O
CO CO H
cd o) W
W S H
o
oo
ON
CN r-~ O
rH
\O CN CN
ON
VD
O
CN
ON
00
co
*•
rH
rH
rH \£> rH
CO rH ON
m r- i— i
-* rH CN
00
CO
-*
00*
O- VO CN
CO
j
rH ON
CN CO
vC CN
CO I—
rH NTN
m
o
o
CO
rH
m rH
r.
CO
00 O-
" \O
O^ O*^
rH
in
in
o
CO
in C vo
0 0 r~,
" "ON
CO C M
-» i
CO
f>^
co
oo
„
CM
ON
CO CO ^
oo oo
" •* *>.
CN r-N a)
CO >
p
-S.S ^ «
cd cd cd ^
4J 4J 4J ^ 4J ry
c d co co co .::
3 3 01 cd 0) 71
Hl^l 4, g.
4-1 4-> CO 5,
>. >N M • 3 01 o
^! 4>i 0 rH 0 13 U
y y Z y t/3 ,_/
O O (3 i-l A]
oi pi y -H y cd «3
•H *—^ -H 4-1 OO
43 43 IW U-l O •
4J 4-1 -H i-l H E)
*^ 3 y y w
O O cd CO >J c_>
ZCOP. p. g
g 1
IV-17
Arthur D Little Inc
-------
r-.
I
M
W
H
W
PM
g
§
o
o
pa
co
w
U
M
BJ
PH
O
O
o
w
pq
H
OJ
D.
CM
o>
•° £
Is
•o .-
o o
3~
* 8
S 6
Q. *^
•o
S | i;
"? a^
a
I/I
ro g>
6 ,
Z 3
S
-S
re
~ f
5
wi
c
>
ra
CO
trt
•a
S
ra
t/5
WJ
—
°
o>
>
>
**
a>
<
d)
O)
o
S1
re
DC
>
aj
01
c
ra
CC
2
Ol
c
rr
d»
<
8,
c
re
CC
?
^
u
a
>.
State and mill
1 1 1 1 1 1
1 1 1 1 1 1
1 1 1 1 1 1
1 1 1 1 1 1
o . m i o i
o, 1 CN 1 o 1
CN' 1 to ' co' 1
1 | S 1 S 1
' ' £ ' £ '
in . o , in
CN 1 O 1 CN 1
CN 1 OJ 1 — ' 1
OJ OJ CN
00 O 0
in in o in
OJ CM M t-° CN 1
OJ CN OJ OJ |
6 in in 6
O CN r^ o
CN CO CO CN
in in in in in .
r^ CN r^ CN CN 1
cb 6 co 6 r*-1 I
•- CN •- OJ r-
1
1 1 1 1 1
1 1 1 1
m
1 1 1 1 1 r-
1 1 1 1 1 in
in in
OJ OJ
co" ! i co 1
in 1 1 in 1
r*- r--
CO CO
in o . i m ,
OJ O I 1 OJ I
r-.' iv ! 1 1 r-' 1
o o o o o
in o in o in
r~ ^r in ^ r^ i
OJ OJ CN OJ OJ |
6 in 6 in 6
m r^ in r^ in
oj in r~ co CN
in o in o o ,
OJ O OJ O O I
cri 6 ^ ^ 6 1
•- OJ CN OJ OJ
O "°
\ 1 t
^ £ (D ° f
^? S3 "5 >- «- > «
5 scocoOO^ o
go. 03
1 1 1 1
1 1 1 1
1 1 1 1
Mil
1 1 I 1
1 i 1 1
1 1 1 1
1 1 1 1
. in in
I i r^ r^
i i do
CN CN
LT> 0 O
CN O O
od— PO ro
^ ' CN CN
LO LiO UD
lO L^ Lf)
O O 0 O
o q in if)
r^ H cd CO
r- CN *- r-
1 i 1 1
1 1 1 1
Mil
1 1 1 1
mo t^i
r* io r-.
(p LD __. U3
LO LT> LO
P-- CN CN
T T ^r
LO LO O LO
r-~ r-- LO r-
LO in CD u>
LO LO LO LO
CN r^ r>. CN
co co O ro
CN r- CN CN
6666
o o p o
LO CN CN CN
O LO O LO
O CM O CN
co CD K r-'
r- <— T- ,-
"O
o
o
2 s ^~
O ^ tu "r Cf)
% all il
Oa WM
in in
in ' in
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
1 1 1
I
1 ^' ^
i o o
I m in
1 CN CN
o o o
o o o
6 6 6
*~ T T
in 6 in
CN in CN
^ in ^t
in LO o
r^ 04 in
to r- CD
8 S§
r^ CD r^
6 66
o in in
CO r- •-'
m m o
i-. r- o
^ ^r in
O 0
a q
m roco
6 in
in r>._
co r^"
in o o
r*> in in
r-' -a- co
r- r-
•o
.11
Board
Particleboar
Hardboard £
insulation
Average
1 1 1 1 §
1 1 1 1 to
i i i i S
1 1 1 1 CO
CN
i i i 8 i
1 1 1 to 1
1 1 1 1 1
1 1 I 1
1 1 1 1 1
III 1
o o o
in in in
CO 00 CO
«- *- *- | I
888
co co' co'
o o o . i
o o o 1 1
222: ' '
in
OJ
1 1 1 m 1
1 i I o I
in
c
1 1 1 o 1
1 1 1 IT) 1
r. ' ro r-, 1
II
0.00,
0 I 0 0 I
in 1 m co
in in in o o
r^ r^ i — o in
in in in ro co
O o o o o
o o o in q
CN CN CN in 6
o o o o o
m o in o o
*i 'in ^ en in
*- *— *- *-
< "D
— O
Z o
O a; "° 01
< 3 co O < o "a
Ua. co a.
i_i
CO
5
OJ
a
H
Q
CQ
CN
O
O
ro
0)
£
c
C ")
0) 0
.-j 1*_ ^
C _c OJ
o *-* *^
o > 2
xi-0 a
d v S
**- -1- c
Si 5
Q. CO *"
oil ^
6 Q. £
t/> Q) *2
(J ^
« a o
I|l|
1 Rounded to
2 Converted f
3Range $1 or
^Includes pu
03
I
4J
•H
0)
CO
P
O
O
a)
xi
•H
fi vO
•H
•
w ex
id
C •>
0) ro
M r~.
H cn
i-l
CU
CJ 4=
•H O
•H
jj p.
[0 (I)
0)
U
IV-18
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CO
I
w
o
4J
t-i
0)
l/t O!
•o c
O re
0 CC
5
•o ~
1 <
V
s
re
TO OC
V — 1
0 g1
<
V
"5 c
5 re
0 Cf
s
= i
i
TO
o> OC
C
a ~~
art
u
**r TO
(A Q-
JE
o —
Q .
CT
"»j re
0 DC
D ^~
I
Oi
^
0)
a
X
=
E
•D
C
re
aj
re
r**
*j in r»' co ^r
O O 0 0 0 ,
o m o in o i
CO CO CO CT) CO 1
o o o o o
in o m o m
r*-' ^r m *j r^ i
CN CN CN CM CN ,
in Ln in in in
o o o o o
CN CN CN CN CN
O m m LO in ,
O CN CN CM CN I
CO CN CO CN CO 1
CN CN CN CN CN
O O O O O
tn o tn o in
r^ ^ tn ^ r*^ 1
CN CN CN CN CN |
UD O LO LO in
O CN O O O
CN CN CN CM fN
in o in m o .
CN LTl CN CN ID I
CO CN CO CN CO '
CN CN CN CN CN
z
O o
*~ o
C5 § ^~
_ oj (jj ^_ 31
X ro ^ 3 aj 2 -Q
g 0.35 °-£ 5 |
g if " W CD
§' O
£ 1
t— ^
o , o in .
O 1 O CN 1
^l^a, 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1 1
1 1 1 1
1 1 1 1 1
III
f- \ \ ^ 1
1 1
in , | in .
CM 1 1 CM 1
H 1 1 „ I
CM CN
in in in
r^ r^ r-
00^ 00 CO 1
6 66
0 00
in CN CM
in o in in
CM O CN CN 1
co CM ^j- in i
o in in
_. ai o o 1
' r^- CM CM
in 6 in
r^- o r^
CD en CD
in in o in
r^ CN in r^ 1
o oo a) CO 1
in in
r^ r*-
1 CO CO 1
1 T 1 T !
in in
CD CD
in in
1 i^ 1 r-
1 r^ 1 r~ 1
1 t
~° "^ ro
0 g p
0 «u a) *\ * S
O ^^^^-n-^
^ a3 ^ 2 > Js " cb
O Q. 00
1 |
i i
i i
i i
i i
i i
i i
i i
i
i
i
i
i
i i
i i
0 0
0 0
CO CO
6 6
in in
CO CO
co co
*t sa-
in in
0 O
in in
ro ro
0 0
in in
ro ro
*~ *~
•o
0
o
c
Q
^ a.
ro en
3 5
£ 1
<
1 1 1 1 1
1 ' 1 1 1
1 1 1 1 1
1 1 1 1 1
r-) r~, ^ 1 r^,
1
§OO,O
polo
CN CN CM ' O
00
*-. | r-, n 0 m
1 tDCO
T— r—
in in o m
CM CN O CM
CM 1 CN r- r~
1
O O O O ,
in m m o [
m iri in co <
*~ *~ •"
,.,,, i
in o in o
CN in CM O
in m in co
0
o
ro
6
o
CO
o o o o
in in in in
in in in o '
III
1 1 1 1 1
1 1 I i 1
1 1 1 1 1
— ~o
Z o
cc § ^
"• ™ § ™ TJ
_i a-^ 2^S*-
DO- CO U-
r
° a>
^
-
=
a
_ <" S
"O T> 0) T3
IllJ
4J
CO
0)
I
4-1
S-l
O
c
•H
•H
(U
to
O
O
•H
Pn ui
•H •
O.
co
T3 «
C ro
cu r^
M ON
H iH
0) J
O O
•rl VJ
M n)
PH S
C cu
•H Pi
4-1 tfl
to PM
^
•
>~)
0)
a
M
3
o
en
IV-19
Arthur D Little, Inc.
-------
• Date of Original Contract between Supplier and Buyer - An older
contract, even with escalation clauses, usually pays lower
prices in a market of rising prices and higher prices when market
prices are declining.
• Transportation Distance - Prices vary significantly with the
distance wood travels to the consuming mill. Although most
mills report a uniform delivered price, many mills absorb some
of the freight cost, or scale prices paid on a zone basis, to
encourage deliveries from more distant suppliers.
• Mode of Transportation - In general, water transportation costs
are lowest, followed by rail. Truck hauling, the most common
method of transportation, is also the most expensive.
• Quality or Quantity - Although most survey respondents did
not report paying a differential for quality or quantity of
pulpwood, a few mills do this to obtain a consistent supply
of softwood.
Although the survey referenced above was conducted in the Northwest, the
same factors influence the cost of pulpwood in the other pulp-producing
regions.
In general, pulpwood costs remained comparatively stable from 1950 to
1972. Obviously, there were exceptions in some geographic areas—spe-
cifically in the Southeast, where the competition for wood increased
substantially. Furthermore, Southern mills generally paid less for
pulpwood than those in the North Central or Northeast regions. In the
northern states, spruce generally commanded higher prices than other
softwood species or hardwood. (Table IV-9.)
This price stability might seem surprising, in view of the threefold
increase in pulpwood consumption during that period and the generally
rising costs of labor, power, and transportation. A variety of reasons
contributed to this stability, chiefly the following:
• Increased use of residue wood from lumber and plywood plants,
which grew from essentially zero in 1950 to 30% by 1970;
• Increased usage of lower-cost hardwood;
• Increased productivity of woods labor; and
• The availability of new pulp mill sites with a satisfactory
supply of low-cost wood.
Pulpwood prices cannot be expected to remain stable indefinitely, as most
factors that have promoted stability are no longer applicable. The use of
residue wood and hardwood as a percentage of the total wood supply is
expected to remain relatively constant. The more economical sources of
waste wood are being exploited now, and additional supplies will come at
IV-20
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
w
hJ
m
3
il
CO
w
H
U
w
PH
co
60
e
H
U
W
I-J
w
00
a
c
•H
o
o
CO
w,
u
[w
to
M
0)
p.
PH
8
PH
re
10 o 10 o »o o o >o 10 10 »o 10 >n o io o 10 10 to
lionj Oi CM oq t£> o» oq to to_ co to •-< oq oo a^ co op to as o CT) co r-< en Oi CD a> tooqaqco^ •<* oq o o £{
CJ rH CJ --H CJ CJf-H'-HCJCJ CO "TfTftOt-- t^t^OCJ
c ' '
fl - -
•fl I „ QJ
- '^-C lOOiOO'O IOLOOOO LOLOOOO »OLOiOO
- ^> ^ o_ crj CD to t- CD ^r co rH r-H CJ 10 10 CD t-^ o tr- *H to
. « ^ o - ' ' i .* CO LO LO to LO LO' LO LO CD "-D t£> CO CD LO tO CO ^J
Eii a
l|
3 wS OOOLOiO IOOOOLO OOOOlO OLOLOO C
1 O t^ . . . .. ^^co^cjj OOCDIOOJCJ t-;iO^OOt~- C^ClCJiO Q
-jo \ ; ; ; ; ^r' ^>* *t ^ *f TTTr**LOLo Locdco't>t^ i>t>a>cj
." ooio LOOLOLOIO LOLOIOOLO >OLOO
• cocj^ cocO'-HCjco oqaiiocjco LO o a>
- •"• -Q I . . , . . l-^fTfTjJ ^Tf^^^t ^fTfLOLOLO LOLOlO
§ '' "J^"J ""
I.
c P
_ j, J; voioo oooioo inoinoin >oinio
I* g.^ CO Tf C-; «3lOTfTlitD roOl>Ot£>CO_
I 00 CO CO CO CO' CO CO CO* Tf Tf IO IO 5C> t> t- 00
967
lar
eg
g«
35
3
o to Tf a>
<£» t- CO CO CO
1C O lO O lO
co lo-^ 1001
IO lO IO IO O
CJOOCJ COCO
oo oo oj
_ .. , „„ ..v 10 lO O
CTioqa^ijiCD T}|TJ«IOIOO TJ«IOIOLOO
rHCOCOCOTp •^J'LOLOiOCD CDCDCDCDt-
LO O >O LO O
CD oqcjoq CTJ
i> oo a> oi o
r-4 fH t-H F-4 CJ
O LO O
rH LO CJ
ai co o>
*-* rH C)
WCJ CJ
•LOOO IOLOLOVOO OOiOOO lOOO
•CJi-HT-H rHCOCOCJr-l ClC^lCO'^'—t OQTfO
ILOLO'LO LO'LOLOIOIO TTLOlOLOtD WLO'LO
•LOOO OOiOOO OlOlOOlO OlOO
•CJCOCO Tf LO LO Tf CO ^•-JCOOO'-H TtLOOl
. ^1* Tf ^J* ^t ^1* ^t ^ ^» TfLOLOLOt- CDt-t^
O irt l
O OJ i
*: OOOLOO ooo»oo oooioo LOIOO
._._ - — -5 t~;aicooqco oq oo 01 oo 05 cOrHc^-^oq cocjto
CO ^t TJ< Tf TT T? Tj- Tt CO* CO CO CO CO* CO CO Tj« LO IO LO LO LO' LO LO
1OOOOIO OO'OOO OiOOOiO OLOOLOlO iOiOlO
CDOOOOOO a^iocoT-^'-' T-HOCM'-H^-* oqooJoqoq OICOLO
OCOCJCJCJ CJ CO CO CO CO CO CO CO CO CO COLOIOLOCD CD t> 00
5 O CO lO IO O LO iO
* CO CO CD (M 1^ »-t IO
5CDCD CDt-'cDCDCD
o >o 10 10 o LO o 10 o o 10 LO LO
Oit-^CDCDoq 00 Cft f-J CO Tj« Ot-;^
CD CD CD CD CD CD CD t~- t^ t~ t" CO t~™
OLOotOO OLOOOO lO'OO^OO O'OlOtOLO OOO
M c^ co N co cqcDCocoi-; o co oo t> o CO.°9'~I|>:1^ °9 ^. co
^jrf-r^TtW TfiOLOLo'iO (D IO'LO'LO'IO co'cot^t^OO OOCTiO
Or-< CS] CO -? lOCDt-OOCT) Ot~*(NCOTr »OCDt>OOO^ OrHCJCO
lOLOlOtOLO LOlO>OiOLO cDCOCDCDCO CDCDCOCOCO t- t- C- t-
CT>OC1CJJC7J CJOO^CTlC^ OlO^<3>ClCTi OlO^CndCi ClOCTsCTl
IV-21
CN
O
CN
a
CO
I
ro
a
T)
o
M
PH
cn
0)
C
o
•H
•u <•
cfl r^
3
•U •
•H ft
CO
co m
u o
•H -H
0)
T3 CO
n) j-i
CO
t3 01
a ^
cd o
CD
n •>
<
QJ O
& CO
H 13
a
S-i
O
CO
Arthur D Little, Inc.
-------
C
O
OS
I
w
HH
ON
PM
m
arthem New Hampshire
2
, Wisconsin *
Hardwoods
Hemlock
u
c
•O
C
fll
01
u
a
M
Aspen
Hemlock
Spruce
a
%
Current 1967
dollars dollars4
Current 1967
dollars dollars*
Current 1967
dollars dollars 4
Current 1967
dollars dollars »
1
Current 1967
dollars dollars '
Current 1967
dollars dollars'
Current 1967
dollars dollars •
L,
flj
01
>•
100 • • •
(--»•••
t~ '00 . | .
O in • • •
in t> • • •
^ CO '
i-ti-4
in in • • •
Tf|- . . .
oo'cd | | ;
O in • • •
rH t- rH
CM CO in -^ •<*
oo o in o
1C O OS 00 •&
O iri CO CM i ;
• in in • •
•CM t- • •
;
(NM CM CM CM
oo mo o
in to •-< to to
310000 tOCO
inuscM t- c-
oo t- 1- in in
ooicom
O} CO O> O O3
t-o> t-oo t>
o m o oo
OCMO O O
t-CO t~ t- [-
in o m o o
Tf CM>-H IN CM
CO IN CM CM CM
CM CM CM CM CM
in o o o o
CM OO OO
CM CM CM CM CM
o in in in •
t> tr- ^J1 in •
CO CO CO -0- '.
o o in in •
coco CM'CO ;
in o in • in
CO rtO • C-
co 06 06 t--
o in m • o
r-«OO .O
CO 00 OO .00*
o in in o in
••H o t- in oo
U> uu O) Oa I—
o o mo o
m o t- o o
t~ oo 01 o as
in o o m o
t-oo <-H m c-
rH T-I CM T-I C>
CM CM CM CM f-<
O 1C O O O
Or- rH TH O
r-l rH (NCMrH
CM CM C4 CM CM
• • mo O
• • c- CD o
. t in in in
• • mo o
. . i> o o
; ; in' to to'
— 1
O O IftlC
rH CO C- 1C
30 Oi O5 Cft
o o o o
o o irt in
o wwco
CM CM CM CM
o m m o
rH CM CM CO
00 CD 00 CO
O O 1(0 O
o m t~ m I
OOOr-l CM
CM rH CM CM
o 10 o m
-3* I~ Tf rH
O O) r-< CM
CMrH CM CM
in m m o
CM CM CM 0
CM CM M CO
o m 10 in
mo cc t-
•^ ^t CO CO
o om o
O OCM CO
CO CO COOO
1-2 o in o o
t- 1C rH CO t
t— O> rH Ol rH
rH rH CM rH CM
O 1C 1C 1C 1C
in t~ c- f-i c-
1C O 1C O O
O CO CO CO rH
ic 06 d oo oi
CM EM CO CM CM
O 1C 1C 1C O
1C CM rH t- 1C
O CD t> Tf< 1C
(N CMCMCM (M
o ic ic o in
TT O Tf t- CM
t- O rH O O
-H (N CM CM CM
1C 1C O O 1C
eg CM O rH t--
•*r oo o> oo t>
C rH CMCO -*
ic ic in in m
G3 O"} Cft 01 O"l
o o in ic o
oo m co co co
o .-< o oo
M CJ (N O) CM
10 o o ic m
C\> tC O CM IN
m ic in ic m
CO CTi CO O CM
O3 Ci C3
— < CM 1— < r-< *H
o ic o m in
m c-i CT c^i c-
C- 00 C- t>00
in to c- oo 05
ic in in m in
G) Ql ^ O> O)
o o o m •
O) r~* CM OO •
oi o o o>
i-l CM CM i-H
o o 10 in •
as o •-! tr- •
in in o in •
CM 00 1C IN •
C>00 00 t~ •
CM (NCMCM
in in o in
l> IN O I- •
CM CMCMCM '
o in o o •
CO O O OO .
00 O3 C> OO .
rH tH rH »H
in o o in •
to o o i> •
t> 00 00 C- ,
O f-H CMM rf
CO CO to CO to
O) O^ O) O) ^
• • 1C 1C O
• • CM CD t-
'rHO' Oi
CMCMrH
. • in ic o
• • CM r-l O
' 'CMCMCM
• • o in m
. . as in t-
• ' oi t^cb
' ' CM CM CM
• .oino
• • 01 CM *n
' ' O100 00
CMCMCM
• • O OO
. . T}< Cl CO
' ' rH O Ol
' ' CM CMrH
• .000
• - -^ TT C}
• • ^ rHO
CMCMCM
in co t- oo <7)
CO to CD CD CO
O) O> ^ O) O)
1C 1C C1 O
rH rf CO t-
O 00 00 t~-
rH rH rH rH
ic o o o
rH O OO O
CM CM CM CM
oooo
1C O rH t-
cc in iOCM
CM CM CM CM
ic o o in
CM 1C t--
Ol 00 OS O
C3
artment of Agriculture, Forest Service Louisiana De-
ture State Market Commission University o( Wisconsin.
t University of New Hampshire. Cooperative Extension
" Preliminary
Sources U S Dep
partment of Agncu,
ureau of Labor Statistics Forestry Departmen
Service
m
u
.C
>,-
•°8
5»
~< yj
00>
T3*^
« —
c c «
. H SI
M 3"g
p si
& 8:
X Cm
rt u
o ^
a =55
C f-'ic
u '••o
> O V
- a *• xu
?^°&
£°S|js
s-° - c5
w d^ GJ w
#IvQQo
. « n - £.
CN
ON
Cvl
r
PH
O
tD
•H
I
m
r-.
T)
O
rJ
PM
en
rH
O
C
O
•H
j-i »
4J •
•H CX
C/3
Q) 0)
0 O
•H -H
en
Q)
0) P
j2 cyi
H P
Q)
O
M
O
to
IV-2 2
Arthur D Little, Inc.
I
I
1
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
higher prices. Also, the number of mill sites with an assured supply
of low-cost wood is now severely limited. And finally, projected
increased demands for primary timber products and new lumber manufacturing
techniques will increase the competition for pole-size timber, which
traditionally has been used almost exclusively for pulpwood. The Chip-N-Saw
system, for example, will permit lumber manufacture from pole-size timber.
On the other hand, technological developments, such as whole-tree chipping
and better utilization of logging residue, will tend to offset some of the
upward pressure on the cost of pulpwood. Nevertheless, in general we believe
the cost of pulpwood will increase faster than the overall rate of inflation—
the question is, how much faster?
To gain some insight to this question, we next examine the cost elements of
the delivered cost of wood: stumpage, harvesting, loading and hauling,
and transportation.
E. PULPWOOD COST ELEMENTS
1. Basis of Evaluation
Four cost elements make up the delivered price of pulpwood at the pulp
mill, namely:
• Stumpage,
• Harvesting,
• Loading and hauling, and
• Transportation
As implied in the previous discussion of alternative pulpwood sources, any
or all of these cost elements might apply depending upon the origin of the
pulpwood. For example, if a pole-size tree is cut for pulpwood and trans-
ported to the mill, all four factors would affect its price; on the
other hand, if the pulpwood came from an integrated lumber and pulp man-
ufacturing operation, it is conceivable that all of the cost elements
would be charged to its lumber value. Hence, the residue from the lumber
operation can be transferred to the pulp operation at a price lower than
the cost of these items. In the case of pulpwood originating from logging
residue, stumpage and harvesting would not apply; the costs would include
simply loading and hauling.
Obviously, therefore, a variety of methods are used to obtain pulpwood
and each has its own specific cost elements. In this analysis, we have
considered the harvesting of roundwood and the newer practice of whole-
tree harvesting; the applicable cost elements are discussed below.
IV-2 3
Arthur D Little, Inc.
-------
2. Stumpage
I
I
Stumpage is the value of a standing tree. It varies with wood species, |
timber class, accessibility, and distance from a point at which the tree
may be converted to a product of commerce. The buyer bases the stumpage _
he pays to the timber owner on the delivered price he will receive less •
the cost of harvesting and transportation. The stumpage value is also
influenced by the supply/demand situation at the time of purchase. From
the standpoint of the grower, stumpage represents the return on his 9
timberland holdings and his forest management costs during the growth I
of the tree. Accordingly, stumpage (particularly for lumber and
plywood-sized timber) can be highly variable and volatile. Stumpage •
rates are particularly important to pulp and paper producers who grow |
their own timber, because these rates directly affect the capital
gains taxes that they must pay. _
In spite of the possible inherent variations, the stumpage value of *
pulpwood was fairly stable from 1950 to 1973; however, it is likely to
rise sharply with increased competition from primary timber products B
and as more intensive (hence costly) forest management practices are applied |
to meet the projected demand for timber products. Table VI-10 presents
historical stumpage values for a variety of pulpwood species in major •
DulD-t»roducine areas. The West is not represented in the tabulation; •
as most of that region's pulpwood is derived from manufacturing plant
and logging residue, stumpage values do not apply. _
3. Harvesting •
Harvesting includes felling and bucking, i.e., cutting the tree and changing •
its form to facilitate transportation of the log to a loading station. I
Harvesting methods and equipment vary in different areas of the United •
States, depending on the size and species of timber to be logged, the topo- I
graphy of the region, and the type of products desired. The technology has
been improved over the past 30 years, but the United States is still con-
sidered behind both Scandinavia and Canada in implementing mechanization. •
Until recently, most of the R&D effort has been in privately sponsored, ™
but ecological concerns and projections of future wood demand have spurred
government sponsorship. For example, five U. S. Forest Service programs •
have been set up in areas with specific forestry problems (Alabama, |
Michigan, Montana, Washington, and West Virginia).
Pulpwood logging is generally simpler than sawtimber logging. In the •
pine forests, for example, smaller trees are cut into 4- or 8- foot lengths
before being moved to a landing. Some whole-tree logging is also being done,
and in some areas (e.g., West Virginia) whole trees are transported by a •
cable system. In the logging operation the tree is felled by a power chain •
saw or axe and then delimbed and put in a pile with other logs. If this
operation is handled mechanically, a feller or feller-buncher is used, de- •
pending on whether or not the felled trees are collected together. The |
feller is usually a tracked vehicle that moves only a few feet; a feller-
buncher may have tracks or wheels and moves over a larger area. _
IV-24 •
Arthur D Little, Inc. |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
O
rH
o
IO
CT>
CO
w
w
H
CJ
CO
CO
W
U
o
u
co
§
1=
P-i
ampshire
S
Z
c
Norther
3
C
n
3
Jj
V
Hemloc
u
*
i-l Tf M <>JCM
Irt C5 IO O O
t- W W CO Tf
N 1C TO CO 00
lO IT^ O O O
(M t> OT 01 O
CJ TJ< c-i w co
o o o mo
t- CO C5 i-H TT
<£> 00 t- t- t>
O O O IO O
1/3 O O (M W7t
Irt OO t- (£> io Tj« m
O r-t (M CO -Tf
oi o a> o> Oi
•OiO • • OOlO»OO ICOIOOO OOOO
• JJ*H • • *-*eoc»cO'-H oot-t-as ooiN'-'C'i
'CJN ' C^i-ii-H'-*O-i WCOr-JiHrH fH C4 Cl C4
• OO • • OlOlOlOO Oo^OkOO OOOO
• oo - • o w r- 1— o ooc-f-o oi^uoo
'cicsi ' " oJi-*»HrHc] t-HCTJOOO
'rr-^t ' ' Trinxf'TrTr if iti \n\ri -^ Tfco'eo-^'
•OO • • ICOOOO OlTii/ilrtO OOOO
•OO • • CJOi/5»/5*O tOCJMC^ll/3 tOt/3iniiO
LOOiOOlO OOOO • • «IOOO O»OiOO
lOCOLO^Ooo r-4 *— * tO Tf • • -OJC^OO t--Tptjtco
cocviwc^w cocJoJw WWN WWWN
oiooioo uoouoio • • -vomo oooo
r-4COTj«Trt-. CJO-^CM • • -Nt-O OOOOT--^
CO C^NC^JCJ P4(NCJW NCJCO COCJNCO
mioiooio oviirto • • -1000 omioio
IO QO CO -T t£j CJ QO*-l
WCOCOTf'rf ^*^fTrrf 'dfxfu'i TfTfco'iO
10 10 io o o 10 10 o »o • • ' o m 10 100100
C-JOOtr-cOr-t tDtftr-^ • • -WOOO rffMOCO
ot^t-odcd t-o6o6oo t-c-t> couSmio
f-H
OOkOiOO lOOlOO • • -OUOO OOOO
OrH(NOOt- OJOc-^O • • -WOiO i-HOlOtO
air^t-t~t^ t-oooood t-cot- t-iotDt-
1001000 oomto • • 'tomvn ooo»o
i- COQO-rflO • • 'OCO(£> OJOOTf^
lo'tc'tcio'io irJiOkftui 'tDidio i/iujio^t
OOlOtOO lOOiOlO • • »IOOO OOIOO
lOl^tDC-Tt O*O»-l(N ' • *OlOO lOtDTfO
•lOOlOO O^OiOlOlA lOOiOOO tOlOlOO
• t- t- C- 00 t-tot£)COt- «£)tr-b-OOoO t- tO t- 00
•COCOO3O COlOiniOtD COt-t-OOOl OlO^i-H^*
^-, ^ r-, ^H ^H r-l t-t .-HOJOJ
O^tNlOiOlO (O^uOlOlO lOiOtDlrtCO Nt-^OOO
ic^>ioioio 0^01/700 oinokrt^o oxoioo
COCOTfXfTf -^"TfTf^1^ TfTpTfTfTf Tj-tfTflC
lO^Oh-OOOl O «~t N CO ^* »CtOt>OOO> Or-tCMCO
lOlOlOlOlO yScotC^C^D tOtOtDtDtO t-C^C'-O
Oi O Ci Ci (Ji Cl O> O^C^QlOO) O03CTG)
5
mission
w Hamps
QZ
*> o
Jjj ^
State Ma
Uruvers
t
•M OJ
CD
cfc-
«£S
.isiana D<
Visconsm
tension S
3i> X
° 41
jjfjl
i * s
o> »
DO
S
o
s
•s
a
£
a
£ •
Ja§
c,!!
5c
lA
i current
iimoditie
"> C
T3
4«
O.d
1 Derived
wholesale
' Prellnu
Q
CO
CD
A
CM
O\
CM
a
05
•H
S
I
ro
a
3
13
o
t-i
o
V-l
O
C
O
•H
4J
tfl
4J
•H
CO
O
T3 a)
c o
CB 'H
T3 1-1
C 0)
ca to
cn
ai
Q)
o
!H
o
cn
IV-2 5
Arthur D Little, Inc.
-------
I
I
The delimbing of large trees is usually done in the forest, while smaller
or medium-size trees are delimbed at the landing area. One of the most B
difficult problems of mechanized harvesting in the Northeast is removal |
of the heavy, low-growing branches of the softwoods grown there; Scandinavian
equipment is now being tested for this purpose. •
Bucking, or cutting the logs into proper lengths, may be done in the forest
or at a landing point. Intermediate transport of the logs from the forest
to a landing area is accomplished in a number of different ways, depending •
on the terrain and type of wood to be handled. It can vary from the use of •
animal skidders in North Carolina and Virginia to skyline (cable) systems
in the Pacific Northwest. The crawler tractor is the most universally used
skidder, although large rubber tired tractors are used in swampy areas.
I
Debarked logs dry out more rapidly, resulting in lower freight costs and «
closer piling in shipment. Therefore, mechanical log barkers are sometimes •
used at pulpwood landings and concentration points. The bark is stripped
off through rapidly rotating knives in a drum. If tree-length logging
is practiced, debarking may precede cutting to proper size. •
A variety of equipment is available for loading logs onto trucks. Boom
power loaders on wheels or crawler tracks are generally used for big •
sawlogs or long logs, and tractors with fork lifts are used for smaller |
timber. Several types of chain loaders can be installed directly on
hauling trucks. _
Combines or harvesters are used in the logging industry, particularly on
moderate slopes, for clear-cutting operations: they are especially adapted
for use on plantations, where regular planting patterns improve their •
efficiency. Harvester perform from two to five operations, i.e., cutting, •
bunching, limbing, bucking, and skidding. They may or may not transport
to a primary landing. There are also processors which perform other •
functions such as barking, chipping, and loading, but these are not usually •,
part of a harvesting system. The Mobark Chiparvestor, which is used to chip
whole trees in the forest without debarking, exemplifies this type of _
equipment. •
Harvesting costs are primarily labor-related, and labor rates have
escalated rapidly in recent years. The type of equipment used, the terrain, •
and the degree of mechanization also affect harvesting costs. In most •
areas there is a shortage of labor willing to work in the woods. Mechanized
harvesting systems are used to overcome the shortage and high cost of labor. •
Table IV-11 compares mechanical and manual logging costs in North America. •
In shortwood harvesting the lower labor cost of mechanized harvesting is
partially offset by a higher machine cost; the cost for the mechanized
system is $2.32/cunit less than for a manual operation. The difference •
with tree-length harvesting is not as great; the total cost of a fully •
mechanized system is $0.84/cunit and a semi-mechanized system is $1.70/cunit
less than a manual operation. A semi-mechanized full-tree logging system •
costs about the same as one that is fully mechanized. I
I
IV-2 6
Arthur D Little, Inc. |
-------
1
1
^o
•H
cfl
1
1
CO
4J
1 i
• 0
o
1
1 , „
cd
O
0)
O 4J
JJ CO
01
M M
cd cd
g *
O en
tw 13
o
0 01
Cd 4J
^cu
4-J 12
Cj 60
C
•> -rl
P< t-l
•H &
t-t 01
4J O
O 4-1
H -iH
_ f* S d
• Ed 3 cd
• a 04-1
• • H
W ^
H
r- m
00 v£>
rH rH
IO r-
2 S
t-^ fll
|*-H W
M M fl
01 >iH
IH cn 4J jS
i-l O (-1 O
ic cd cd
5 e £ *
CM in
r^- co
CM CO
rH
W S t3
Ii-J C
PQ O CM
<3 53
H H •> M
O 4-J O
O CO ,£>
0 0 cd
• tJ U i-4
• 0
r*-
_ O cd
• H C 7
• P4 0 (3
^ -, rH
0) rO 0)
>4H MH
rH rH
Cd Cd
C C
S 1
00 rH
\Q vO
rH rH (jj
00
r4
cd
14H
or- °
in rH ^
« o a
§
§
e
JQ 5 §
<^ rH ^
^ * 1
\ \
•51
c
o
t- o .3
• • jj
•* ^ cd
u
•H
§
T) M
01
S 0)
•H jj
c 15
cd i3 ^
£< <0 .H
UN C
0) -H £
f cS
•H ,C
E 10 01
cS S g
o
• IV-27
Arthur D Little, Inc.
-------
I
I
Evaluation of any cost data dealing with multifunction machines requires
information on the machines' availability so that an accurate assessment •
of cost over a period of time can be made. In addition, availability and •
cost of more highly trained labor must be considered in assessing the
benefits of shifting to a mechanical harvesting system. •
4. Loading and Hauling
As the term implies, this step includes loading the pulpwood onto a vehicle •
and hauling it to a mill. Note that in addition to the transportation *
cost considered under (5) below, a portion of the transportation cost is
included in this item—namely, that for moving the pulpwood comparatively •
short distances by intermediate truck transportation to a railhead or •
barge site. The cost discussed in subsection (5) is for longer distances
(greater than 50 miles). •
Contingent upon the choice of the preceding harvesting step, short wood
(4- or 8-foot bolts), tree-length logs, or chips may be loaded onto a _
vehicle for transportation. The cost of loading and short-distance •
hauling is estimated at $8-10/cunit for short wood via truck transportation. ™
Specific factors that influence loading and hauling costs are size of the
truck, inter/intrastate transportation, and regional costs for fuel and B
labor. Hauling costs for up to a 50-mile radius from a mill are included. |
5. Transportation Patterns and Costs •
Roundwood or residues for pulping are transported by rail, truck, barge,
and various combinations of these methods, depending on such factors as
the geographical location of the pulp mill, hauling distance, and •
economics. Generally, short hauls of either roundwood or residues are made ™
by truck, although trucks have been used for distances up to 200 miles.
The largest proportion of pulpwood is moved by rail, sometimes in combi- •
nation with truck and barge. Most of the pulpwood and chip transportation is |
intrastate, although interstate movement is increasing in the Pacific
Northwest and in the South. •
Transportation rates have increased over 40% in the past five years and
are expected to continue their rapid rise. Rail tariffs increased 7% across
the board in February 1975; increased labor costs, OSHA requirements, and •
the need for new rail equipment have been the major causes. Recognizing the •
importance of transportation costs, the paper industry is setting up regional
traffic conferences to study the problems and work toward equitable solutions. •
The costs of truck transportation are not publicly reported, since they are
determined by contracts or private negotiations. In many situations the cost _
has not been calculated especially for deliveries by small farmers. The I
choice between trucks and rail for wood transportation is generally made
on the basis of economics, although the physical arrangement of the woodyard
sometimes favors one over the other. Forest products companies that own I
their woodlands frequently supplement public transportation with their •
own trucks.
I
IV-28
Arthur D Little, Inc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
In discussions with a number of paper companies throughout the country,
a wide range of trucking costs per cord-mile have been reported to us.
Rather than reflecting regional differences, they vary with the size
of the logging and trucking operation, whether or not trucks are owned
by a forest products company, and (in the case of privately owned
vehicles) whether the labor is union or nonunion. On the basis of infor-
mation reported to us, the average truck transportation cost is about ten
cents per cord-mile for a one-way haul; however, it can range from 8 to
15 cents, depending on the many variables previously mentioned. We have
not estimated regional variations, since other factors are more significant.
Figure IV-7 shows typical transportation costs for pulpwood by region.
Trucking costs are included in these figures, even though we have not
indicated regional variations, so that a direct comparison with rail
costs can be made. Rail rates were obtained from carriers in each region,
and are shown for both roundwood and chips, where possible. (There are
no established rates for moving chips by rail in the Northeast or for
moving roundwood by rail in the West.)
The average distance for rail shipments is 120 to 150 miles in the North-
east, North Central, and South regions, although much longer shipments are
common in the South when wood is in short supply. The average distance for
rail shipments in the West is 500 miles.
Table IV-12 shows the distribution of roundwood and chip (residual)
shipments by truck and rail for the South for the years 1973 and 1978.
In contrast, chips account for almost 80% of the wood fiber used for pulping
in the West; both rail and truck shipments are important in that section
of the country.
6. Summary of Delivered Cost for Pulpwood
Table IV-13 summarizes the cost elements and indicates representative
costs for rough roundwood delivered to a pulpmill in the four major
geographic sections of the country. For several reasons, including
the mixture of various forms of pulpwood used by a given mill to make
up its requirements, delivered cost of roundwood can vary significantly
from these derived values. Nevertheless, the tabulated costs provide a
reasonable basis for comparing the competitive positions of virgin and
recycled fiber.
The cost of pulpwood in the South and West is significantly less than in
the Northeast and North Central sections because of lower stumpage
values and harvesting costs. Furthermore, the densities of softwood
pulpwood are higher in the South and West, so the cost on a weight basis
is even lower than on a unit volume basis. Wood densities and pulp
yields for selected softwood and hardwood species are listed in Appendix
B-3.
IV-2 9
Arthur D Little Inc.
-------
200 300
Distance (miles)
a. Northeast
400
500
100
200
300
400
500
Distance (miles)
b. North Central
*190 cu ft chips equivalent to one cord roundwood.
FIGURE IV-7 TYPICAL TRANSPORTATION COSTS FOR PULPWOOD, THIRD QUARTER 1974
IV-30
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
o
u
T3
O
CJ
4 -
100
200 300
Distance (miles)
c. South
400
500
100
200
300
400
500
Distance (miles)
d. West
*190 cu ft chips equivalent to one cord roundwood
Sources: Truck rates — ADL in-house information and private communications;
Rail rates - (Northeast) Maine Central RR, Boston & Maine RR; (North
Central) Chicago & Western RR; (South) Southern Paper Manufacturers
Traffic Conference; (West) North Pacific Coast Freight Bureau and private
communication.
FIGURE IV-7 (Cont'd)
IV-31
Arthur D Little, Inc.
-------
I
TABLE IV-12
SOUTHERN PULPWOOD REQUIREMENTS BY METHOD OF DELIVERY, 1973-1978
(000 cords)
Q
Rail Truck
Roundwood
1973 16,256
1974 17,462
1975 16,482
1976 16,098
1977 16,336
1978 16,434
1973-78 178
Residual Roundwood
7,812 14,923
9,349 14,604
10,708 14,564
12,129 14,698
13,663 15,107
13,897 15,173
6,085 250
Residual TOTAL
6,472 45,463
7,604 49,019
8,242 49,996
8,667 51,592
9,321 54,427
9,320 54,824
2,848 9,361
(Percent)
Increase 1973-
1978 by Method -. q
of Delivery13
65.0 2.7
30.4 100
Includes pulpwood transported by water.
'increase by method of delivery, expressed as a percentage of total
increase.
Source: J. A. Altman, "Pulpwood Needs Forecast by Southern Pulp
Mills," Pulpwood Production & Timber Harvesting
December 1974, p. 17.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
IV-32
Arthur D Little, Inc.
-------
1
1
1
1
1
1
••
1
1
1
1
1
1
••
1
1
1
1
1
1
TABLE IV- 13
ESTIMATED DELIVERED COST OF PULPWOOD BY MAJOR GEOGRAPHIC SECTION
(2nd quarter 1974 dollars per cunit)
North
Northeast Central South West
SW HW SW HW SW HW SW
a b A b b
Stumpage 8 4 8 4 7 4 Not
HW
Applicable
Harvesting 14 14 14 14 12 12 " "
Loading and Hauling0 888877 "
Transportation d d d d d d "
Forestry Management, 222222 "
road maintenance,
and supervision
Total 32 28 32 28 28 25 38
$/Metric ton 32 21 32 21 23 18 32
•a
Applies to spruce and fir; stumpage for less desirable species would
be less.
Applies to dense hardwood; stumpage for low-density hardwoods (e.g.,
poplar and aspen) would be lower.
Hauling up to 50-mile radius of pulp mill; longer hauls would be
in addition.
Transportation beyond 50-mile radius of mill is shown separately
for each cost model in Section IX.
IV- 33
Arthur
II
II
II
28
21
DLii
-------
I
An examination of each of the principal cost elements indicates that
all are likely to rise faster than the general economic indicators or
inflation.
• Stumpage will rise because of increased competition for
timber and more intensive forest management;
• Harvesting costs will increase because of the need for
more capital-intensive mechanized equipment and environmental
regulations;
* Loading/hauling and transportation will be more expensive
because of escalating costs of fuel, OSHA regulations on
noise and safety, and environmental restrictions on air
emissions from trucks.
One measure of the degree to which U.S. pulpwood prices will rise is
present differential between Scandinavian and U.S. wood. In recent
years, Scandinavian prices for both softwood and hardwood have been about
30-40% above U.S. prices. If domestic firms have to adopt the intensified
forestry management practices of the Scandinavian companies and pay compar-
ably high energy costs, U.S. pulpwood costs will rise an average of
about 3-4% per year beyond that due to inflation and will reach current
Scandinavian levels in ten years. Obviously, regional differences in
various sectors will influence this anticipated cost increase.
F. IMPACT OF EMERGING TECHNOLOGY ON PULPWOOD COSTS*
Pulpwood costs could be reduced by the application of two technological
developments: (1) new forest management practices, which would increase
timber supplies, and (2) the better use of the fibrous raw material in
the pulping reaction, e.g., by pulping the whole tree. Each of these
subjects is further discussed below.
1. Forest Management
Data accumulated during the 1960's demonstrated that dramatic improve-
ments in timber yield are possible under proper conditions. However,
technical opportunities for increasing yields and thereby improving
returns on investment vary widely from stand to stand and from region
to region; for this reason, it would be very difficult to estimate what
overall improvement might be achieved.
*This discussion is based on Chapter III of the previously referenced
USDA publication "The Outlook for Timber in the United States."
IV-34
Arthur D Little, Inc. |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
In this section we will discuss some of the practices now at various
stages of development that contribute to improved forest management.
The opportunities for greater timber growth and harvest in various
sections of the country will be discussed. Forest management is still
a developing technology, but sufficient data are available from existing
applications to permit a rough assessment of its future economic impact.
It must be remembered, however, that private land owners need an eco-
nomic incentive before they will change their forestry practices.
The general opportunities for improving timber supplies by using
better forestry technology include the following:
Accelerated regeneration
Stand conversion
Commercial thinning
Fertilizaton
Improved insect and disease control
Improved fire protection.
Regeneration can be accelerated by stand improvement and by greater use
of genetically improved stock. The plantations in the South are
excellent examples of this practice; an estimated quarter of the planting
stock seed used in the South's timber industry in 1970 came from selected
superior trees. Research programs are now under way to produce seedings
from superior trees, and in 1970 about 15% of the seedlings produced
by state and federal nurseries were from improved seeds. It is also possible
to obtain desirable properties as well as higher yields of fiber by using
genetically selected tree stocks.
Stand Improvement - It has been demonstrated that an important method
for increasing yields in heavily stocked stands is precommercial
thinnings; i.e., removal of undesirable trees at an early stage.
Commercial Thinnings - Cutting of saleable trees to improve spacing
and stimulate growth of crop trees is still not widely practiced in
the United States. Many research studies show that this is a particularly
valuable method for concentrating growth on the more valuable trees.
Fertilization - Most of the research on the use of fertilizers to
improve and accelerate tree growth has been in the Pacific Northwest
and in the South, principally by industrial forest owners. Applications
of nitrogen, sometimes in combination with other nutrients such as
phosphorus, can result in increased timber yields.
IV-35
Arthur D Little Inc
-------
I
Insect and Disease Control - The annual mortality and growth reduction
attributable to southern pine beetles, western dwarf mistletoe, and
western bark beetles are estimates to be about 13% of the current timber
harvest. Although numerous research programs have been undertaken in
recent years to reduce this loss, only partial success has been achieved.
The information necessary to develop complete control techniques is not
available. Potential developments could include use of attractants or
repellents; feeding of deterrents, hormone sterilants, use of pesticides
and antibiotics, and improved cultural methods.
Fire Protection - The largest and most effective forestry effort in the
United States has been in fire control. There are opportunities to use new
technology for more effective fire detection (using airborne infrared
sensors, for example) and better control of forest fires.
Development of markets for logging residues provides incentives for
cleaning up cutover areas, which reduces the accumulation of flammable
brush in these regions.
Growth Stimulants - The use of chemicals to improve timber growth has
demonstrated that yields can be increased through their use. The most
widely tested material is giberellin.
Economic Aspects - Intensified forest management requires an investment
that must offer the private land owner the possibility of economic return.
As part of government efforts to encourage better forest management,
the Forest Service prepared regional estimates in 1972 of possible increases
in supplies of softwood timber from national forests, farms, and miscel-
laneous private holdings by intensification of forest management. Other
public lands and forest-industry-owned lands, which make up 9% and 14%
of the total commercial timberland respectively, were not included; however,
forest industry owners have already implemented good forestry practices,
and these are expected to continue.
In the Forest Service study, areas were classified according to physical
condition and management options. The cost of intensified timber growing
practices and anticipated increases in timber harvests were then estimated.
Not all possible technologies were considered in the study. The findings
for each region are reported below.
• Northeast
Forty-two million acres of commercial timberland, predominantly
hardwoods of the oak-hickory type (southeastern Ohio) and
maple-birch-beech type (Maine) were selected as suitable for
intensified forest management. The objective of the program
would be to grow the highest quality sawtimber the site could
produce in the shortest reasonable time. Periodic thinnings and
the planting of genetically improved stock were the forestry
practices deemed acceptable.
I
IV-3 6
Arthur D Little Inc. |
-------
I
I
• The estimated costs per acre (at 1970 prices) were:
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Average
Stand Conversion $10 - 20 $15
Improved Cutting $14 - 28 $19
Precommercial Thinning $21.50
In the pilot area under consideration, under the 1970 price
assumptions, an average increase in net worth per acre due to
intensive forest management averaged $34.14 at an average cost
of $27.32 per acre. Stand improvement cost an average of
$17.22 per acre but increased the present net worth by only
$12.56 per acre. As wood prices rose, the average net worth
per acre increased, providing more incentive for intensified
management. At least 50 years are required for harvesting
and a return on investment.
• North Central
Three predominantly hardwood forests were selected as areas
suitable for intensified forest management. Practices assumed
to be most suited included reforestation with softwoods, mostly
red and white pine, and scheduled thinning.
Estimated costs for softwoodp lant ing were $45.60 per acre..
Harvests from softwood sawtimber planting would be minimal until
the fourth decade, when the annual increase per year would reach
53 million board feet. In the eighth decade the estimated annual
harvest would be 567 million board feet, which would be twice
the 1970 softwood sawtimber output of the region. Investments
in site preparation for aspen (at 1970 prices) were estimated to
cost $5.20 per acre, and the pulpwood harvest increase was
estimated to be 130 million board feet per year in the fifth
decade. Improvements in northern hardwood stands (at 1970 prices)
were estimated to cost $13 per acre, and the increase in harvest
would be 344 million board feet annually.
• South
Opportunities for changing timber supplies in this area vary widely
due to differences in species, sites, and land ownership patterns.
The areas considered suitable for intensified management include
10.7 million acres of young stands plus 26.5 million acres that
require regeneration or planting. In the former areas, precommercial
and commercial thinnings were judged necessary to increase timber
yields. On the 26.5 million acres which would require reforestation,
IV-3 7
Arthur D Little, Inc
-------
a breakdown into good and medium sites was made to take
into account the large variations in potential yields of
pine plantations. Control of fusiform rust appears most
likely through development of more resistant planting stock.
Weevils require treatment with insecticide. The average
cost of forestry practices in the Southeast varies with the
region; for example, the average cost of establishing a pine
plantation is estimated to be about $44.75 per acre and may
be even higher , since most of the easy planting areas have already
been utilized. Other forestry practices range from controlled
burning at $2.05 per acre to cutting of overgrowth to encourage
the growth of more desirable species at $15.50 per acre.
• West
In the West, the economic potential for increasing timber
harvest by intensified forest management was analyzed for
commercial timber land ownership class on 35.1 million acres.
Westside conifer stands were judged to be best served by thinning,
fertilization, conversion of hardwood stands to Douglas fir,
and reforestation. Ponderosa and lodgepole pine stands would
benefit from thinning.
Based on 1970 prices, average per-acre costs were as follows:
Planting (Westside conifers following harvest) $35
Precommercial thinning $50
Fertilization $22
Site preparation for conversion of hardwood
stands less than 45 years old $40
In this region, the time required for harvest and return on
investment is 60 years.
2 . Pulping Technology
Innovative methods of pulp production are being developed, but it is
doubtful that any of these new processes and equipment will be in sufficient
use to have a major quantitative effect on pulp production (and hence
pulpwood prices) within the next decade. The proposed changes can be
categorized as (a) those dealing with the chemistry or mechanics of
fiber production and (b) those related to the selection and use of the
fiber raw material.
Since the use of kraft pulp will continue to dominate in the manufacture
of paper and board, the success of new processes will be based on an
ability to compete with the kraft process — i.e., to produce at least
IV-38
Arthur D Little, Inc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
equivalent yields and properties of pulp from a variety of woods and wood
residues. Several promising candidates have been developed in the laboratory
and are currently under investigation. One group is the so-called "oxygen
pulping processes."
Oxygen pulping processes are considered by many to be a leading challenger
to the kraft process. Only one company has performed limited mill trials
on a two-stage process using soda pulping followed by oxygen delignification.
In a related development, Toyo Pulp has used its High Oxygen Pulping Enclosed
Systems (HOPES) in a 2-tpd pilot plant for several years. Other processes
are still in the laboratory development stage.
Several other chemical pulping processes have been under development for
a number of years, but commercial operation is still in the future. These
include an alkaline-sulfite process proposed by Canadian International
Paper and a sulfite-sulfide process developed by Owens-Illinois. Another
is the holopulping development by the Institute of Paper Chemistry, which
is based on a mild oxidation of lignin with chlorine dioxide solution fol-
lowed by alkaline extraction. Nitric acid pulping is under consideration
by two North American mills, but this process is believed to have only
limited applications.
Chemical-solvent pulping offers little immediate potential for commercial
production.
Modifications of the conventional kraft process to obtain higher yields are
currently being offered by several companies on a licensing basis. These
include a pretreatment with H S (MacMillan Bloedel Ltd.), oxidation of
sulfide in white liquor to produce polysulfides (Union Camp Corporation).
irradiation of wood chips prior to normal kraft cook (Radiation Development
Ltd.), and a modified kraft process presumably based on polysulfides (Mead
Corporation). These processes permit better utilization of wood, but their
use within the next decade will be on a selected basis and will have no
significant effect on pulpwood prices.
Mechanical pulping is expected to grow in importance, because it minimizes
wood consumption per ton of pulp. The use of waste wood for mechanical
pulp production, especially refiner types, is increasing. In many grades
of printing papers, mechanical pulp may soon comprise all or large percent-
ages of the fiber furnish. The use of thermal or chemical pretreatment
produces modifications of mechanical pulps and increases their usefulness.
Although there will be some substitution of mechanical pulps for chemical
pulps in paper and board manufacture, no significant effect on pulpwood
prices is expected.
The quality of fibrous raw material used by pulp mills has changed over the
past five years. There is a tendency to deliver logs of variable length
and diameter to the pulp mill. Whole-tree chipping, either in the woods
or at the woodyard, and the use of tops and branches has introduced the use
of unbarked wood in the digester. This has significantly increased the
potential amount of usable pulpwood from the forest, but it has also
IV-39
Arthur D Little, Inc
-------
*Pulpwood Production, August 1973.
I
I
expanded the operating variables in the pulp mill. Nevertheless, by
October 1973 about 40 mills were reportedly making trials with whole- •
tree chips as part of their furnish for paper and paperboard.* Eight |
were making bleached paper and board grades, seven linerboard, and
twenty-four corrugating medium. Another twenty mills were evaluating •
whole-tree chips in construction paper and board manufacture. •
The advantages of higher yields from the forest by using unbarked thin-
nings, tops, and branches are at least partially offset by problems in I
the pulp mill. Chemical requirements are increased, pulp yield and quality •
are affected, and there is an increased solids load to the recovery boiler,
which reduces its capacity on a fiber basis. •
As experience is gained in the use of unbarked wood, papermakers will be
in a better position to evaluate the effect on their manufacturing costs. •
Whole-tree chips can be delivered to the digester at lower cost than •
roundwood chips, so there will be continuing pressure to increase their
use. Actual cost savings will be apparent only when additional
mill processing costs are compared with the costs using good roundwood •
chips. The use of total tree-chips will find wider use in the coarser •
grades of paper and board; extension of their use in the finer grades
will come more gradually. We believe, however, that no substantial effect •
on pulpwood prices will be felt in the next decade as a. result of whole- Jj
tree utilization in pulping.
The increased use of hardwoods is particularly apparent in the North and
South regions. Prices for hardwoods will thus continue to rise and
approach those for softwoods in these regions.
G. SUMMARY OF WOOD RESOURCE ANALYSIS
The following summarizes the salient findings and conclusions discussed
in this section.
• Pulpwood is both a by-product of and in direct competition
with timber harvested for primary timber products.
• Competition for standing timber is likely to increase as new
lumber manufacturing technology makes it economically attractive
to make lumber from pole-size timber which traditionally was
used exclusively for pulpwood. Conversely, new pulpwood harvest-
ing technology, such as whole-tree chipping in the woods, reduces
the likelihood of selectively taking a few sawlogs from a pole-
size timber stand.
IV-40
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
• Public ownership of the commercial timberlands and growing
stock is a significant feature of the U.S. wood resource. This
is particularly true in the West, where 67% of the timberland
and fully 71% of the growing stock is publicly owned.
• The total annual growth of timber exceeds the total annual
removal of all but the Western area.
• Timber growth per acre could be approximately doubled in all
sections by demonstrated intensive forestry management.
• An adequate supply of timber is available for all projected
demands throughout the next decade; better forest management
practice will be required to assure our timber supply beyond
1985.
• There is considerable variation in the origin of pulpwood and
the method by which it is delivered to a pulp mill. Together
with the distance from the mill, these are the principal
factors that influence the delivered cost.
• Pulpwood costs have been historically lower in the South and
West than in the Northeast and North Central. The cost differ-
ential in these areas is likely to continue.
• Pulpwood costs have remained comparatively stable over the past
two decades. For a variety of reasons we do not expect this
historical stability to continue through the next decade.
• We estimate that pulpwood costs will increase at a faster
rate than overall inflationary trends. Obviously, specific
regional factors will influence the rate of increase in cost,
but on an overall basis we believe that annual increases will
exceed those due to inflation by 3-4%.
IV-41
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
V. CHARACTERISTICS OF THE WASTE PAPER INDUSTRY
This section deals with the characteristics of the waste paper industry
and the historical patterns of waste paper usage. It also includes a
discussion of the terms used in the industry, the correlation between
paper stock grades and paper and paperboard products, and the structure
of the industry. The information was derived from both published and
unpublished sources and was validated where possible by direct contact with
waste paper dealers, industry associations, and key management personnel
of paper and paperboard mills that rely upon waste paper for a significant
portion of their fiber furnish.
This analysis is presented to show how the characteristics of the
industry influence the potential cost and availability of waste paper
to the pulp and paper industry. It is not intended to be a detailed
study of the organization and business dynamics of the industry; these
subjects have been examined by others.*
A. DEFINITION OF TERMS
Historically, a number of dissimilar terms have been used to report
waste paper usage by the pulp and paper industry, which has caused
confusion and misinterpretation of data. Accordingly, before entering
into a discussion of waste paper usage, a definition of certain terms
used in this report is appropriate.
1. Recovery Rate
Recovery rate (also called "salvage rate" or "collection rate") denotes
the amount of waste paper that is collected, expressed as a percentage
of the total paper consumed for the reporting region, i.e.,
_. „ ^ amount collected .. _.
Recovery Rate = — x 100
amount consumed
*See, for example, the following:
• Battelle Memorial Institute, "Study to Identify Opportunities for
Increased Solid Waste Utilization", report to National Association
of Secondary Material Industries, Inc., 1972
• A.B. Dickerman, "Economics of the Waste Paper Industry," Doctoral
Thesis, Syracuse University, 1957.
• S.G. Tuchman, "The Economics of the Waste Paper Industry,"
Doctoral Thesis, New York University, 1963.
• Midwest Research Institute, "Base Line Study of Resource Recovery
from MSW," 1972-1990, report to Environmental Protection Agency
(in preparation)
V-l
Arthur D Little, Inc.
-------
Implicit in the term is an accounting of any imports or exports of
paper or paperboard products. Accordingly, the recovery rate compares
to actual quantity collected with the theoretical supply available for
recycling. We stress "theoretically available," since the definition
of the term does not discount the available supply for nonrecoverable
quantities such as those included in disposable tissue products and
construction papers (e.g., roofing shingles) which lose their identity
as paper products.
In addition to this generalized meaning, we have also used the term
"recovery rate" more explicitly to denote the amount collected,
expressed as a percentage of:
• the original product(s), or
• the quantity economically available from recovery. (See
definition of collectable tonnage.)
Naturally, we indicate how the term is used in each instance.
2. Consumption Rate
Consumption rate (also called "furnish rate" and "recycling rate")
denotes the amount of waste paper consumed, as a percentage of the total
papermaking fiber used, in the manufacture of paper and paperboard
within a studied region, i.e.,
_ _ . amount of waste paper consumed .. nn
Consumption Rate - —- -\, r 3 x 100
amount of fiber used
The difference between recovery rate and consumption rate is particularly
important in regions (such as California) that export substantial
quantities of waste paper. As discussed more fully later, the
comparatively low "consumption rate" of certain waste paper grades
presents a misleading indication of possible, greater utilization of
secondary fiber in that area; it is only when the export tonnage is
added to the quantity reused in that region that the true extent of S/F
utilization is seen. Accordingly, consideration is given to the
quantity and point of debarkation of export tonnage in the assessment
of opportunities for the increased use of waste paper.
3. Collectable Tonnage
As used in this report, the collectable tonnage is the quantity of waste
paper economically available for recovery. The concept involves a
judgmental assessment of what is "economically available." The factors
that influence collectable tonnage are dependent upon the uses of the
paper and paperboard products from which the individual waste paper grades
are derived; hence, these factors are discussed separately in our analyses
of the individual grades. (See Section VI.)
V-2
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Note that collectable tonnage is defined as the amount economically
available for recovery but not necessarily economically available for
reuse in traditional paper and paperboard manufacturing operations. For
example, Alaska may have a considerable quantity of waste paper that is
economically available for recovery (collectable tonnage), but the
quantity is not sufficiently large to support a recycling papermaking
operation in that area. Also, transportation costs to deliver the waste
paper to a recycling operation would no doubt be prohibitively expensive.
Hence, while that quantity of paper will support a collection and baling
operation, it is not economically available for a recycling operation.
Other factors that influence the economical reuse of collectable tonnage
are discussed in Section X-B.
B. HISTORICAL USAGE PATTERN
1. Domestic Consumption
On the basis of preliminary data published for 1973, the consumption
rate (as defined above) for the United States as a whole was about 22%.
This represented a modest but continuing increase that started in 1968.
Prior to 1968, the consumption rate had been declining steadily since
1951. Figures V-l and V-2 and Table V-l summarize the sources of
fibrous raw materials used from 1960 to 1973. The consumption figures
have been reported both as a percentage of total fiber and actual tonnage
to give proper perspective to the fact that with the exception of some
minor variations, the quantity of waste paper used by the industry has
been increasing steadily, although its percentage of total fiber
requirement has been relatively constant.
2. Exports
Historically, waste paper exports have been a small fraction of the
total recovered, accounting for less than 5% of the total tonnage.
However, 1973 exports increased significantly, rising from 415,000 tons
in 1972 to 683,000 tons in 1973. Tables V-2 and V-3 indicate the
recovery of waste paper by major category and the calculated U.S. recov-
ery rates from 1968 to 1973.
Census Bureau data on exports combine all grades and are not broken down
by major waste paper categories. From information obtained in field
interviews, we estimated the composition of these exports in 1973 and
apportioned the tonnages to major geographic regions on the basis of
published data on export volume (Figure V-3). The results are shown in
Table V-4.
Note in Table V-4 that about 50% of the total exports are from the West
Coast. Hence, the "consumption rate" is quite dissimilar to the
"recovery rate" in that region. The implication of this characteristic
will be discussed in Section VI, which concerns the availability of
waste paper.
V-3
Arthur D Little, Inc
-------
o
c
o
35
30
25
20
15
10
I
Roundwood
Wood Residue
Waste Paper
Other Fibers
1960 1965 1970 1975
Source: American Pulpwood Association, 1973
c
0}
o
70
60
50
40
30
20
10
0
Roundwood
Wood Residue
Waste Paper
Other Fibers
T
1960 1965 1970 1975
Source: American Pulpwood Association, 1973
FIGURE V-1 CONSUMPTION OF FIBROUS FIGURE V-2 PERCENTAGE OF TOTAL
MATERIALS IN PAPER AND FIBROUS MATERIALS
PAPERBOARD MANUFACTURING CONSUMED
V-4
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CO
to
M fc-5
OJ ^
to
S
en
3
O
H /—*
43 CO
•H £3
fri O
4-1
rH
to O
0 0
H »-'
^
CO ^
w ^
Pd CU
p 4^
H -H ^
O pti CD
< G1
Pm Vi O
p CU 4->
iz 4=
K, °
W H ^"
pa p
< w
H c/}
p
c/2 6^5
i-J CU ^
<: 3
M T3
Pi "rl ^~s
W CO CO
H CU C
CO
*r)
O x-«.
O CO
IS C
T3 O
Cj 4-)
3
o o
P=! O
o
^_l
CO
CU
(x
0
o
o
0
1
CO
o
r-
m
co
t-H
CM
1— 1
f —
ON
O
co
m
CM
CM
co
o
ON
^3-
CM
CM
i-H
ON
VD
CO
^.
in
f-
ON
m
rH
CO
CO
#.
rH
CM
O
vo
ON
1— 1
O 0
0 0
0 0
O 0
1— I 1
m VD
ON CO
in VD
v£> 00
co co
-d- ON
CM CM
«xf CO
ON vD
00 Ov
-d- ON
vO -d° in
r*- m
co -d-
r, f,
r- O
CM CO
OO ON
vO vD
ON ON
i-H t-H
0
0
O
O
[
r^.
(-^
ON
in
m
ON
co
t-H
co
00
r-.
13
00
O
,_!
CM
T3
O
O
oo
i-H
i-H
i-H
f-
i-H
CM
O
m
rH
CN1
rH
CM
00
in
m
^3-
•*j-
CM
*.
i— 1
CO
o
f —
SN
i— 1
O O
0 0
O 0
O O
rH ]
O O
CO vD
i-H rH
I-» i— 1
in VD
CO vD
in 01
co a,
3 CO
H
4-1 O
S-i CU
CO 4J
01 3
>, 4-1
•iH
4J 4J
cn cn
, •] ^
n cj
• f>
rH
r^
ON
"-H
" C
^ o
CU.H
E «
T3 Ci).H
CU > o
4-1 O o
H 2: co
O CO
a •<
^f n)
?s w
CU 4-IT3
3 o
CO 4J o
G -H ft
O 4-1 o,
4J CO i—j
C !3
*••* t i ^
O
O ^-t C
cu 5
O CX f)
0 CO.H
CU
O *H o,
Q cfl
cn p"
c a
O i-H C
J-> 3 cfl
PH CJ
0 .H
0 : n
O •> CU
C s
Or~i 3
U *£
0 -H ^
CM 4-J
•H;
CO 13 «
0) W-d-
'^J p^
^ 4J ( |
cj m
t*f *?*
?s n *
CU (_,
1 OJ
cO cn nj
4J a PH
CO -H
t3 4-i UH
co o
0) -H
4-1 4-1 u)
3 CO cj
4-1 4-1 -H
•H C/5 4-1
4-1 CO
CO CX>H
C rH U
rH 3 CO
^ CO
CU 13
P- O m
tO >. O J3
CO " -
G C
CO -H
o E ••
•H -H CU
rl rH 0
CU 01 ^
•*3^ P-l O
T3 CU C/0
V-5
-------
TABLE V-2
RECOVERY OF WASTE PAPER IN THE UNITED STATES, 1968-1973
(thousands of short tons)
1968 1969 1970 1971 1972 1973
Domestic
Consumption
Old Corrugated 3,254 3,558 3,511 3,796 4,244 5,138
Containers
News 1,995 2,198 2,073 2,040 2,118 2,384
Pulp Subst. 1,343 1,419 1,377 1,425 1,485
3,106
Deinking 500 552 493 502 464
Mixed 3,130 3,212 3,140 3,237 3,392 3,272
Total 10,222 10,939 10,594 11,000 11,703 13,900
Domestic
Exports 253 289 408 419 415 683
TOTAL 10,475 11,228 11,002 11,419 12,118 14,583
Source: Bureau of Census, U.S. Department of Commerce, Current
Industrial Report Series M26A, "Pulp, Paper and Board"
for 1968 to date; American Paper Institute, "Statistics
of Paper and Paperboard," 1974 and American Paper Insti-
tute "Capacity Survey 1973 to 1976" for 1973 data.
V-6
Arthnrni.itt.le.Ir
1
1
1
1
•
1
1
1
1
1
1
1
1
1
1
1
, I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CO
I
w
rJ
PQ
£
ro
t--.
o\
rH
I
00
v£>
ON
«
W
PM
W
H
CO
PM
O
W
H|
to
a
o
Pi 4-1
w
§
O 0
w ,c
pi tfl
..i-S
°(g
to
o
. ,c
CO 4J
§
u
o
CO
M
PS
o
o
C8
O
PH
tJ
c
cd
o>
ex
co
01
P.
id
PM
01
4J
CO
O
n
01
u
QJ
>,^~
M 6-S
fll **—>
\U ••— '
O 01
O 4J
01 CC
Pi P3
ti
o
•H
4-1 /—
PM 6*5
B ^^
3
to oi
a 4-1
O cfl
U cut
c
o
••J
"M
4J
Q*
§
CO
C
O
u
c
o
•H
4-1
a
p
T3
O
J-i
Pw
rH
Cfl
4-1
o
H
4-1
J-l
O
e
f3
o
•H
4-1
CO
B oi
o to
Q P
r-l
CO
01
^
/*~\
m
v ^-s
oo
' *lk •
*l* "
oo
rH
S^*
CO
*^s
s~*
O
P. •*
oi cd •
PS 4-1 cd
cd 4-1
4-1 T3 Cfl
C T3
01 CM
3 rH ON
O .H
O
* 4J (-1
01 O
O 00 M-l
l-l vD
01 ON •>
S rH 01
R 4J
O t-i 3
CJ O 4-1
M-l
o
4-1
tn
I
C co
01 M
B oi oi
4J rH PL,
r-l fl 0}
cd cd PM
P. H
01 ^ C
Q cd
= 0
• T3 -rl .
CO J-4 (-1 O
• cd 0) c
&S3H
«t *1
CO T3 S O)
3C «rH
CO Cd
0) )M ON -H
U 01 rH i_l
ex
Cfl *i •
u°
a v-i
cd 3
O PM
3 . .
Ol rH PL,
H 3 4J
3 PM 4-1 ^
PQ = O
-------
TABLE V-4
ALLOCATION OF WASTE PAPER EXPORTED FROM THE UNITED STATES IN 1973
(thousands of short tons)
Old
Point of Corr. Pulp Subst.
Debarkation Cont. News & Deinking Total
Northeast 100 100 23 223
North Central 50 50 Negl. 100
South 10 10 Negl. 20
West Coast 90 90 160 340
Total 250 250 183 683
Source: Arthur D. Little, Inc., estimates based upon Census
Bureau data and interviews with waste paper exporters.
C. DEFINITION OF PAPER STOCK CATEGORIES
1. PSI Listing
The Paper Stock Institute of America (PSI), a division of the National
Association of Recycling Industries, Inc. (NARI), lists 46 regular
grades and 26 "specialty" grades of waste paper stock. The regular
grades comprise the major part of the waste paper market; the others
are characterized by the presence of unusual contaminants, such as
wet strength, polycoatings, plastic foil, carbon paper and hot-melt glue.
While the specialty grades are produced and traded in carload and truck-
load quantities, the tonnages are relatively small and are not generally
included with the reported statistics.
2. Consolidation of PSI List
One of the most comprehensive studies of waste paper usage was performed
in 1970 by Professor W. S. McClenehan of the Institute of Paper Chemistry,*
who compiled consumption data for each of the 46 major categories of
paper stock and 4 special grades. The data represented actual 1969 con-
sumption; figures for 1970 were projected on the basis of mid-year estimates.
Respondents to the survey accounted for 90.8% of the total 11,969,000 tons
used by the industry in 1969 and thus provided a sound data base.
*W.S. McClenehan, Consumption of Paper Stock by U.S. Mills in 1969 and
1970, Div. of Information Services, The Institute of Paper Chemistry,
Appleton, Wisconsin, 1971.
V-8
Arthur D Little Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
FMAMJJAS ONDJFM AMJ JASOND
1972
1973
Source: U.S. Census Bureau and Paper Stock Conservation Committee,
American Paper Institute, February 1974
FIGURE V-3 MONTHLY U.S. WASTE PAPER EXPORTS, 1972-1973
V-9
Arthur D Little, Inc.
-------
I
Unlike the detailed list used by PSI to define the various grades, the
Bureau of Census used only five major categories in reporting consump-
tion. Hence, although more detailed consumption data are available,
usage patterns are most conveniently discussed in accordance with the
five classes recognized by the Bureau of Census.
As no official relationship exists between the Census and PSI break-
downs, we have combined them in Table V-5 in a manner suggested by
McClenehan. We have also postulated an apportionment of the grades
between pre-consumer and post-consumer sources.* The data are for 1970
only, but the grouping of grades by major categories is applicable to
more recent data.
With minor exceptions, all the individual paper stock grades that make
up the OCC, news, pulp substitute, and deinking categories are derived
from specific paper/paperboard grades identified by API. In the mixed
paper category, however, the origin of the constituent materials is lost
in the all-inclusive terms of "mixed," "cuttings," and "mill wrappers."
To be consistent and to complete our analysis of the recyclability of
the individual paper grades, we had to postulate the composition of this
category.
Discussions with a number of waste paper dealers indicated that "mixed
paper" is generally office waste with the following approximate compo-
sition:
Typical
Percentage
OCC 0-15 5
News 10-25 15
High-Grade Printing and Writing 90-60 80
* Pre-consumer waste is waste paper that is generated before the intended
end use of the paper or paperboard packaging material—e.g., printing
or converting plant waste. (The terms "pre-consumer waste" and "converte
waste" have been used synonymously in this analysis.)
Post-consumer waste is that generated after the intended end use. It
includes commercial and industrial waste as well as household waste.
Some grades, such as over-issue news, can be either pre- or post-
consumer waste: newspapers that never leave the printing plant are nor-
mally considered pre-consumer, while those that are returned unsold
from the dealers are considered post-consumer.
V-10
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE V-5
PAPER STOCK CONSUMPTION, 1970
(thousand tons)
OLD CORRUGATED CONTAINERS (OCC)
Solid fiber containers
Corrugated containers
New corrugated cuttings
New double kraft lined corr. cuttings
New brown kraft corrugated cuttings
TOTAL OCC
NEWS
No. 1 news
Super news
Over-issue news
No. 1 groundwood shavings
Post-
Converter Consumer
3. 3.
Waste Waste
34
2,645
357
1,096
99
1,552 2,679
1,338
551
151
87
Total
TOTAL NEWS
PULP SUBSTITUTE (P/S)
No. 1 used brown kraft bags
Mixed kraft bags
No. 1 brown kraft paper
Super sorted brown kraft
New colored kraft
New brown kraft cuttings
New brown kraft bag waste
New brown kraft envelope cuttings
Mixed shavings
White newsblanks
Super white newsblanks
Publication blanks
No. 1 flyleaf shavings
No. 1 soft white shavings
Super soft white shavings
Hard white shavings
Hard white envelope cuttings
Super hard white envelope cuttings
New colored envelope cuttings
Semi-bleached envelope cuttings
Super semi-bleached cuttings
Manila tabulating cards
Unprinted bleached sulphate
Converting plant trim and miscellaneous'
Kraft side rolls and boxes
Q
News side rolls
TOTAL P/S
V-ll
238
358C
58
9
1,653
4,231
87 2,040
19
12
29
11
14
51
47
36
201
116
15
66
96
81
16
57
103
15
32
16
28
2,127
199
270
(Continued)
1,923
Arthur D Little, Inc.
-------
TABLE V-5 (continued)
PAPER STOCK CONSUMPTION, 1970
(thousand tons)
Post-
Converter Consumer
3. 3.
Waste Waste
Total
DE-INKING (PI)
No. 1 sorted colored ledger
Super colored ledger
No. 1 sorted white.ledger
Super white ledger ,
Colored tabulating cards
No. 1 graded magazines
No. 1 book stock
Printed bleached sulphate cuttings
Misprint bleached sulphate
Polyethylene or wax coated stock
112
53
201
78
137
212
40
63
34
64
TOTAL DI
366
628
994
MIXED
No. 2 mixed paper
No. 1 mixed paper
Super mixed paper
Boxboard cuttings
Mill wrappers
TOTAL MIXED
TOTAL ALL CATEGORIES
733
733
4,391
424"
1,142
246
6
1,818
7,435
2,551
11,826
Partially estimated by respondents and author
Includes an unknown amount of post-consumer waste
CGrades not defined by Paper Stock Institute
Can be used as P/S
Q
Includes an unknown amount of converter waste
Source: Grouping of grades into five major categories by W.S.
McClenehan; distribution between converter and post-
consumer origin is ADL estimate.
V-12
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
For purposes of our overall material balance, we used about the mid-
point of the range reported.
P. SOURCES OF MAJOR WASTE PAPER CATEGORIES
An analysis of the data indicates that OCC is by far the single largest
component of waste paper used by the industry and that about 63% of the
waste paper originates from post-consumer waste (Figure V-4). We must
look to post-consumer sources for any substantial increase in the supply
of waste paper, as the potential for increasing the availability of
converter waste is limited.
A further analysis of the information developed by McClenehan reveals
that the East North Central is by far the single largest user of waste
paper, both in tonnage (Table V-6) and as a percentage of the region's
total papermaking capacity (Figure V-5). Note the unusually high con-
sumption of pulp-substitute and deinking grades in this region; this
reflects the large number of nonintegrated manufacturers of tissue and
printing and writing papers there.
Further information on usage patterns and opportunities for increasing
the supply of waste paper by region is given in Section VI.
The specific origin of waste paper strongly influences the possibility
of its increased availability, the cost of collection, and the channels
of recovery. The following are nine principal sources of this material:*
Residences or households
Institutions
Office buildings
Retail establishments
Wholesale establishments
The transportation industry
Printing and converting industries
Service industries
Other industrial and commercial sectors
* Battelle Memorial Institute, op. cit., Vol. Ill
V-13
Arthur D Little, Inc.
-------
c
o
c
o
MM Tons %
I/I Converter Waste 4.0 34.6
| | Post-Consumer Waste 7.8 65.4
////
'36.7%'
^(1.5) /
V/7
63.3%
(2.7)
Total
11.8 100.0
4.1%
(0.1)
95.9%
(2.0)
y 86% /
/(1.7)/
ll
*
/36.8%/
/ (0.4). '
63.2%
(0.6)
^ 28.7% /
^ /n 7\ /
. \\i.i] r
' / / / y
71.3%
(1.8)
occ
News
P/S
Dl
Mixed
FIGURE V-4 ESTIMATED SUPPLY OF CONVERTER AND
POST-CONSUMER WASTE PAPER (1970)
V-14
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE V-6
ESTIMATED U.S. CONSUMPTION OF WASTE PAPER BY GRADE AND REGION, 1970
(thousands of short tons)
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain & Pacific
California
Other states
TOTAL U.S.
Total
1,093
2,805
4,053
352
1,188
503
551
1,138
338
12,021
Mixed
Papers
172
606
837
105
255
122
195
268
79
2,639
News
144
617
739
64
169
71
88
293
50
2,235
OCC
301
816
1,311
136
557
226
188
387
158
4,080
Pulp Sub st. &
High-grade
Deinking
476
766
1,166
47
207
84
80
190
51
3,067
Source: McClenehan, op. cit.
V-15
Arthur D Little, Inc
-------
New England
Middle Atlantic
East North Central
West North Central
South Atlantic
East South Central
West South Central
Mountain & Pacific
Waste Paper Consumption
Papermaking Capacity
(as of year end)
i i i I I I I I
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
Millions of Short Tons
Source: Capacity Survey, American Paper Institute
FIGURE V-5 WASTE PAPER CONSUMPTION AND PAPERMAKING CAPACITY (1971)
V-16
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
The relationship between these sources and the five categories of waste
paper used by the Bureau of Census is as follows:
(1) Old corrugated containers (OCC) are primarily generated
(i.e., discarded) by retail and wholesale establishments
and by other industrial and commercial sectors; relatively
small quantities come from the residential or household
sectori
(2) Old newspaper ("news")* is generated by all nine sectors, but
households are by far the primary source. A recent study
by the Forest Products Laboratories indicated that news-
paper comprised about 40% of the paper in household trash
(Table V-7) and that the 78 pounds discarded per person
per year corresponded to about 80% of the total amount of
newspaper printed.
Obviously, the quantity of newsprint in household trash is
influenced by the effectiveness of old news collection
systems within a given area. At the time of the survey,
news was not collected separately from other household trash;
accordingly, the study provides valuable insight as to the
point of origin of this important paper stock grade.
(3) Pulp substitutes (P/S) are generated principally by the
printing and converting sector. The homogeneous form and high
quality of paper stock grades in this category enable them to
command a premium price.
(4) Deinking (PI) is generated in all sectors, but principally
by offices, institutions, and other industrial and commercial
sectors.
(5) Mixed papers are generated in all sectors, but traditionally
have been collected primarily from offices, institutions,
and other commercial and industrial sectors.
In summary, with the exception of newsprint, commercial and industrial
sources constitute the most promising area for the recovery of high-
quality waste paper. A large quantity of all paper and paperboard
products consumed are discarded by commercial/industrial sources, and
their discards tend to be more homogeneous and of higher value than
household discards.
* Although the names of these categories imply post-consumer waste,
they also contain some converter waste, as shown in Table V-5. OCC,
for example, contains roughly 35% new corrugated cuttings.
**G.C. Myers, Paper Trade Journal, Vol. 155, No. 35 (1971) 32.
V-17
Arthur D Little, Inc.
-------
TABLE V-7
ANNUAL PER CAPITA CONSUMPTION AND DISCARDS OF PAPER
Product
Newsprint
Groundwood paper
Book paper
Fine paper
Household
Consumption (Ib) Discards (Ib)
87 78°
10 2
48 24
23 8
1
1
1
1
•
*
1
Coarse-industrial paper 58 25
Sanitary and tissue
Construction
Container board
Bending board
Building board
Other board
Total
31 15
15
183 11
64 32
26
30
575 195d
3Average U.S. per capita in 1969
Based on discards
At time of survey,
Equivalent to 34%
Source: G.C. Myers
from Madison, Wisconsin households in April 1970
the recycle ratio for newsprint in Madison was about 7%
of the total paper consumption
, op. cit.
V-18
ArthnrDI ittlf Inc.
I
1
1
I
I
1
1
1
1
1
1
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
E. SUPPLIERS
As illustrated in Figure V-6, waste paper flows through a variety of
channels to reach its ultimate point of use at the consuming mill.
While these routes are not clearly defined, certain patterns are charac-
teristic of the point of origin particular to each of the major grades.
Some of the individuals and organizations that handle this material on
its way to the mill are described below.
Waste paper dealers^ buy paper stock from scavengers, solid-waste col-
lectors, converters, and other public or commercial sources. They
usually have sorting and baling facilities and sell directly to a con-
suming mill or to a broker. A dealer may process all five major cate-
gories of waste paper, but normally each facility is organized to handle
either the bulk grades (OCC, news, and mixed) or the high-added-value
grades (P/S and DI).
At one time, most waste paper dealers were independent, family-owned
businesses; more recently, however, many have been acquired by major
solid-waste management organizations or have become affiliated with
a consuming mill.
The scavenger collects and/or buys paper and various other secondary
materials and sells them to a dealer, broker, or in some instances,
directly to a consuming mill. Most scavengers deal primarily with the
bulk grades—OCC, news, and mixed papers—and have baling equipment to
facilitate its transport to the next point in the supply channel.
Brokers buy paper stock from scavengers, solid-waste collectors,
converters, and other public or commercial sources. Typically, they
do not have sorting or baling facilities; rather, they act as general
contractors who take on the responsibility of identifying and organ-
izing a number of small suppliers to meet the needs of a consuming mill.
Alternatively, a broker may provide this service and sell (or exchange)
his paper stock to another broker or to a dealer. These processors
handle all grades but rarely deal in mixed paper.
Solid-waste collectors or solid-waste managers are public or private
organizations that collect municipal solid waste, reclaim the paper
stock, and sell it directly to consuming mills, waste paper dealers,
or brokers. Browning-Ferris Industries (BFI) and SCA are two of the
largest firms of this kind. BFI, through an affiliate, Consolidated
Fibres, is integrated to a major waste paper dealer and to numerous
scavengers throughout the country. The other large waste-management
firms are similarly structured to collect municipal (or industrial)
solid waste and to sell the reclaimed paper stock directly to consuming
mills. These processors deal primarily with the bulk grades.
V-19
Arthur D Little, Inc
-------
Converter Wastes
Post-Consumer Wastes
Solid-Waste
Collector
Dealer
Broker
Consuming Mill
FIGURE V-6 FLOW OF WASTE PAPER FROM POINT OF ORIGIN
TO CONSUMING MILL
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
V-20
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Waste paper is also collected by charitable groups (social and religious
organizations). Their activities are generally limited to collecting
old news from the residential sector and selling it, unbaled, to a con-
suming mill, scavenger, or waste paper dealer. In the past, these groups
were a major factor in the supply of waste news, but their importance
is declining as more municipalities are organizing their trash collection
system so that waste news is picked up separately or along with the house-
hold trash.
F. STRUCTURE OF THE INDUSTRY
In 1970, there were about 1300 waste paper dealers in the United States.
Table V-8 shows their regional distribution and estimates of the annual
tonnage handled by the average dealer in each region. The largest
dealer establishments are in California and in the East North Central
and East South Central regions because of the large quantity of waste
paper historically used in these regions.
By any comparative standard this industry is extremely fragmented with
many small, family-operated firms. On the other hand, there is a fair
degree of concentration at the top: from information reported in the
U.S. Census of Wholesale Trade, we estimate that the 100 largest
establishments account for about half of the industry's sales, averaging
roughly $3 million in sales per establishment. Using typical selling
prices for paper stock prevailing in 1974 and the reported capacities of
the firms, we derived annual sales of an average dealer at about $400,000
to $500,000.
Table V-9 lists the 17 largest paper stock companies and indicates
captive affiliations with paper companies. We believe that each of the
firms in this group has sales of over $5 million per year. Table V-10
lists the second-tier paper stock dealers and their paper company
affiliations; we estimate that most of the firms in this group have annual
sales of $2-5 million.
There has been a gradual trend over the past ten years for large waste
paper consumers to acquire dealers who essentially act as collectors
and purchasing agents for the mills. With the expected stimulation of
recycling activity, we expect this trend to accelerate. We also expect
a greater incidence of direct supply relationships between big con-
verters and large generators of waste paper and the paper mills. The
underlying cause of these trends will be the paper mills' desire to
assure their supply of raw material and thus reduce their risks.
On the other hand, increasing use of captive dealers and direct supply
relationships with converters by the paper mills does not preclude pur-
chases from other dealers, who may be in a better position to provide
certain grades of waste paper to fill out their supply.
V-21
Arthur D Little, Inc.
-------
Within the last few years, the structure of the waste paper industry has
changed significantly. As demand has risen, more of the large genera-
tors are bypassing the dealers and negotiating directly with consuming
mills. Collection systems operated by towns and cities, which are be-
coming an integral part of the supply channel, are doing the same thing.
To assure themselves of a continuing supply, an increasing number of
mills have also become affiliated with waste paper dealers or have estab-
lished their own dealers.
A third major change is the acquisition of small, independent dealers
by major solid-waste management firms. Browning-Ferris Industries
alone, through its subsidiary, Consolidated Fibres, has expanded and
consolidated its position in the past 2 1/2 years by growing from 11
facilities in 5 states to 41 in 20 states, the District of Columbia,
and two Canadian provinces.* The firm is shipping papermaking fiber
at an annual rate above two million tons.
The acquisition of waste paper dealers by BFI and others has been prompted
by their need to secure market outlets. Since a large fraction by weight
of the solid waste collected is paper, forward integration by these firms
into waste paper sales is a logical step and could lead to greater sta-
bility in the cost and availability of secondary fiber.
* Official Board Markets, Vol. 50, No. 52 (Dec. 28, 1974), 9.
V-22
Arthur D Little, Inc.
-------
1
1
1
TABLE V-8
NUMBER OF DEALERS AND AVERAGE SIZE BY REGION-1970
1
1
1
1
1
1
1
1
1
1
1
Number of
Region Dealers
New England 154
Middle Atlantic 524
East North Central 256
West North Central 77
South Atlantic 121
East South Central 37
West South Central 57
Mountain and Pacific
California 69
Other States 42
TOTAL 1,338
Calculated by dividing regional demand
multiplying by two thirds. According
a
Regional Average per
Demand Dealer
(OOP tons/yr) (OOP tons/yr)
1,093 4.7
2,805 3.6
4,053 10.6
352 3.1
1,188 6.6
503 9.1
551 6.4
1,138 11.0
338 5.4
12,021 6.0
by number of dealers and
to McClenehan (op . cit . ) ,
only about two thirds of all waste paper goes through dealers.
1
Sources: Col. 2 - Paper Stock Dealers
Directory, Fiber Market News, 1970
Col. 3 - American Paper Institute
1
1
1
Col. 4 - Calculated by Arthur
V-23
D. Little, Inc.
Arthur D Lit
-------
Company
D. Benedetto Inc.
TABLE V-9
LARGEST PAPER STOCK DEALERS
Key Locations
New York, Buffalo,
Consolidated Paper Grading
Company
Consolidated Fibres, Inc.
Derrico Company, Inc.
Federal Paper Stock Co.
Fibre Core, Inc.
Friedman & Sons, Inc.
Great Eastern Packing &
Paper Stock Corp.
Independent Paper Stock Co.
Paper Reclamation Div.
Pioneer Paper Stock Div.
I.V. Sutphin Co.
Toga Paper Stock Co,
Affiliations and Comments
Canadian operations half
Elkhart (Ind.), Toronto owned by Continental Can
Chicago
International Cellulose
Letellier-Phillips Paper Co. New Orleans
National Fiber Supply Co. Chicago
Packaging Corp. of America
New York, Calif.,
Oregon, Arizona
New York
St. Louis
New York
Denver and other cities
New York, New Jersey,
Boston
California, Oregon
Chicago
Merged with Browning-
Ferris Industries
Affiliated with Whippany
Paperboard Company
Cleveland,
Kansas City (Mo.)
St. Louis,
Kansas City (Mo.)
Chicago
Has 50% interest in Garden
State Fiber Co., Pomona, Cal.
Wholly owned by Fibreboard
Paper Products Corp.
Specializes in large printing
plant waste
No sorting plant
Totally captive
Wholly owned by Alton Box
Board
Wholly owned by Container Corp,
Cincinnati, Atlanta,
Augusta (Ga.), Charlotte (N.C.),
Columbia (Miss.), Jacksonville,
Nashville
New Jersey
Wholly owned by Federal Paper
Board - one small plant
Sources: Paper Stock Institute of America and
Consolidated Fibers, Inc.
V-24
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE V-10
SECOND-TIER PAPER STOCK DEALERS
Company
Acme Paper Stock Co.
American Paper Stock Co.
Arco Trading Corp.
Atlantic Paper Stock Co.
N. Bantivoglio's Sons Inc.
Batliner Paper Stock Co.
Bel-Art Paper Stock Co.
Bruno & D'Elia Inc.
Byerly & Infante Inc.
Capital Reclamation Corp.
Castle & Overton
Commercial Waste Paper Co.
The Dayton Paper Stock Co.
Durbin Paper Stock Co.
G. H. Einhauser Co.
Empire Waste & Metal Corp.
Fibers, Inc.
Florida Rag Co.
Gaccione Co.
Garden State Fiber Co.
Key Location
Louisville, Ky.
Indianapolis, Ind.
Pittsburgh, Pa.
Baltimore, Md.
Norfolk, Va.
Camden, N.J.
Kansas City, Kans.
Los Angeles, Calif.
New York, New Jersey
Philadelphia, Pa.
Washington, D.C
New York, N.Y.
Milwaukee, Wis.
Dayton, Ohio
Miami, Fla.
Pittsburgh, Pa.
Utica, N.Y.
Chicago, 111.
Miami, Fla.
Lyndhurst, N.J.
Pomona, Calif.
Affiliation and Comments
Owned by Scott Paper
No plant
Supply Garden State
Paper Co.
No plant
Owned by Perkins-Goodwin;
no plant
Owned by Diamond National;
Plant closed
No plant
Owned by Garden State Paper
Co.; no plant
(Continued)
V-25
Arthur D Little Inc
-------
TABLE V-10 (Continued)
SECOND-TIER PAPER STOCK DEALERS
Company
General Mill Supply Co.
Glove Co., Inc.
Goldman Paper Stock Co.
Wm. Goodman & Sons, Inc.
Gordon Waste Co.
Great Lakes Paper Stock Corp.
Grossman & Sons, Inc.
Hancock Paper Co.
I. Hershman
Hicks-Costarino Co., Inc.
Hoerner Waldorf
Kline Paper Stock Co.
Perry H. Koplik & Sons, Inc.
Lehigh Waste Materials Co.
Lissner Corp.
Marcus Paper Company
Marks Paper Stock Co.
Monroe Scrap Material Co.
Mustang Waste Paper Co.
North American Paper Co.
North Shore Waste Paper Co. .
Louis Padnos Iron & Metal Co.
Paper Products Inc.
Paper Stock Dealers, Inc.
Key Location
Detroit, Mich.
New York, New Jersey
Richmond, Va.
Portland, Me.
Columbia, Pa.
Buffalo, N.Y.
Columbus, Ohio
Philadelphia, Pa.
New Haven, Conn.
Maspeth, LI, N.Y.
Minneapolis, Minn.
Washington, D.C.
New York,N.Y.
Philadelphia, Pa.
Chicago, 111.
Westhaven, Conn.
Canton, Ohio
Monroe, Mich.
Houston, Texas
Columbus, Ohio
Salem,,Mass.
Holland, Mich.
Trenton, N.J.
Carolinas
V-26
Affiliation and Comments
Specializes in high grades
Also handles metals
Subsidiary of D. Benedetto
Captive dealer
No plant, primarily pulp
Also handles metals
Metal and paper
Captive dealer, owned by
Sonoco
(Continued)
Arthur D Little, Inc.
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE V-10 (Continued)
SECOND-TIER PAPER STOCK DEALERS
Company
Herman Petricoff & Co.
Ponte Brothers, Inc.
Riverside Industries, Inc.
Royal Paper Stock Co.
Ed Sacks Co.
Sangamon Paper Grading Co.
P. Shaffer Co.
Sims Paper Stock Co.
J. Solotken & Co.
Southern Waste Paper Co.
Tennessee Paper Co.
Union Salvage Co.
United Paper Stock Co.
United Waste Material Co.
Universal By-Products,Inc.
Waste Papers Inc.
Key Location
Cincinnati, Ohio
New Jersey
Bettendorf, Iowa
Columbus, Ohio
Houston, Texas
Chicago, 111.
Chelsea, Mass.
Birmingham, Ala.
Indianapolis, Ind.
Spartanburg, S.C.
Greensboro, N.C.
Atlanta, Ga.
Knoxville, Tenn.
Plainfield, N.J.
Providence, R.I.
Los Angeles, Calif.
Los Angeles, Calif.
Garfield, N. J.
Affiliation and comments
Winter Paper Stock Co.,Inc. Cleveland, Ohio
Howard Zuker Associates Chicago, 111.
Mill owned
Owned by Garden State, no
plant
No plant
Sources: Paper Stock Institute of America and Consolidated Fibers, Inc.
V-27
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
VI. WASTE PAPER COSTS
This section deals with the major costs of collecting, processing, and
transporting waste paper from the point of origin to a paper mill. The
analysis is based on both published and unpublished information obtained
in interviews with selected waste paper dealers, trade associations,
scavengers, and public officials responsible for solid-waste disposal.
A. HISTORICAL PRICES
We originally planned to use December 1973 prices of waste paper to pre-
pare the economic models for virgin and secondary fiber cost comparisons.
Historical prices for selected grades were plotted for each major market
region (Boston, New York City, Chicago, and Los Angeles) to show the
trends. Where possible, the price paid by the dealer or broker to the
generator of the waste was recorded in order to establish the operating
margin at the dealer level.
Figures VI-1 through VI-6 illustrate the historical patterns and the
cost/price relationship for the selected waste paper grades in major
market areas. Note that these historical prices are for specific waste
paper grades as defined by the Paper Stock Institute (PSI). Weekly
prices were recorded, and monthly averages were plotted in these graphs.
The width of the cost and price bands denotes the variance reported
for these items at any given period. Appendix C-l contains a sample
table reproduced from Official Board Markets and shows how the plotting
points were derived.
Since the data were found to be unsatisfactory as a basis for projecting
future prices, we did not plot historical prices for each specific grade
in the geographic areas generally reported. Rather, we selected a few
specific grades in key cities to illustrate the historical stability of
prices and the more recent high volatility that occurred between the
spring of 1973 and the fourth quarter of 1974. The prices of all grades
began to rise around the third quarter of 1972 and rose rapidly through
the end of 1973; previously, they had remained essentially stable.
(Data for some grades are plotted from 1969 to illustrate this fact, and
additional plots going back to 1967 are shown in Appendix C-l.) It can
also be seen that the Chicago market has long brought high prices for
practically all grades.
The operating margin—i.e., the difference between the dealer's cost
and dealer's selling price, from which the dealer must deduct his
operating cost to arrive at a profit margin—is typically greater for
the higher-added-value P/S and high-grade deinking grade (e.g., white
ledger) than it is for the lower-added-value grades (e.g., mixed paper).
This is because high-grade waste paper costs the dealer more to sort,
(continued on page VI-13)
VI-1
Arthur D Little, Inc.
-------
Purchase Price (Delivered
to Dealer)
Selling Price (f.o.b. Dealer)
A. Chicago Market-
I I I I
B. Boston Market—
I I
77777 x£
C. Pacific Coast
Market
1972
Sources: Purchase prices - Fiber Market /Vews
Selling prices — Official Board Market
FIGURE VI-1 DEALER'S PURCHASE AND SELLING PRICE RANGES
FOR WASTE PAPER - CORRUGATED CONTAINERS
1974
VI-2
Arthur D Little Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
150
125
100
75
25
Legend:
Purchase Price (Delivered
to Dealer)
Selling Price (f.o.b. Dealer)
D. New York City Market^
1969
1970
1971
1972
1973
1974
Sources: Purchase prices - Fiber Market News
Selling prices — Official Board Market
FIGURE VI-1 (Cont'd) DEALER'S PURCHASE AND SELLING PRICE RANGES
FOR WASTE PAPER - CORRUGATED CONTAINERS
Arthur D Little, Inc.
-------
Selling Price (f.o.b. Dealer)
A. Chicago Market
II III I I I I I I I I I I I I I I I I
B. Boston Market
I I I I I I I I I I 1 I I I I
1972
1973'
•1974
Source: Official Board Market
FIGURE VI-2 DEALER'S PURCHASE AND SELLING PRICE RANGES FOR WASTE
PAPER - NEW DBL. KRAFT LINED CORR. CUTS, SEMICHEM.
VI-4
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
100
Purchase Price (Delivered
to Dealer)
Selling Price (f.o.b. Dealer)
C. Pacific Coast Market
ill i i i i i
i i i i i i i i i
D. New York City Market
III
1 1 I I I
1972
Sources: Purchase prices — Fiber Market News
Selling prices - Official Board Market
FIGURE VI-2 (Cont'd.) DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER - NEW DBL. KRAFT
CORR. CUTS, SEMICHEM.
VI-5
1974
Arthur D Little, Inc.
-------
Selling Price (f.o.b. Dealer)
15
1972
Source: Official Board Market
1974
FIGURE VI-3 DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER - NO. 1 NEWS
VI-6
Arthur D Little, Inc
-------
80
70
60
50
o
•M
§ 40
30
20
10
Legend:
Ki-;" "] Purchase Price (Delivered
to Dealer)
S//\ Selling Price (f.o.b. Dealer)
'//////J7,
C. Philadelphia Market
I I I II 1 1 J I I
1972-
-*•»
1973
-1974
Sources: Purchase prices — Fiber Market News
Selling prices — Official Board Market
FIGURE VI-3 (Cont'd) DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER - NO. 1 NEWS
VI-7
Arthur D Little, Inc.
-------
150
125
100
o
75
50
25
- Legend:
Purchase Price (Delivered
to Dealer)
- \///\ Selling Price (f.o.b. Dealer)
I I I J I
1972-
v////////,
Pacific Coast Market
I I I I I I I I I I I I I I I
-1973
1974
Sources: Purchase prices — Fiber Market News
Selling prices - Official Board Market
FIGURE VI-4 DEALER'S PURCHASE AND SELLING PRICE RANGES
FOR WASTE PAPER - WHITE NEWSBLANKS
VI-8
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
150
o
CD
O
Purchase Price in Chicago
(Delivered to Dealer)
A. Chicago and Boston Markets
50
25
1972
Sources: Purchase prices — Fiber Market News
Selling prices - Official Board Market
1974
FIGURE VI-5 DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER - WHITE LEDGER
VI-9
Arthur D Little, Inc.
-------
150
125
100
o
«e 75
50
25
— Legend:
Purchase Price (Delivered
to Dealer)
- \///\ Selling Price (f.o.b. Dealer)
I I I I I
I I I I I
B. Philadelphia Market
l I l l I
1972
1973
I I I I I
1974
Sources: Purchase prices - Fiber Market News
Selling prices — Official Board Market
FIGURE VI-5 (Cont'd) DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER -WHITE LEDGER
VI-10
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
o
~ 75
Purchase Price (Delivered
to Dealer)
Selling Price (f.o.b. Dealer)
C. New York City Markef
1969
1970
1971
1972
1973
1974
Sources: Purchase prices - Fiber Market News
Selling prices - Official Board Market
FIGURE VI-5 (Cont'd) DEALER'S PURCHASE AND SELLING PRICE RANGES
FOR WASTE PAPER -WHITE LEDGER
VI-11
Arthur D Little Inc.
-------
50
25
50
c
o
o
CL
50
25
0
Legend:
..".."..1 Purchase Price (Delivered
to Dealer)
Selling Price (f.o.b. Dealer)
A. Chicago Market
I I I I I I I I I
B. Boston Market
I I I I l I I I I I
C. Pacific Coast Market
iii
1972
Sources: Purchase prices - Fiber Market News
Selling prices - Official Board Market
FIGURE VI-6 DEALER'S PURCHASE AND SELLING PRICE
RANGES FOR WASTE PAPER - NO. 1 MIXED PAPER
1974
VI-12
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
bale, and store. Hence the higher operating margin does not necessarily
mean that these products are more profitable.
In a further departure from their earlier stability, prices then declined
rapidly starting about the second quarter of 1974, which was the revised
base year for our cost calculations, and fell steadily through the re-
mainder of that year. Therefore, since historical data was not a reliable
guide to the future, we did not use prices that prevailed in the second
quarter; instead, we. derived likely long-term prices on the basis of our
analysis of the various cost elements. It was these derived prices that
were used in the comparative economic analysis of virgin vs. secondary
fiber. Table VI-1 documents the price change that occurred between the
second and fourth quarters of 1974 and lists the prices used in our
economic analysis.
B. COST COMPONENTS
The economic model developed to illustrate the cost of selected grades
of waste paper delivered to a mill is based upon the dealer system. The
model represents the main flow of waste paper to recycling paper and
paperboard mills. Obviously, there can be numerous variations of this
model, depending on the specific mill; nevertheless, the model provides
a convenient basis for identifying the key cost components and
their influence upon the total delivered cost to a mill. We believe
the lower limit on prices will continue to be determined in this way;
hence, possible lower costs incurred by scavengers and/or solid-waste
management firms are not likely to be passed on to a recycling paper mill.
For purposes of this cost analysis we used the costs associated with the
shredding and baling of OCC and old news, because (1) these two grades
constitute over 50% of the total waste paper recovered, (2) they provide
convenient examples, and (3) the opportunity for substantial increases
in waste paper usage rests with these two major categories.
1. Primary Pickup
Primary pickup is the price paid by the dealer to the prime collectors
of waste paper, i.e., the Boy Scouts, civic, social, or religious organ-
izations, or a private commercial/industrial source. Where applicable,
i.e., news, it includes the cost for door-to-door pickup and delivery
of bundled news to a concentration point such as a school yard. In
other instances, e.g., OCC, P/S, and Mixed, it includes the cost of
collection in a commercial and/or industrial building and delivery to
the "shipping dock." In still other instances, it includes the cost of
door-to-door pickup and delivery of the bundled waste paper directly
to the dealer's "receiving yard." This is the item shown on the figures
previously presented as the Dealer's Price. Clearly, it is ill-defined,
since in some instances it includes transportation to the dealer's
receiving area and in others it does not.
VI-13
Arthur D Little, Inc.
-------
W
CO
rJ
Q
§
H
CO
0
QJ
2
M
Q
W
CO
w
CO
o
H
IS
g
CO
w
w
a
o
4J
•C/V
s«x
Q)
w
w
5
T3
0)
rH
PQ
W
•H
0)
n)
«
T3
S
k
i-H
O
2
u
u
•a
•H S
3 M
cn o
a u
^0
u r*-
0) ^
Q ^
4J
o-
"e S
CM rH
0) x-s
*a t-«
ta ai
t- oc
U TD
01
•Sci
•rt
X &C
C
•a -H
§^
M
CO |
-•^ 0)
cn
rH
a)
T3
•H &
0) cn
cn o
CM
£D CJ
u r^
cy o^
Q rH
p
o-
•0 r~.
C
CM rH
cn
JK
rH
O
z
tn
cu
•a
•sa
*a 4-*
cn o
^3 (j
CM
f")
i *£•
cj r-
QrH
**
o-
TJ r^-
C cn
CM rH
in
01
C
•H
n)
4-)
C
0
T3
at
4-1
3
M
0
O
U]
.si
0) W
tn o
D CJ
*
O r-
01 O>
Q rH
M
4-1
O"
T3 r^.
CM rH
^
•H
a
4J 01
HI lj
ji <
M )J
S o
E.
S
X
02
O
CMCMr-iCM
oom
inooo
CMfMCMCMCMCS
rH
fa
i
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
While this item is a "price", it nevertheless represents the cost
incurred by the dealer to stimulate the primary collection system. It
is by far the most volatile of the cost components, since it is influenced
by the supply/demand balance and has little relationship to the actual
costs incurred in providing this function of primary collection. Obviously,
at the historical low "price"—$2 to $10 per ton for the bulk grades (OCC,
news and mixed)—the cost for primary pickup is higher than the price;
hence the primary collection system was based upon volunteer labor,
e.g., the Boy Scouts, and the sale of byproducts, e.g., by the solid-waste
collectors.
2. Box Pickup, Hauling, and Demurrage Charges
Part of the services provided by a dealer organization is to supply a
collection box to the primary collector. Typically, a religious or civic
organization will ask a dealer to provide a collection box for depositing
bundles of waste news when organizing a waste paper drive. These generally
hold 30-60 cubic yards, or about 10 to 20 tons respectively of waste
news. The costs incurred by the dealer therefore include:
• the delivery of the container to the collection point;
• the demurrage charge for the container, and
• the pickup and delivery of the container to a
baling press or directly to a recycling mill.
Table VI-2 lists typical costs for the above.
The primary pickup system for the other grades is quite dissimilar. For
example, with mixed paper, the solid-waste collector is paid by the
commercial or industrial firm that generates it to haul it away. The
collector may then be able to sell this solid waste material to a dealer.
The income that he receives ($2-$5 per ton) constitutes the supplementary
income; it seldom is sufficient to cover the actual cost of primary trash
collection.
The cost for primary pickup of OCC is dissimilar from either of the two
previously discussed grades. In this instance, the "price" paid by the
dealer is for loosely baled or compacted OCC delivered to the dealer's
yard by the prime generator. Uncompacted OCC is seldom transported; the
low density of corrugated boxes makes it prohibitively expensive to employ
the "box" pickup system used for newspaper or the packer truck system used
in the primary pickup of mixed waste paper. Frequently, the dealer
will help finance the installation of a small baling system (500-1000 Ib
bale) at the primary generator's plant and defray his cost by paying some-
what less per ton. Other arrangements are also used in bundling and
financing the primary baling system.
P/S and high-grade deinking grades are recovered primarily from printing
and converting sources. As with OCC, the dealer will frequently help to
VI-15
Arthur D Little Inc
-------
TABLE VI-2
ESTIMATED COST OF BOX PICKUP AND HAULING
A. Box Size » 30 cu yd
Assumptions:
Box holds 10 tons news
Box cost = $1,500
Box life - 3 years ($500/yr)
Tractor cost w/driver * $18/hr
CONDITION 1 • Fill-up time 2 wks (i.e., 25 loads/yr)
• Full load each trip - 10 tons
Item
Demurrage ($500/25)
Pickup (1/2 hr each way)
$/box
20
18
38
$/ton
2.0
1.8
3.8
CONDITION 2 • Fill-up time 3 wks (17 loads/yr)
• 7-ton load each trip
Item
$/box
$/ton
Demurrage ($500/17) 30
Pickup (I/2 h* each waY) 18
48
4.2
2.6
6.8
(Continued)
VI-16
Arthur D Little, Inc.
-------
1
I
1
1
1
1
^B
1
1
1
|
1
1
1
I
1
1
1
1
TABLE VI- 2 (Cont'd)
B. Box Size =•= 60 cu yd
Assumptions : • Box holds 20 tons news
• Box cost - $2,500
• Box life * 3 years ($840/yr)
• Tractor cost w/driver - $22/hr*
CONDITION 1 • Fill-up time 2 weeks (i.e., 25 loads/yr)
• Full load each trip = 20 tons
Item $/box $/ton
Demurrage ($840/25) 34 1.7
Pickup (1/2 hr each way) 22 1.1
56 2.8
CONDITION 2 • Fill-up time 3 wks (17 loads/yr)
• 15 tons/trip (75% full)
Item $/box $/ton
Demurrage ($840/17) 50 3.3
Pickup (1/2 hr each way) 22 1.5
72 4.8
* Rate is higher than for 10- ton box, because larger tractor
is required for the 20-ton load.
Source: Arthur D. Little, Inc., estimates.
VI-17
Arthur D Little, Inc.
-------
install a primary baling or bundling system at the source; uncompacted
P/S and deinking grades are seldom transported.
3. Sorting and Baling
The degree of sorting depends on the paper stock grade, and the degree
of automation (hence, the capital investment and operating cost for this
process step) varies widely. Obviously, a highly automated system would
have proportionately lower direct labor and higher capital-related
cost than one not as highly automated. Similarly, the higher-added-
value P/S and high-grade deinking grades can absorb higher sorting costs
in their selling prices than can OCC and mixed bulk grades.
Our model for sorting and baling costs (see Tables VI-3 through VI-6) is
based on the typical size of a new facility producing shredded, baled
news and OCC. New facilities for handling the higher-added-value pulp
substitute grades tend to be smaller than this, and many existing facil-
ities that handle either the commodity or pulp-substitute grades are
smaller still. (As shown in Table V-8, dealer sales ranged from about
3000 tons to 11,000 tons in 1970, depending on the region; we have no
information on the specific grades involved in these averages, but we
believe that the variations in tonnage partly reflect differences in
the grades of waste processed.)
Table VI-7 summarizes the costs of news and OCC, f.o.b. dealer's shipping
point. Clearly, the single most important item is that for primary
pickup, or the cost paid by the dealer to stimulate the supply.
A dealer's profit margin was added in these cost models to arrive at the
f.o.b. prices previously shown for these grades in Table VI-1. The same
rationale was used in arriving at the estimated prices for P/S, high-
grade deinking, and mixed listed in that table.
With this model, we can simulate the cost for any region by using the
reported "dealer's purchase price" and various sets of assumptions
regarding the fraction of waste paper collected by the dealer vs. that
delivered to his plant "over the scale."
4. Transportation from Dealer to Mill
a. Approach ^
Consistent with the previous section, in which the economic model of waste *
paper collection, sorting, and baling was based upon the dealer system,
we have also based the transportation cost for waste paper delivered to I
a recycling paper/paperboard mill on the dealer system. Again, numerous |
other alternatives and material flow channels exist by which waste paper
can be delivered to a mill—e.g., public and/or social organizations •
can deliver collected waste paper directly to a mill, or large dealers I
can operate their own delivery system and sell waste paper on a delivered
basis- (continued on page VI-23) j
VI-18
Arthur D Little, Inc. •
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VI-3
ESTIMATED PLANT INVESTMENT FOR WASTE PAPER SORTING AND BALING
BASIS: Production - OCC: 100 tpd; 2,200 tpm; 26,000 tpy
News: 100 tpd; 2,200 tpm; 26,000 tpy
Operation - 12 hr/day (avg), 22 dpm
Product - Shredded OCC
- Shredded News
Installed Equipment
Item Cost ($000)
Balers (2 horizontal) incl: baler feed, 240
take-away conveyor, and control center
Hoggers w/motors (2) 60
Front End Loader 20
Fork Lift Trucks (2) 27
Building (includes Process, Warehouse, Office and 82
Maintenance Shop)
Yard (fence, parking lot, scale, guard house, 40
dumping pad)
Spare Parts 12
TOTAL DIRECT PLANT COST 481
Engineering, Construction Supervision and Fee 58
TOTAL PLANT INVESTMENT 539
(Excl. working capital & land)
Use $540,000
Source: Arthur D. Little, Inc., estimates based on interviews
with Consolidated Fibres, Inc.
VI-19
Arthur D Little, Inc.
-------
TABLE VI-4
SUMMARY OF ESTIMATED OPERATING COSTS FOR WASTE PAPER SORTING AND BALING
BASIS: Production 100 tpd each OCC and No. 1
News; Total annual production 52,000
tons
Plant Investment: $540,000
Item
Units
Units/
ton
Cost
$/ton $000/yr
Dealer's Purchase Price
Direct Labor w/Fringe
Benefits
Supplies (Maintenance &
Operating)
Power
Plant Supervision & Overhead
Depreciation @ 10% of
Plant Investment
Taxes & Insurance @ 2-1/4%
of Plant Investment
Man-hr
0.5
kWh
Not Included
2.1 112
TOTAL
1.0
0.1
1.9
1.1
0.2
6.3
52
6
100
54
12
336
Source: Arthur D. Little, Inc., estimated based upon interviews
with Consolidated Fibres, Inc.
I
I
I
VI-20
Arthur D Little, Inc
-------
I
I
I
I
I
TABLE VI-5
Yard 1
Front End Loader Operator 1
Baler Operator 2
Fork Lift Truck Operator 2
Sorters 2
Utility 1
Maintenance 1
Foreman 1
I ESTIMATED DIRECT LABOR REQUIREMENTS
• Shift Position Number of Men
I
I
I
I
I
I
I
I
Manager $35,000
I Area Brokers (2 @ $20,000/man-yr) 40,000
Office Help (1 @ $8000) 8.000
» Total Salaries (w/fringe benefits) 83,000
_ Office & Travel Exp. <§ 20% Salaries 16,000
' Other Services - Accounting,Legal 1,000
• Total $100,000
Source: (both tables) Arthur D. Little, Inc., estimated based
upon interviews with Consolidated Fibres, Inc.
Total 11
Labor Cost: $10,200/man-year (incl. fringe) X 11 - $112,000/yr
TABLE VI-6
ESTIMATED PLANT OVERHEAD
Item Annual Cost
VI-21
Arthur D Little, Inc.
-------
TABLE VI-7
SUMMARY OF ESTIMATED DEALER'S COST FOR BALED, SHREDDED NEWS AND OCC
Basis: 100 tpd each baled shredded news and OCC
Plant Investment: $540,000
Operation: 12 hr/day, 22 dpm
North Central location
Cost ($/ton)
News OCC
Primary Pickup3 14 25
Box Pickup, Demurrage 4 c
& Hauling
Shredding & Baling _6. 6
Total 24 31
Price paid by the dealer to stimulate supply
Assume 40% of the news would be delivered to the dealer;
only 60% would come via box pickup
Q
Not applicable. Assume all OCC is delivered to dealer
in prime generator's vehicles.
Source: Arthur D. Little, Inc., estimates based upon information
obtained in interviews with Consolidated Fibres, Inc.
VI-22
Arthur D Little, Inc
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Within the dealer system we have selected for cost estimating, waste
paper is priced f.o.b. dealer. Waste paper prices by grade and region
are published (Section A), but transportation to the mill is an addi-
tional and highly variable cost. To estimate representative freight costs,
we have developed data for three methods of transporting waste paper
from dealer to mill: common carrier, rail, and a mill-owned truck fleet.
b. Common Carrier
Approximately 75% of the waste paper used by the paper and board industry
is transported by trucks. Most of these are privately owned by waste
paper dealers or paper and board producers. In the latter case, the
higher-value mill products are delivered, and the trucks return with
waste fiber. (See Subsection d.below.)
Common motor carriers of general commodities have little incentive to
participate in waste paper traffic, because rail and contract carriers
charge lower rates. However, established common carrier rates are
readily obtained, provide a convenient data base, and indicate the rates
with which other methods of transportation compete. Figure VI-7 shows
the common carrier rates for paper stock in New England. The minimum
loads of 12 and 16 tons are representative of waste paper transportation.
In the Moshman* study of transportation rates, comparable moves by common
and contract carriers showed that the contract rates were about 75% of
the common. These rates are set by individual contract terms and are not
published. There are variations from company to company rather than
regional differences. For this reason, we have used the New England common
carrier rates as a representative data base for all regions.
Common carrier rates reported are for 1974 second quarter. Since then,
additional increases of 8%, 2.2%, and 1% have been allowed through the end
of 1974. These rate increases are typical of all regions.
c. Rail
The transportation of waste paper by rail is typically over longer distances
than by truck, and loads average about 40 tons per car. The rate applies
to paper, waste, or scrap; there is no grade distinction. These trans-
portation rates are reported in the TD-1 carload waybill statistics.
The waybill sample is taken from audited revenue waybills for carloads
terminated by line-haul operating railroads with an average revenue of
$3 million or more and filed with the ICC. A 1% proportional sample is
reported in the statistical tables. The Moshman study used the 1969
carload waybill statistics, which include Ex Parte 259B, November 28,
1969. The Ex Parte rates granted since then can be used to increase them
* Moshman Associates, Inc., "Analysis of Transportation Rates and Costs
for Selected Virgin and Secondary Commodities," report to Environmental
Protection Agency, 1973.
VI-23
Arthur D Little, Inc
-------
30
c
o
25
20
15
10
_L
0 100 200 300 400
Distance (miles)
Basis: Class V Commodity Products, 1974 Second Quarter Rates
Source: New England Motor Rates Bureau
FIGURE VI-7 COST OF TRANSPORTING PAPER STOCK BY TRUCK IN THE
NEW ENGLAND REGION (Common Carrier Rates)
I
I
I
VI-24
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
so as to apply to some later time. Although we have the 1972 waybill,
we have chosen to use the Moshman data because they identify the origin
and destination by town and state and thereby enable us to assign rates
to the census regions used in this report.
Rate increases granted by the ICC for all commodities (including waste
paper) after Ex Parte 259 are as follows :
Ex Parte 262
265
267
281
295
299
303
305
305
310
1969
1970
1971
1972
1973
1974
1974
1974
1974
1975
6%
6%
11%
3.1%
3%
2.8%
4%
3.3%
10.2%
7%
surcharge
general freight
We have included increases through Ex Parte 303 to adjust the Moshman
data to a second quarter 1974 basis. Figure VI-8 shows the adjusted
data, plotted for each of the four major regions considered in this study.
To estimate the quantities of waste paper moved by rail (Table VI-8) , we
used the 1972 waybill statistics. As supplied, these data were broken
down according to the five rail rate territories used by the ICC (Figure
VI-9); therefore, Table VI-8 follows this scheme rather than reporting
tonnages for the four major geographical regions mentioned in the previous
paragraph. Of the approximately 4 million tons transported by rail in
1972, almost half was moved in the Northeast and parts of the North Central
and South Atlantic states.
d. Mill-owned Truck Fleet
In addition to common carrier and rail costs, we have also estimated the
annual transportation costs for a secondary fiber mill that has its own
fleet of trucks. (See Table VI-9.) Obviously, these costs are primarily
dependent on the mill's proximity to customers and fiber sources, rather
than on geographic or product grade differences. In addition, since
the estimated costs are based on a consolidation of the costs of product
shipment and raw material receiving, the allocation of costs to each
item is somewhat arbitrary.
In our estimate, we have assumed that the mill delivers all of its pro-
duction (112,000 tpy) with its own trucks, and that one third (46,000
tpy) of its waste paper requirements are hauled by the same trucks on
return trips. Thus, no significant equipment or operating costs are
incurred by hauling waste paper. The primary purpose and justification
for the truck fleet is product delivery; the back-hauling of raw materials
represents a marginal benefit through more efficient operation of the
fleet. On this basis, we have charged the annual operating costs of
the truck fleet entirely to product delivery.
VI-25
Arthur D Little, Inc
-------
o
o
O
20
18
16
14
12
10
8
6
4
2
0
200
A. NORTHEAST REGION
I
I
400 600
Distance (Miles)
800
1000
14
13
12
11
10
? 9
B. NORTH CENTRAL REGION
I
I
I
I
I
100
200
500
600
300 400
Distance (Miles)
Source: ICC Waybill Statistics - 1969, TD-1, adjusted to 1974 2nd qtr.
FIGURE VI-8 COST OF TRANSPORTING WASTE PAPER BY RAIL
I
I
I
VI-26
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
24
22
20
18
"c 16
<§ 14
+->
CO
6 12
10
8
6
4
o
o
18
16
14
12
£ 10
200
I I
C. SOUTHERN REGION
I
I
400
600 800
Distance (Miles)
1000
1200
1400
D. MOUNTAIN AND PACIFIC REGION
I I I I I 1 I
200 400 600 800
Distance (Miles)
1000
1200
1400
Source: ICC Waybill Statistics - 1969, TD-1, adjusted to 1974 2nd qtr.
FIGURE VI-8 (Continued) COST OF TRANSPORTING WASTE PAPER BY RAIL
VI-27
Arthur D Little, Inc
-------
TABLE VI-8
U.S. RAIL TRANSPORTATION OF WASTE PAPER - 1972
Weight into Territory
a,b
I
II
III
IV
V
Rate Territory
(Official)
(Southern)
(Western Trunk Line)
(Southwestern)
(Mountain Pacific)
Total U.S.
(000 tons)
1,883
860
598
380
173
3,895C
% Total U.S.
48
22
15
10
4
Incl. inter-region shipment
Estimated from 1% waybill sample
(•
Does not total due to rounding
Source: ICC Carload Waybill Statistics - 1972, TD-1, Issued May, 1974
FIGURE VI-9 U.S. RAIL RATE TERRITORIES
VI-28
I
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VI-9
ESTIMATED TRANSPORTATION COSTS FOR SECONDARY FIBER MILL USING OWN TRUCKS
Raw Material (RM) Delivery: 412 tons/day; 140,000 tons/year
2/3 local collection (delivered to mill)
1/3 back-haul by own trucks
Customers: 6, average round trip distance 40 miles
All production (330 tons/day; 112,000 tons/year) delivered by truck*
All RM arrives by truck
Capacity per load: 16 tons
Number of trips: 28 per day, 5 days per week
Equipment: 8 trucks
Manning: 7 drivers per shift, 2 shifts per day +
dispatcher + maintenance man + helper = 17.
Investment: $280,000 for trucks and supporting
facilities
Annual Operating Costs
Drivers, including fringes @ $17,500 $245,000
Operating costs: gas, oil, normal maintenance @
28
-------
I
I
Accounting procedures might normally charge a portion of the trucking •
costs to the waste paper back-hauled, effectively crediting part of the I
benefits of efficient operation to product delivery. However, since
it is the opportunity for back-hauling raw materials which creates the _
benefit, the point is best illustrated by taking credit there—i.e., •
not allocating costs to the waste received in the mill's own trucks. •
With the above stipulations, the cost per ton of product delivered is •
$4.50. The cost of waste paper received is estimated at $9.00/ton |
on two thirds (94,000 tpy) of total requirements received by common
carrier and no charge on the remaining third (46,000 tpy) that is back- •
hauled in the mill's trucks, giving an overall average cost of $6.00/ •
ton freight on total annual requirements of 140,000 tons of waste paper.
Our intent in including this estimate of freight costs in and out for I
a mill using its own trucks is to illustrate the savings in freight which •
might be realized by judicious site selection. However, it is only an
example; the actual cost of such an operation would depend on the average
distances to customers and fiber sources, as well as actual tonnages
handled.
I
5. Summary of Delivered Cost of Waste Paper •
The aim of this analysis was to derive possible long-term prices, since
historical price data did not provide a reliable base for projecting •
future prices. Table VI-10 summarizes our analysis of possible long- •
term prices—i.e., cost to a consuming mill—for the major waste paper
stocks by region and grade, f.o.b. dealer (from Table VI-1), transpor- •
tation costs by various methods, our estimates of transportation cost |
within the range for each region and grade, and thus our estimate of
delivered cost. Note that in transferring the dealer's cost from _
Table VI-7, we have added a margin of profit to arrive at the price •
f.o.b. dealer. ™
All these costs are based on short tons; however, since our economic •
estimates are made on a metric ton basis, we have indicated the equiva- |
lent cost per metric ton in brackets for correlation with other sections
of this report. •
The common carrier rates provide a basis for estimating truck freight
costs, as the latter are roughly 75% of the common carrier rates. For
the Northeast, North Central, and Pacific regions, the common carrier •
costs are for a range of 100 - 150 miles; for the South we have assumed •
a more diverse geographical pattern and have used a 200-300 mile range as
typical
I
Common carrier rates for OCC, No. 1 news, and No. 1 mixed waste paper are
based on 16-ton minimum loads. We have selected sorted white ledger as an •
example of pulp substitute deinking grades, and for this grade we have I
used 12-ton minimum load rates to reflect the lower availability and
consumption of these higher grades of waste paper.
VI-30
Arthur D Little, Inc.
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Rail rates shown are based on 40-ton loads for all grades. We have
selected typical distances (and used the corresponding rates) from the
Moshman data plotted in Figure VI-8 as follows:
Northeast 500 miles
North Central 300 miles
South 700 miles
Pacific 1000 miles
As the lower end of the range for freight costs, we have included mill-
owned trucks at $6.00 per ton for all regions and grades. This value
is representative of the conditions we have assumed for our cost
estimate, which would be independent of region or paper grade. However,
it is not a fixed number; it would vary with specific conditions, and
is included only as an example.
We have estimated freight costs within the overall range for each grade
and region, based on our judgment of all factors involved. In general,
we have used the lower-range costs for OCC, No. 1 news, and mixed waste
paper and higher costs for pulp substitute deinking grades because of
their higher value and smaller total shipments. We have estimated
higher costs in the South for all grades to indicate a more dispersed
industry with longer average shipping distances.
C. RECOVERY OF PAPER STOCK FROM MUNICIPAL SOLID WASTE
In addition to the potential supply of waste paper segregated at points of
origin in both the consumer and commercial/industrial sectors, increased
interest has recently focused on municipal solid waste (MSW).* Midwest
Research Institute (MRI), in a recent study of this field,** predicted
that by 1985 about 2-3 million tons, or about 10% of the estimated quantity
of waste paper required by the industry, will be obtained from MSW.
Of this, according to MRI, some 500,000 tons will be recovered via mech-
anical separation and the balance via conventional channels, such as curb-
side pickup of old news and "hand-picking" of OCC from the feed conveyor
in a solid-waste disposal plant.
* Forest Products Laboratory, "Recovery and Reuse of Waste Paper from
Shredded Household Trash," J.R. Laundrie, U.S. Forest Service Research
Paper FPL-252 (1975); A.A. Mohaupt and J.W. Koning, Jr., TAPPI, Vol.
57, No. 11 (November 1974), p. 56.
**W. E. Franklin, "Base Line Study of Resource Recovery from Municipal
Solid Waste, 1972-1990," report to EPA by Midwest Research Institute
(in press). See also D. Bendersky, R. J. Reid, and W. E. Franklin,
"A Technical and Economic Evaluation of Waste Paper Recovery Systems,"
report to Boxboard Research and Development Association by Midwest
Research Institute, December 13, 1974.
VI-31
Arthur D Little, Inc.
-------
pq
to )•
in
CO
CM
2
CO
rH
r-.
Sfr
rH
a> 4-1 y
B 4-1 p -•' B M -H
-i. o c — •
•CO- 4-1 4J O rH
C 4= M 4J 0
O (0 O MB
4J s-* ~~~ 10 43 O
M 01 <0 43 4-1
4J ai »iH --» (0 W
M r-"I M tH B •> to u
43 ai IH 4-1 ai
10 T3 MO 43rH "M
Mm 60 -H CO O
M • efl rH iH S 4^ 14H
oi 42 o i o
W O MH i rH tH
33 -H --^ B tH pa)
H M 0 CO i M
pri a, u (2 Ob-.
o
0 M
>• 43 4J
- to ai
"""•4;
•&)•
1— 1
• •
4J
(0
0
y
0)
M
a>
•H
•H
ai
o
CM OO
CM •—
1-1
0 1^
CM
CO CA vO
rH
o" o"
CM CM
2 -1
C\ 00
O H
rH
CO cjs vD
CM
r— i r— ^
0 O
CO rH
r- cTi
CM
CO CJ\ vO
rH
in o
-* rH
rH CTi
**
PO (^ vO
rH
C
r^ 0
fu 4J
O i~
4J 4-1 C
M C
y ^~- o 4.
tH rH 43
o"
CO
r^
CM
o"
sf
rH
^
CM
rH
O
^,
vO
CO
in
ili
o
10
^
3
J
C r— »
M ^ X-N 01 U O P
4J P CM ^-^ — .TH4JO
Ol O — ' CO M 4J
B 4-1 p >— ' 4.
--- ^— . O P " 0
M 4J ai ^^
rH O 4J T3 rH CO 01 43 4J
4J • * -iH -^ a) 10 01
M43 ME • 01 4J
-i -^ ai
-------
I
I
I
I
I
I
I
1
I
I
I
I
I
I
I
I
I
I
I
>
w
p
w
M
a
rH
•
0
^
'«'
w w
H O
^ W
rH rJ
H •
PQ £3
CO P
W
P* H
nJ 3
B 0
P* CO
CO
W
sz
rH
.
0
"
o
8
r-. en
rH rH
m CM
rH rH
o m vo
CM rH
r— i r— i
o m
rH CM
rH •—
O en
0 CM
I-l
r^. in *P
CM rH
1~^ r— »
O u^
CO i—l
1— * 1— 1
CM iH
o »o ^
CM r-(
XTJ tO
*^~ i— 1
t_W I 1
^5 *^
ST rH
o m <*
CM rH
c
i— i O
C 4J
o
4J 4-1
Vl i-
CJ ^"N O C
•H rH .C C
rl '-' /-x CO 4.
4J C CM x-x ^
0) o ^ en -co- c.
B 4J C ^ T
-< 5 a •• ^
o
en
• — '
r*x
CM
i— —i
in
en
rH
•— '
en
CM
rH
i i
m
^f
i_i
rH
"o
\O
i__j
in
7 ^
} O
J C 4-1
O
1 4-1 U
4 IH
4 4J to
O OI
O 4J TJ £
C J3 M 4-1 O —
O ''-' to o to B ^ O
OO> OltH » CO
-------
I
I
This section describes how mechanical separation is achieved and how much —
it might be expected to cost. Only dry techniques are considered here; •
wet processing, which has been used for several years, has been found to •
produce a fiber with limited commercial utility. Information on the latter
is available from other sources. •
1. Generalized Process for Reclamation
The generalized process flow sheet for a fiber recovery operation I
(probably coupled with recovery of other materials such as glass and metals)
could be envisioned in three stages. The first stage is the segregation of
a fiber-rich fraction from the remainder of the MSW stream. In dry I
processing techniques, the heart of the segregation process is generally •
air classification. This is a separation process which utilizes dif-
ferences in specific surface areas (the ratio of surface area to mass) •
to effect separation in a horizontal or vertical column of moving air. |
Because paper and paper products generally have higher specific surface
areas than other materials in MSW, this fraction, along with plastic •
films, metal foils, and very fine particles of glass and dirt (the major •
contaminants) is discharged from the classifier as the "floats" stream.
Other metals, glass, plastics, etc., are discharged as the "sinks" stream.
Before it can be effectively classified, the refuse must be "groomed" so I
that it enters the classifier as discrete bits that encounter the air
stream one at a time. For maximum efficiency of separation, the bits •
should be as uniform as possible in size and shape. The preprocessing |
customarily includes one or more stages of shredding by hammermills,
flail mills, or similar machines; screening may also be used to remove _
oversized material, which might cause blockage farther downstream, and •
undersized material such as dirt or glass. Ferrous materials are
usually removed by magnetic separation. Hand picking is often employed
to remove certain categories of materials such as explosive items (fuel I
and solvent cans), heavy metal castings (e.g., engine blocks), tires, I
bundled newspapers and corrugated board, and large pieces of nonferrous
metals. Drying may also be used, because controlled moisture content •
enhances the efficiency of air classification. •
The second stage of processing in the reclamation of fiber is the upgrading
or beneficiation of this fiber-rich stream by removing as much of the •
nonfibrous material as possible. The materials to be removed are plastics, •
metal foils, glass, dirt, and food wastes. Those that are not attached
to the paper can be separated fairly easily, but paper that is coated •
with foil or adhesive, laminated to plastic, soaked with greases and |
other food wastes, etc., can be very troublesome.
To remove the discrete as well as the "mixed" contaminants, each of the I
operations described above can be reused, but with greater control, be-
cause the classification of this material is more difficult. Thermo-
plastic films can be removed from the stream by contacting them with a I
heated surface to which they will adhere, or, as is done by the Forest •
Products Laboratory, they can be exposed to hot gases that cause them
I
VI-34
Arthur D Little, Inc. •
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
to shrivel, thus materially decreasing their specific surface area so they
can be air-classified from the paper fraction. There are also electrostatic
techniques for removing plastics. Fine glass and dirt can generally be
removed by repeated screening. Considerable research is being done in this
area at present, since the reclaimed material from this stage of benefi-
ciation would be adequate for many commodity-grade paper products (combi-
nation board, roofing felt, newsprint, corrugating medium, etc.).
The third stage is to produce a distinct, impurity-free pulp grade from
the fiber mixture typically found in MSW. As noted earlier, the paper
fraction recovered from MSW consists of about 60% chemical fiber and
40% mechanical fiber, and it contains a mixture of softwood and hardwood
pulps that may be bleached, unbleached, or semibleached. As a result,
the recovered "unbeneficiated" fraction has limited potential for recycle
applications. The separation of the fiber mixture into its constituent
components is a challenging problem, and a commercially practicable
solution has not been demonstrated to date.
2. FPL Air Separation Process
The following is a discussion and preliminary economic analysis of the
air separation process developed by the Forest Products Laboratory.
We believe this to be the most advanced technique for beneficiating the
recovered paper fraction from MSW. (Other processes at various stages
of development include the ballistic separation process developed by
Franklin Institute, the air separation process developed by the U.S.
Bureau of Mines, and the wet process developed by Black-Clawson.)
a. Method of Operation
Figure VI-10 is a schematic diagram of the FPL process. The primary
shredding of the MSW is performed in a vertical-shaft hammermill. The
coarse shredded waste from the hammermill is deposited onto a belt
conveyor, and the ferrous metal contaminants are removed by a magnetic
separator. The primary classification is accomplished at the discharge
from the belt conveyor via a vacuum pickup, which removes the light,
paper-rich fraction and rejects the heavy materials.
The material separated by the vacuum pickup is transferred to a vibrat-
ing screen, which removes oversized materials** and "fines" (organic and
inorganic particles such as glass, sand, and garbage carried over with
the "light" fraction).
* J.F. Laundrie, U.S. Patent 3,814,240.
**The oversized materials are removed because FPL's pilot plant, being
a small-scale model, cannot handle the largest pieces of shredded,
"light" material recovered in the vacuum pickup.
VI-35
Arthur D Little, Inc.
-------
Commercially
Demonstrated
(Madison, Wis.
Landfill Operation)
-I—-
Pilot Plant
Evaluation Only
(Forest Products
Laboratory)
'
'
Heat
Household Discards
1
Primary Shredding
(Hammermill)
1 Conveyor
Magnetic Separation
(Suspended over Conveyor)
1
Primary Separation
(Vacuum Pickup)
I
i Moisture
20%-30%
Drying
(Rotary Dryer)
i Moisture
5%-10%
Air Classification
1
Air Classification
Rejects fc r
Metal
Rejects ^ "H«wiM"
(Total refuse stream less a
portion of the paper fraction)
Rejects ^.
^" "Hnes"
(Field trash, garbage)
(Unshredded sheets of newspaper, etc.
Rejects "Mimic-"
(Inorganics, paperboard, garbage,
shrunkeh plastics)
Rejects ^ ,,L(.ght.,,
(Tissue, carbon paper, dust)
Newsprint-Rich Mixture
FIGURE VI-10 SCHEMATIC FLOW DIAGRAM OF THE FOREST PRODUCTS
LABORATORY'S WASTE PAPER SEPARATION PROCESS
VI-36
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
The accepts from the screen are next conveyed to a rotary drum dryer,
where the moisture is reduced from about 20-30% to 5-10%. The primary
purpose for drying is to facilitate the subsequent air classification;
the high temperature (320°F to 365°F) in the dryer contracts any plastic
film present in the "light" fraction, thereby reducing its specific surface
area sufficiently to permit separation from paper via air classification.
The drying operation also serves to sterilize the waste paper, which
is often contaminated from contact with garbage and will decompose unless
the bacteria are destroyed. The high temperature in the dryer kills the
bacteria, and the low moisture content virtually eliminates future bacter-
iological growth. (A fluidized-bed dryer could also be used in place of
the rotary drum.)
Finally, the dried waste is conveyed to two air classifiers in series.
The air velocities through the classifiers are independently regulated
to control the ratios of accepted versus rejected materials.
Figure VI-11 shows a material balance for the process steps that follow
primary separation.
b. Economic Evaluation
As indicated earlier, only the coarse shredding and primary classification
steps have been carried out on a commercial basis.* The technical feasi-
bility of the other steps has been demonstrated, but reliable estimates
of investment and operating costs must await more complete information on
throughput rates and specific operating conditions. A paper fraction has
been produced containing a high percentage of newsprint (estimated at
65% - 80%) that is free of both organic (plastic film and garbage) and
inorganic (glass and sand) contaminants. This recovered paper has been
used in experimental programs to make newsprint, corrugating medium, paper-
board, and composition board. The FPL has submitted samples of the recovered
fraction to several paper manufacturers (such as Garden State Paper
Company, St. Regis, and Upson) for evaluation. Although the results of
their tests have not yet been released, the manufacturers are reported to be
optimistic.
Our analysis considers a standard-sized production module—100 tpd of
newsprint-rich material. From the relationship shown in Figure VI-11, this
corresponds roughly to 230 tpd of shredded trash or almost 510 tpd** of raw
MWS, which is the amount produced by approximately 150,000 to 200,000
people.
* Systems for doing this have been installed in Wilmington, Delaware,
and East Bridgewater, Massachusetts.
** Based on 75% recovery of combustibles (the experience at the Madison
installation), which constitute an estimated 60% of the raw MWS.
VI-37
Arthur D Little, Inc.
-------
Shredded Trash from Vacuum Pickup
Heat
1 Million Btu
2000 Ib
I
Screening
1 ton (as received)
500 Ib Water (25% Moisture)
Rejects (15%)
1700lb
300 Ib Field Trash,
Garbage,
Oversize Material
Drying
1380lb
Evaporated Water (16%)
^-
320 Ib
Air Classification
1060lb
"Heavy" Rejects (16%)
320 Ib Heavy Papers
Air Classification
870 Ib
"Light" Rejects (9%%)
^»
190 Ib Light Papers
Newsprint-rich Fraction (43V2%) - 870 Ib at 8% Moisture
Source: Personal Communication from J. Laundrie, Chemical Engineer, FPL
FIGURE VI-11 ESTIMATED MATERIAL BALANCE FOR THE SEPARATION OF
NEWSPRINT-RICH FRACTION FROM MSW
VI-38
Arthur D Little, Inc.
-------
I
I
I
I
I
I
1
I
I
I
I
I
I
I
I
I
1
I
I
We have assumed that the investment and operating costs for primary
shredding and cleaning would be the same for any disposal method, and
hence have not charged them to this supplementary cleaning and classi-
fying operation for the recovery of fiber. Improved cleaning methods
could incur higher costs, and better separation may be required.
Table VI-11 shows capacity requirements for the newsprint separation
process used in developing the cost calculations. The capital invest-
ment for a 100-tpd plant (8 hours per day, 5 days per week) is estimated
to be $600,000 (Table VI-12). This includes process equipment as well
as additional building space to accommodate the paper separation plant.
The cost of operation is estimated at $17.50 per ton of finished, news-
print-rich product (Table VI-13). This excludes the cost of the coarse
shredded material used as primary feed to the separation process.
Since definitive information is not available at this time for evaluating
plant investment and operating costs, we have illustrated the effect
that key process variations would have on operating costs in Figure
VI-12. A "best guess" operating cost ($17.60 per ton) is plotted at the
origin of the graph. Possible variations of the "best guess" are plotted
along the horizontal axis, and the resulting operating costs are indicated
on the vertical axis. For example, product yield (newsprint) is influenced
by the newsprint content of the raw waste as well as the overall efficiency
of the separation process. A wide variability may be expected in this
item (perhaps + 50%). A sensitivity analysis of such a variation shows
an operating cost ranging from $11.70 to $35.20 per ton. Similarly,
definitive experimental data are not available for process throughput,
so this variable may also fluctuate widely from our "best guess". The graph
reveals, however, that a + 50% variation in the plant investment or
throughput is not as significant as one in product yield.
Obviously, more definitive information is required regarding the specific
composition of the refuse raw material, and plant throughput data must be
obtained to derive more precise cost calculations. Nevertheless, these
preliminary cost estimates provide a basis for comparing the potential
competitive position of waste paper recovered from MSW with respect to
alternative raw materials.
Unfortunately, despite the technical and economic promise of the process,
there are no good prospects for its commercialization at present.
D. PRICE PROJECTIONS
1. Summary and General Comments
Historical price performance provides little guidance in forecasting
prices of waste paper. Cost analysis also fails to provide a precise
forecasting tool, since the largest single cost component is that for
primary pickup—i.e., the price paid by the dealer to stimulate a supply—
which is not a tangible cost. Further, recovering selected grades from
VI-39
Arthur D Little, Inc.
-------
TABLE VI-11
ESTIMATED REQUIRED CAPACITIES FOR PROCESS STEPS IN
NEWSPRINT SEPARATION PROCESS
Basis: Production 100 tpd newsprint-rich material
Operation 8 hr/day @ 85% efficiency (6.8 hr)
Overall yield: 43.5%
Capacity
Tons/Hr @ 85%
Process Step Tons/Day Efficiency
Screening 230 34
Drying 200 29
Air Classification (I) 160 23
Air Classification (II) 120 18
Product 100 16
VI-40
Arthur D Little Inc.
-------
1
1
1
•1
1
1
•
1
1
1
1
1
1
1
1
1
1
TABLE VI-12
ESTIMATED TOTAL FIXED CAPITAL FOR THE SEPARATION OF
NEWSPRINT-RICH MATERIAL FROM MSW
Basis: Production 100 Tons/day Newsprint-rich
Operation 8 Hr/Day; 85% Mechanical
Overall Yield 43.5%*
Year Second Quarter 1974
Item
Equipment
Cyclone Collectors (5 @ $2,000 each)
Screens (4 @ $5,000 each)
Drying (2 @ $30,000 each)
Conveyors (4 @ $5,000 each)
Air Classifiers (4 @ $10,000 each)
Baling Equipment (1 @ $70,000)
Total Purchased Equipment Cost (PEC)
Delivery of Equipment @ 10% PEC
Mechanical Installation @ 20% PEC
Electricals @ 15% PEC
Plant Dust Collect System
Vehicles: Lift Truck
Front End Loader
Sub-total, Equipment Installation
Installed Equipment Cost (IEC)
Building (60 ft x 80 ft @ $10/sq ft)
Heating
Sprinkler System
Outside Electricals
Lighting
Sub-total, Buildings & Lighting
Total Direct Plant Cost (DPC)
Engineering & Construction Supervision @ 20% DPC
Total Physical Plant Cost (PPC)
Other Fixed Capital
Total Fixed Capital
* Newsprint-rich fraction from "light fraction"
VI-41
material
Efficiency
Cost
($000)
10
20
60
20
40
70
220
22
44
33
30
14
20
163
383
48
15
25
5
4
97
480
96
576
58
634
Use $600,000
Arthur D Little,
-------
TABLE VI-13
ESTIMATED OPERATING COST FOR THE SEPARATION OF
NEWSPRINT-RICH MATERIAL FROM MSW
Basis: Production : 100 tons/day; 26,000 tons/year
Product : Newsprint-rich material @ 8% moisture in bales
Overall Yield: 43.5% (newsprint-rich fraction from "light
fraction")
Total Fixed Capital: $600,000 Units
Units
per
Cost
Item ""^ ton ($7ton) ($000/yr)
Raw Materials:
Coarse shredded & primary cleaned
household discards Not included
Conversion (less capital-related):
8 operators & 1 utility man @ $7500/man-yr man-hr 0.8 2.6 68
Maintenance - 1 skilled & 1 helper man-hr 0.2 0.8 20
Fringe Benefits @ 32% Direct Labor 1.1 28
Fuel MM Btu 5.26 7.9* 2053
Power kWh 4 0.8 20
Operating & Maintenance Supplies 1.0 26
Factory Overhead 1.0 26
TOTAL CONVERSION COST i5-1 393
Capital-Related:
Depreciation @ 10% Total Fixed Capital 2-3 60
Insurance @ 3/4% Total Fixed Capital °«2 L
TOTAL CAPITAL-RELATED 2'5 65
TOTAL OPERATING COST (f.o.b. Plant) 17'6 458
aThis cost could be greatly reduced by recirculating part of the hot gases
and also by using part of the MSW as fuel — especially the shrunken plas-
tics, which are high in fuel value.
VI-42
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Base $17.6
Operating Cost, $/Ton
- 38
Possible Decrease
in Variable
I
40% ' 60%
Possible Increase
in Variable
Key Variables
(J) Newsprint Fraction Yield* (%)
(2) Total Fixed Capital ($000)
(3) Throughput (Tons/Day)
Percent
Variation
+50, -50
+50, -50
+50, -50
Best
Guess
43.5
600
100
Possible
High
65.2
900
150
Possible
Low
21.7
300
50
"Newsprint - Rich Fraction Yield from "Light" Fraction
FIGURE VI-12 SENSITIVITY TO KEY VARIABLES OF THE OPERATING COST FOR
SEPARATION OF NEWSPRINT - RICH FRACTION FROM MSW
VI-43
Arthur D Little, Inc.
-------
MSW appears to have little cost advantage over the source segregation/
dealers system. Reclamation from MSW will not be practiced widely be-
tween now and 1983; accordingly, any price forecasting is necessarily a
matter of "guesstimating."
In general, nowever, the rate of change in the supply and demand appears
to be the single most important influence on waste paper prices.* Except
for the high-value pulp substitute and high-quality deinking grades,
waste paper is not transported long distances; thus, regional supply/
demand factors are more significant than are national averages.
Some other, more specific findings also emerge quite clearly from this
analysis:
• The sharp increase in waste paper prices that occurred in 1973
to early 1974 was caused by a number of coincident circumstan-
ces, including a sudden increase in domestic and foreign de-
mand and deficient supply channels. Transportation is a sig-
nificant factor in the total delivered cost, and its influence
upon dealers' purchase prices should be measured on a regional
and not a national basis. The rapid growth of West Coast ex-
ports to some 140,000 tons, which corresponds to less than 1%
of the total national consumption, added fully 30% to the re-
gional demand for waste paper; the consequences of this sudden
surge were predictable.
• While the high prices of the 1073 to early 1974 period have
dropped sharply, they are not likely to remain at their present
low level. The cost of the alternative raw material (wood
fiber), the high capital cost for pulp mill construction, and
the cost of solid waste disposal all contribute to increased
demand and boost prices for waste paper. Thus, while there
will be additional "blips" from sudden surges of new demand
and "dips" from general business slumps, waste paper will con-
tinue to be a major source of fibrous raw material for both
domestic and export uses.
• The growth in demand for the major waste paper grades will be
quite dissimilar. The differences are influenced by the
stage of development of their reuse applications.
The remainder of this section discusses the factors that influence the
projected demand and hence the price of the major categories of waste
paper.
* The interpretation of these price trends is discussed in greater de-
tail by F.L. Smith, Jr., in "Wastepaper Recycling: Review of Recent
Market Demand and Supply," Pulp & Paper, Vol. 49, No. 10 (September
1975), p. 148.
VI-44
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
2. OCC
The recent innovation of using OCC as a fiber blend in the manufacture
of kraft liner is one of the few major new applications of S/F since
the introduction of 100% recycled newsprint in the early 1960's. For
some time, smaller kraft mills have been blending virgin kraft with
OCC to make a few kraft specialty and industrial converting grades, but
the tonnage used in this application was small compared with the
potential in the containerboard category.
Hence, in addition to the growth of OCC in its traditional applications—
bogus medium, jute liner, and as a fiber blend in recycled board and
industrial converting grades—the new application of OCC as a fiber blend
in kraft liner will increase the demand for this waste paper grade. The
potential supply is adequate to fill these new and expanding applications,
but higher prices will be required to encourage its collection. The net
effect, we believe, will be a rise in price from the current low of
$20-$30 per short ton, f.o.b. dealer, to $40-50 through 1975-1978.
Possible new applications leading to a further increase in demand after
1977-1978 could raise prices substantially beyond that period.
3. News
The recent introduction of old news as a fiber blend in the manufacture
of newsprint is another (albeit smaller) new application of S/F.
Southwest Forest Industries is installing deinking facilities for this
purpose in Snowflake, Arizona, and Publishers Paper Company in Oregon
recently announced plans to blend up to two-thirds S/F with virgin fiber.
Other small, nonintegrated paper mills (e.g., Manistique Paper Company
at Manistique, Michigan) have been blending S/F with virgin fiber in the
manufacture of groundwood specialty papers; however, the tonnage potentials
in these historical applications were much smaller than in newsprint
manufacture by the larger mills. Hence, in addition to the growth of
old news in its traditional applications—100% recycled newsprint, and
as a fiber blend in groundwood specialties and recycled folding boxboard—
its use as a fiber blend in newsprint will increase the demand for this
type of waste paper. An adequate amount Is available, but the price will
have to rise to stimulate the supply, particularly from the more remote
and less populated regions that are now only marginally economically attractive.
From the present low of some $10-20 per ton, f.o.b. dealer, we expect the
price to increase to $30-40 through the 1975-1978 period. Obviously,
regional differences will continue, and temporary fluctuations will be
created by sudden demands for new supply or general economic conditions.
4. P/S and High-Grade Deinking
The prices of P/S and high-grade deinking will almost certainly rise.
As reported previously, new facilities for using these grades are being
built, and existing ones are being expanded. Because of the lack of
sufficient market pulp manufacturing facilities, both in this country and
abroad, these waste paper products are bound to become highly competitive.
VI-45
Arthur D Little, Inc
-------
The growing demand for pulp-substitute and high-quality deinking grades
is likely to stimulate additional supplies of these grades from new
sources. Government agencies are now planning to introduce programs
for the source segregation of high-quality deinking grades.* New tech-
nology is also being developed to recover high-quality deinking (equiv-
alent to colored ledger) from office waste.**
The prices of the numerous grades included in this category are expected
to follow trends in the price of market pulp, although remaining lower by
some $30-60 per ton (the cost of reprocessing and cleaning the S/F).
As the supply of these grades from traditional sources is finite, new
sources must be found to sustain the growth.
5. Mixed Waste
Mixed waste papers are used principally to make recycled folding box-
board and construction papers. Unlike the situation with OCC and old
news, where new applications are rapidly increasing demand, the demand
for mixed waste is tied to the consumption of established paper and
paperboard products. The fact that this consumption has grown sig-
nificantly more slowly than the average for the industry tends to depress
the price of mixed waste.
On the other hand, waste paper is also being recovered for its fuel
value, so there is a viable alternative use for this material. It is
worth $6 to $12 per ton, depending upon the cost of fossil fuel. At
$1 per million Btu's for fossil fuel, the net fuel value of mixed
waste is about $8 per ton.
The net effect of these conflicting forces, one of which would depress
and the other increase its price, is to cancel each other. As shown,
there is an ample supply of waste paper to support current and possible
new applications for mixed waste paper. We do not believe the recovery
facilities for reclaiming waste paper as a fuel supplement will be
built fast enough in the next 3 to 5 years to make any significant dent
in the overall supply. Subsequent to 1980, the practice for recovering
low-value waste paper for its fuel value may be sufficiently established
to drive up the price of mixed waste to its fuel replacement value.
* SCS Engineers, Inc., "Analysis of Source Separate Collection of
Recyclable Solid Waste: Office Separation Systems," U.S. Environmental
Protection Agency (in preparation; to be published in Spring of 1976.)
** F.D. lannazzi, "Technical Developments that May Increase the Use of
Secondary Fiber," 1975 Secondary Fibers Testing Conference, Madison,
Wisconsin, September 16-18, 1975.
VI-46
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
SECTION VII
AVAILABILITY OF WASTE PAPER
This section deals with the cost and availability of waste paper. It
includes an assessment of the historical, present, and projected avail-
ability of the major waste paper grades by geographic regions and the
cost components of paper stock delivered to consuming mills. The analy-
sis is based upon published and unpublished information and on inter-
views with waste paper suppliers, public officials, and management of
paper companies that use this fiber resource.
A. GENERAL APPROACH
To project the availability of waste paper, one must first correlate the
various waste paper grades with the paper and paperboard products from
which they originate. The future supply can then be determined by pro-
jecting the market demand for the original products. We used 1977 and
1983 as the interim years for projecting the demand, and hence the theo-
retical potential supply of waste paper.
Since waste paper is a solid waste material and not manufactured to rigid
specifications, the correlation between original products and waste paper
grades is not always distinct. The correlation between containerboard
and newsprint on the one hand and OCC and old news on the other is quite
satisfactory; that for pulp substitute, deinking, and mixed waste papers
is significantly less distinct. In Table VII-1 we have attempted to
correlate the original products and the corresponding waste paper grades.
Note that all types of original products are found in the mixed waste
paper category; thus, unlike the other major waste paper grades, the
identity of the original products is not evident from this grade desig-
nation. For purposes of this analysis, however, we have assumed that
mixed waste is composed of printing and writing grades; hence, the po-
tential supply can be correlated with the consumption of those original
products. If other assumptions were used regarding the composition of
this grade, the theoretical supply would be different.
Table VII-2 summarizes the 1973 U.S. consumption of paper and paper-
board by the major functional groups used in this study and projects
their respective growth for 1977 and 1983. These figures (which were
given earlier in Chapter III and are repeated here for convenience) rep-
resent the total theoretical supply of waste paper for the studied time
periods.
To estimate waste paper reuse in the United States by 1977, we have used
API capacity survey data. Since engineering and construction usually
require 2-1/2 to 3 years to bring a major new project on stream, the
data gathered in 1974 provide a sound basis for projecting the consump-
VII-1
Arthur D Little, Inc
-------
TABLE VII-1
SOURCES OF WASTE PAPER STOCKS AND THEIR RECYCLE APPLICATIONS
Source
(Functional Group)
1. Containerboard
2. Groundwood Paper
Waste Paper Stock
OCC, Mixed
News, DI (GW)
Mixed
3. Tissue and Other Machine P/S, DI(CP)
Creped Paper Mixed
4. Folding Boxboard
a) Solid Bleached P/S, DI(CP)
b) Combination Mixed
5. Printing, Writing and P/S, DI(CP)
Related Mixed Office
Waste, Mixed
Printer's Waste
6. Industrial Packaging, Mixed, P/S
Converting, and
Miscellaneous
7. Construction Paper and N.A. (internal
Paperboard recycle)
8. Market Pulp N.A.
Recycle Application
Functional Groups:
1, 4b, 6, 7, 8**
Functional Groups:
1,2,3,4,6,7,8**
Functional Groups:
2,3,5,6,7
Functional Groups:
a) 3,5,8**
b) 1,4,6,7
Functional Groups:
2,3,4,5,6,7
Functional Groups:
1,3 (unbleached kraft-tissue)
4,6,7
N.A. (internal recycle)
Functional Groups:
1,2,3,5
OCC - Old corrugated containers
DI = Deinking
P/S = Pulp substitutes
CP = Chemical pulp
GW = Groundwood
**Market Pulp manufactured from preselected grades of paper stock has been
postulated but is not currently a significant factor
N.A. = Not applicable
VII-2
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
en
C
ro O
00 4J
ON
^ s
§
v— '
0)
Cd BJ VJ
0) ,£ «C
> 4J 8-S
0)
t/3 4J
sa cu cd -—-
CM O 00 pd M
1 H Cd X
M H M ,£3 ->.
H O CU 4J S^
>Cx2 !i "> **^
HM |^ .J ^"
l-l < O
wo n
rJ Pd O
W Pi
F-< O
^ en
W 0
P CO O
F^ 4-1
P ^
§•
O
M
O
r-l
cd
c
O
•H
4-1
0
C
O 00
• •
m m
CM r-l
oo vo
• •
CO CM
CO ^D
• •
O CO
CM iH
CO *^O
CO CM
r~ CM
1-^ CM
rH rH
13
Cd
O
f^ T3
M O
0) O
c &
•H ""O
cd C
4-1 3
c o
0 M
u o
CN -J- OO rH in
• • • • •
in ON v*o co oo
rH rH
in o m ON m
• • • • •
CM CM CO CM CO
m co vo m ON
• • • • •
rH r~- m
rH
T)
CD *O
4-1 >-l
cd cd
rH O
(S *C W
cd 13
•o c
C oo cd
cd C oo
•H (3 M
00 00 -H CJ
i-i rl ^4 l-l Cd
Cd 4-1 CJ 0) P-I
O -H cd >
rO »H PL, C C
* IS O O
O rH U -H
pq . cd 4-1
00 -H O
00 C rJ 3
01 C -H 4J (-1
3 -H 4J CO 4-1
co 13 C 3 co
M rH -H 13 0
•H O M C O
H PM PM M O
00
•
o
ON 0)
c
o
•H
4-)
O
01
o
i — 1 C^t
CO ••
•
a
M
n
0)
rH
<• 4-1
• 4->
m -H
•
Q
M
3
4J
^
rH TJ
• C
ro cd
r~\
ro
ON
rH
*^-x
0)
0 0
l-~ 0)
O
U
Hn
o
4J
C
C/3 CD
<3 4-*
H r4
o cd
EH p,
0)
O
%
CO
t
^
t m
V)
w
C_)
1
C/l
VII-3
Arthur DLittleJnc
-------
tion of secondary fiber in 1977. However, the projection cannot be pre-
cise, as there will inevitably be some additional previously unannounced
or incremental expansion and some plans could be cancelled or postponed.
General economic activity in 1977 will also have an important effect on
reuse.
The analysis for 1977 is predicated on announced new capacity; that for
1983 simply assumes that the rate of reuse will continue to grow at the
same rate between 1977 and 1983 as it is projected to grow from 1973 to
1977. The purpose of making that assumption was to determine whether
the potential supply could sustain the substantial rate of growth that
is expected to occur in the 1973-77 period. Note that the derived level
of recycling was not used to estimate the likely level of secondary fiber
use in 1983. Ultimately, for the 1983 projection, we used other factors
that were identified and evaluated in the study, such as competitive
process economics, product quality level, possible deficiency in market
pulp supply, and comparative prices of pulpwood and waste paper. (See
Section X.)
In addition to estimating the amount of waste paper to be reused in the
United States by 1977 and 1983, we have also projected export tonnage to
derive the total "recovery rate" (as defined in Section V) for each ma-
jor grade by major geographic area. In this section we have simply as-
sumed that the exports of waste paper will increase by about 8% per year
through the studied period. This assumption grossly understates the
doubling of export tonnage that occurred between 1973 and 1974 (from
700,000 to 1.4 million tons). In Section X (Analysis of Data), we use
a higher export tonnage to reflect our belief that while it may not be
economically attractive to reuse the recoverable tonnage of waste paper
in the United States, there will be increased export opportunities for
this material.
Using actual 1973 data and these assumptions, we have developed an over-
all fiber balance for 1973 and 1977 in Figures VII-1 and VII-2 respec-
tively. The analysis reveals that even with the projected substantial
increase in S/F recovery between 1973 and 1977, the potential theoreti-
cal supply — i.e., the amount of solid waste — will increase from 43
million tons to 47 million tons by 1977. Table VII-3 shows the deriva-
tion of the quantity of permanent stock and non-recoverable given in
Figure VII-1.
Some of the factors influencing the potential recovery apply to all
grades, while others are specific to the individual grade under consid-
eration. The factors considered in this analysis are discussed below.
Since only the more populous areas can support an economic collection
system, population concentration is a key factor in this assessment.
Accordingly, we have calculated the percentage of each state's popula-
tion that resides in counties of over 100,000; this percentage is called
the Population Concentration Factor (PCF). (With only a few exceptions,
the PCF is about equal to the percentage of a state's total population
VII-4
Arthur D Little, Inc
-------
1
1
1
1
1
1
••
1
1
1
1
1
1
1
1
1
1
1
TABLE VII-3
IDENTIFICATION OF PAPER GRADES GOING TO
PERMANENT STOCK AND NONRECOVERABLE - 1973
„ _ . Paper to Permanent
Domestic p , „ , .
,., _,.,•_ Stock or Nonrecoverable
LiOnsumption
Functional Group (MM tons) Percent MM tons
Containerboard 17 . 7 Neg Neg
Groundwood Paper 12.3 5 0.6
Tissue and Other Machine
Creped Paper 4.0 50 2.0
Folding Boxboard 7 . 3 Neg Neg
Printing, Writing &
Related 11.8 5 0.6
Industrial Packaging 7.3 10 0.8
Construction 6.6 80 5.3
TOTAL 67.0 9.3
Sources: Consumption figures from Table 111-45; other data
are Arthur D. Little, Inc., estimates
VII-5
Arthur
-------
•- CM
CN
s
i
c
i
T3
8
0)
CC
1
r>
i
~O
0)
1)
>
O
o
(U
CC
8
j
•o
OJ
LJJ
t
§o o
o o
*r" co o"
2- CM CM
i ,
-5 -o
ro c
ro
— (J —
8 IS
= £ 3
o o ?
X 0 £
i
a;
ro
g
;o
"o
CO
i
0
r-T
CD
§ §
co" en"
1
"
co
"S
0
ra?
*» 0- O)
S; "srg
<— o
c ^ ^"i
.9 ™ °- fe (S ^ Q . <5
S. ™ ^ "^ 1 Q. ^ ? ^j." Q £j
fin ote™ go - 1 o = % «
ftgll? ^5 i |^> 11
ctajco^° ^CD ""* °-o^ cJJ
— 5. p — ^ •- ^5 "^ ra^J 5°
1^3 | i 1 ^« ^ 5 if 1 g"
«>*--gc^ ^fe fe rf.s;= « -
CJ^ocog"' ato a - $ 3 Sji"
i|| IQ | it "E- ||| is
R*~ +_i X ^ ^ *2 u 3pr^ o. — .*
"^(5Q.^c 3*£ ** o5i^ Q.^J
^ ™ « LU 0 ~ S ^S.0)5. >' 1"^ £ =
• 2ro •':-S.o)c51££o ^Sff S •£
Dl(/?DH^^'o'?Ec:i S? g. 3<
w,"E^ ui"0" cra D™E-X ^"d)0 cc"
3p "3*^ S® TO^-O _c £ c ^ ^ O
lislH^fiJKill
ro ^- C (Q "O t (Q ^ £* i_ ^ro C
*-2L^*-.cOi-i3T S 3j^.. E
3raO3ott)3Ou v OOm o--
CD 0- O CD CO D CD CJ CC LU X 2S O =
" 0
•2 o
og • €
a J; o
X ^ ^
LU CO °"
M
1
..II i =^ II
*2 <5 — ^- ^- ^cu 5"^
I Is 1 1 III ll
CO
t~.
O)
CO
a
LU
LU
X
I-
cc
O
o
00
CC
LU
00
u.
CC
LU
o
LU
tr
VII-6
Arthur DLittklnc
-------
CO
CM
CN
CO
CO
a>
CM
CN
CD
o
o
g
D ^D
3 ^?
D ol
•*»
, i
-a
CD
I
X
01
/
T3
CD
i_
CO
8
CD
DC
*
88 8
•*. C» 00
oo" •*" <-"
«- CN CN
i
.C
re
H
T3
O
1
O
I
I I
"re
.5 £
0 |
1?
ii
o S
8 g
CO ^
CO c
•» s
J
T3
re
Ji
1 0 CD
1 /i 53
CO re
+^ Q)
CD C >
•^ a> o
E co
5 (00)
5 E fe
~ .s 2
si
O
§
in
o>
CO
4-«
a
p--
O>
^-
c
o
'i-i
a
E
3
c/>
C
O
u
to
T
o
o
CN
at
CO
c
o
I
"D
O
II
ai co
VII-7
.c
u
= 1
O •§
o
°>
>
o
D CJ
If
O
fz
» re
•*-" —
(D
e
c -g
~
•t C
s g
CD X
-O
•o C o
C 0) w
«•§ s
j2 £ >-
S = re
j? c E •"
~ .2 < 2
w zz n
2 c ? o
E E •£ -c
1^3:"
< ^ I i
U)
LL
a>
CD
CO
S 2
M
LU
co
Q
Z
D
LU
I
I-
DC
O
LL
LU
O
3
DC
LU
CO
ed
ou
a
c
a
re
-D
(O
C
O
'€
CD
'5"
a
3
^
-
1
QC
LU
0
UJ
cc
D
O
Arthur D Little, Inc
-------
I
I
that live within one or another of the Standard Metropolitan Statistical •
Areas in that state.) Other population concentration indices could be I
used, such as population per square mile; however, we believe that the
PCF as derived in this analysis provides a more meaningful indication _
of this important factor. •
The other factor used in this analysis is the "G" (Generation) factor.
This factor indicates the relative employment in the manufacturing in- •
dustries in each state, since it is the ratio of the percentage of such |
workers in that state to the national percentage. Depending on the
state, its value ranged from 0.15 to 1.46 in 1972. The "G" factor is •
useful in evaluating OCC availability, as will be explained shortly. •
In making this assessment, we calculated the data on an individual
state basis. The results are listed in Table VII-4, grouped according •
to the nine individual U.S. Census Bureau regions. However, because B
of variations in the size and other characteristics of these regions,
certain ones were combined (or subdivided) in our analysis. For ex-
ample, the New England and Middle Atlantic states were combined, while
Alaska and Hawaii were split off from the Pacific region.
"Collectable tonnage," as defined in Section V-A, denotes the quantity •
of waste paper that is economically available for recovery but not nee-
essarily for economical reuse in a paper or paperboard manufacturing
application. It is not a precise term but simply an indication of the •
magnitude and location of the potential supply for additional waste I
paper recovery. Other factors, such as the magnitude of the available
supply, its proximity to a mill, its value compared with the cost of an •
alternative raw material, and its utility in papermaking applications, |
all influence the economical reuse of waste paper in paper and paper-
board applications. These factors are discussed following the analysis _
of the amount of waste paper that is economically available for recovery. •
I
I
B. COLLECTABLE TONNAGE OF OLD CORRUGATED CONTAINERS (OCC)
1. Bases of Evaluation
Although the name of this category implies post-consumer waste, it is I
generally defined to include pre-consumer waste (double-lined kraft
cuttings) generated at the corrugated box plant as well as old corrugated
boxes. While the term may be misleading, we have used the conventional •
nomenclature, since these two discrete paper stock grades are combined •
in most of the statistical data. In assessing the potential recovery
of OCC, we considered the respective characteristics of each and, •
ultimately, its reuse potential. |
As indicated previously (Table VTI-1) , OCC is derived solely from the •
containerboard functional group; hence the projected demand for those •
products became the theoretical potential supply of OCC. The potential
VII-8
Arthur D Little, Inc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
w
CQ
H
W
PH
PM
W
H
C/D
^
O
W
O
H
W
co
O
H
Pi
W
H
O
O
W
H
CO
8
H
O
W
W
CO
C
O
•H
4J
cfl
ft
O
ft
CM
ON
CO
H
CO
HJ
•H
4->
co
3
TJ
a
M
Cfl
fll
w
<
C
O
•H
4-)
cfl
4-1
C
OJ
o
C
o
u
C
o
•H
4-1
rH
3
cx
o
PH
C
o
•H
4J
rH
3
cx
o
PM
0)
4J
CO
4J
CO
^-i *J
4-> O
•H cfl
O O
d" "d* *^ in "d"
m
ON CO CO CM O rH
0 O O O 0 O
V
in *^ ON P** ••d" ON
rH O O m rH O
CM CO VO CM CM O
CO ON ON OO rH in
CO
CM O ON rH CM 00
••d" "-d1 *J" rH
rH t^ CO 00 rH
ON O O vO O CO
CM CO ON OO 00
00 rH 00 O ON S Pi u
ON
^^
oo
rH
00
0
VO
*sD
^O
^
CO
v«^
**
oo
r-^
00
oo
m
ON
ON
0
CM
rH
P
3
i_j
o
w
r^
w
f-« rH f-
00 vO CM
00 rH CM
CO rH rH
O vO CO
CO *3" CO
-* CM CO
rH O rH
vO vO CO
r^ co co
in oo co
ON r- m
^- ^-
CM rH -tf
CM
O CO CM
co m O
ON vO ON
CM OO CO
oo m r*.
oo co m
vo r^ vo
vO vO CM
CO CO ON
00 1^ rH
rH rH
Cfl
•H
^> C
CD cfl
^ en >
t-l tJ rH
o cu >i
t>-< ^ CD
Pi
S & C
0) V Q)
oo
^~*
00
CM
m
*^j-
i"^
CM
O
rH
s-**
rH
N^
f^
vO
oo
CM
^— '
rH
00
rH
ON
m
VO
r^.
CO
u
1 1
H
rS
•^
hJ
H
<^
W
rJ
P
P
M
^r|
ON rH
OO ON
CM CO
rH rH
m oo
CO CO
rH 0
rH rH
CM rH
CM ON
CM CM
rH VO
<]• CO
o m
rH CM
CM m
CM rH
00 VO
VO rH
rH
CM in
m CM
CO rH
00 ON
r-~ CM
o m
rH
Cfl
Pi
CO
0 tH
•iH TJ
J2 P!
O H
CM CM
-------
/— s
T3
4-1
£
O
O
^-
1
M
H
^>
W
rJ
9
H
Pi
W
P-j
Pn
W
H
CO
•f£
£2
O
^H
H
M
FQ
<£
i_J
M
^3
£>
<^
w
53
H
O
53
M
U
53
W
5>
PM
53
M
CO
U
1 1
H
CO
IH
w
H
C_3
<£
P5
<5
U
pa
H
H
CO
/—.
W
H
O
W
PJ
CO
rH
Cfl
•H
, ,
CO
3
C
H
cfl
i-i
"^
C
O
•H
4-1
C cfl
O J-i
•H 4-1
4-> C
rH 0
3 C
a. o
o a
a.
c
CM O
r^ »H
rH CO
rH
£J
p.
CO O
M p_
CO
w
c
o
•H
4-1
CO
rH
p.
0
PH
QJ
4-*
,— i
Cfl
CO
o
>> J-I
4-1 a
•H cfl
,*j
4-1 =
o O
C
(3
&*•€
OJ
!-i cn
cfl a)
cr -H
C/3 [5^
^^
•
pLj
•
AJ CJ
c •
p^
^^
r\
v^x
/""N
5s?
v»x
p^
*
U
•
PH
C
pi
rH
cfl
4-1
H
oo CD ON co co r*"» o oo vo
VO O ON in rH rH VO VO rH
rHOOtHONONO rH 00 OO i-O P**" **O
OLD OOr— li-OOOOLO
CNO Od" CS LA CO uO LT)
•
LO i — i ^] LO ^D co *^" i***- r*^
ro • co m ro co CN
!^H
co^-ooor^^ra\ -H T3
£ rH M -H ,C rC 60 -H
CO >,J-JM)4-J4-14-l(-jLj
.rH(-lCO)-lWS-l3OO
"Uco-H-r-iaJooairH
QJSpt'StSSCoOP^
VD CM CM 1^
in **^ o ^o
O CM CM CM
rH rH rH rH
/-s r- -* ON CM
m co co CM co
V '
1 — • iH CM ^" CO
(^ rH rH rH iH
vO in -3" ON vD
r~ ON -* O rH
00 O CM rH t--
r^ x^- ^f- u~i , to -H
CO ^1 W Cfl CO
O W p CO
3 r-~^* *^" *^~ CM CO CO CO <3"
••— '
vc co-3-cMrHmoNinco
ON OOOrHOOOO
i— i ONvDinr-^mmvor^
oo rH in
O ^ ^i O QJ J-I 4J QJ
SMlSCOS3<3t353
CN
.
CO
CM
r^
00
00
CO
vD
OO
s~^
vD
v^_*-
rH
ON
m
^
ON
CM
^
0
oo
oo"
^
M
^
H
£2
^~i
o
s
VII-10
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
^^x
T3
4J
C
0
CJ
N — •
o-
i
M
H
>
W
rJ
pq
^-^
H
P<
H
M
, i
*—l
M
PQ
^A
<*
rJ
H
<
>
-l
<
C
o
•H
4J
C CO
0 H
•H 4-1
4-1 C
Cfl CU
rH U
3 C
a o
0 CJ
a,
CN O
r~~ -H
as 4-*
rH Cfl
f—f
3
a
Cfl O
M PH
Cfl
<
ffi
C
o
•^
4J
cfl
rH
3
a.
o
PH
O
>, 4J
4J O
•H c^
> fc
•H
4J r
a o
< =
N-^
X
C
cfl
Prf
gsO
cu
)-l CO
cfl CU
3 rH
rr* «^
W PI
cfl S
*'~s
PM
^ U
C •
cfl PL,
Pi
,Q
^^
6-«
r-r .
MH
U
•
PH
A!
Cfl
erf
B-5
rH
CO
4J
0
H
CU
4-1
cfl
4-1
Cfl
OS CN LO rH !>•
CO CM CO LO LO
oo a\ oo co f
CO CD CD 0 0
O O CO rH f^
CM rH O-
as r-~ -* CM CM
rH CM -* VO O
rH
CM rH CO CM O
OS OO OS rH LO
rH OS VO -tf I-- O CM CM
vo x£> as --l CO rH CO
ts o cj <: PS
/^
rH
x^^
fr
o
o
CM
CM
LO
ro
o
o
CM
CO
CM
•%
OO
O
CM
H
O
H
Cfl
p
C
O
•H
M
(1)
1-t
W
H
g
VII-ll
cu
a
o
u
a
0)
Q
en
cu
, w
"T3 C
CO O
fi
cu a
.C rH
cfl
o
14-|[
o
CO
M
3
O hJ
CO
•H
4-1 l-l
CO
4J
Cfl
I
CO I
Cfl
CU CO
rJ rJ
Cfl O
T3
C
CO Z
C O
o =
•H
4J 13
cfl C
rH Cd
CX PL,
O U
0)
a
rJ
o
CO
Arthur D Little, Inc
-------
supply is projected to grow from some 17.7 million tons actually con-
sumed in 1973 to 20.0 million and 25.0 million tons respectively in
1977 and 1983.
2. Regional Supply/Demand Patterns
a. Double-Lined Kraft Cuttings
The quantity of double-lined kraft cuttings and other preconsumer waste
can be correlated directly with the projected demand for containerboard.
Typically, the quantity that is discarded is 8% to 14% of the tonnage
of the incoming raw materials—linerboard and corrugating medium. The
low end of the range (8%) is characteristic of box plants making long
runs of standard-size boxes; the high end of the range (14%) is charac-
teristic of smaller box plant operations making short runs of highly
specialized boxes. We assumed an average overall scrap factor of 10%.
A second assumption in deriving the quantity and location of the availa-
bility of double-lined kraft cuttings is that the containerboard is
converted in the same Census Bureau region in which it is used and dis-
carded. In view of the bulky characteristics of corrugated container-
board, this is a reasonable assumption. These two assumptions enable us
to derive the quantity of double-lined kraft cuttings from the projected
regional demand for containerboard.
Figure VII-3 shows the geographic location of corrugated box plants,
and Table VII-5 lists estimated data on the availability of double-
lined kraft cuttings in 1973. The relative amounts and geographic dis-
tribution of this waste product are expected to remain essentially the
same between now and 1983; thus they are not shown separately but incorp-
orated within the overall estimate of OCC availability.
b. Old Corrugated Containers
The potential resource from post-consumer waste is significantly larger
than the preconsumer fraction but more difficult to quantify. The
basic approach is to take the national average consumption of container-
board and modify it to reflect the population concentration and indus-
trial activity of the studied region (state) compared with the national
average. (See Appendix C-2.)*
The previously derived Population Concentration Factor was applied to
that portion of the theoretical total consumption used in the retail
*An alternative, more refined method of calculation that does not rely on
national average consumption is explained in Section VII-F. Examination
of the tables and graphs in that section shows that while the alternative
method produces somewhat different figures for the individual states, the
regional data are essentially unchanged. Therefore, we have elected to
base our analysis on the method originally used and discussed here.
VII-12
Arthur I) Lit tic Inc
-------
I
I
I
V)
(A
Q
Z
D
a.
X
2
a
cc
DC
O
O
O
<
CO ^
r> >
O> QJ
T §
> o
o u.
s
- Q
"§
o
^
u
o
I
VII-13
Arthur D Littlejnc
-------
TABLE VI1-5
SOURCES AND AVAILABILITY
Census Region
New England
Middle Atlantic
TOTAL NORTHEAST
East North Central
West North Central
TOTAL NORTH CENTRAL
South Atlantic
East South Central
West South Central
TOTAL SOUTH
Mountain
Pacific
Alaska and Hawaii
TOTAL MOUNTAIN & PACIFIC
TOTAL U.S.
OF NEW KRAFT
Container-
board Con-
sumption
(000 tons)
1,032
3.208
4,240
3,499
1,402
4,901
2,688
1,096
1,683
5,467
730
2,266
94
3,090
17,700
CUTTINGS ,
*
Scrap
(000 tons)
103
321
424
350
140
490
269
110
168
547
73
227
9
309
1,770
1973
% of Total
Available
Scrap
6
18
24
20
8
28
15
6
9
30
4
13
1
18
100
SOURCE: Consumption based upon U.S. Bureau of Census data,
reapportioned to major geographic.regions by ADL.
* Assumed to equal 10% of region's containerboard consumption.
Includes all discards from converting plants, including new
corrugated cuttings, new double kraft lined corrugated and new
kraft lined corrugated cuttings.
VII-14
Arthur!) I ittlr lix
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
sector of the economy. Statistics compiled by the Fibre Box Asso-
ciation (Table VII-6) indicate that 42.2% of the total container usage
occurs in the retail sector; hence, the collectable tonnage from this
source is:
[theoretical quantity] x [percentage used in the retail sector
(i.e., 42.2%)] x [PCF]
In a similar manner, the amount of containerboard used in manufacture
is adjusted to reflect the individual state characteristics. In this
case, the ratio of the state's manufacturing activity is compared to
the national average to develop the "G" factor. Hence, the collectable
tonnage from this source is expressed as:
[theoretical quantity] x [percentage used in the manufacturing
sector (i.e., 57.8%)] x ["G" factor]
The total collectable tonnage is the sum of these quantities. Table
VII-7 is an example of the calculation made for an individual state;
similar calculations were made for each of the 50 states and projected
to 1977 and 1983 with appropriate adjustments to reflect market
demand projections for containerboard.
Table VII-8 summarizes the apparent consumption of the original con-
tainerboard, the collectable tonnage, and the recovery rate of OCC
in 1973. (Note that in Tables VII-8, -9, and -10 the term "OCC"
includes both old corrugated boxes and box-plant waste.) The analysis
reveals that in 1973 on a national basis, the "collectable tonnage"
amounted to some 15.3 million, or about 86% of the apparent 17.7
million ton consumption of the original products. It is also clear that
the ratio of collectable tonnage to apparent consumption is highly
variable, ranging from 102% in the East North Central region to 59%
in the Mountain region. The ratio in Alaska and Hawaii is even lower
than in the Mountain region but is not considered significant because of
the comparatively small quantity available and its remote location.
The apparent anomaly in the East North Central region, where the collect-
able tonnage exceeds the apparent consumption, simply reflects that the
calculated use of containerboard in that region is greater than the
national average. Similarly, some of the data presented later (e.g., P/S
and deinking) will indicate a regional recovery greater than the apparent
consumption, because the region is a net importer of the studied waste
paper grade.
The tonnage of OCC that is reused in each region is based on actual mill
survey data gathered by API. However, data are not available to identify
the paper stock grade exported from specific census regions; accordingly,
we postulated these data on the basis of actual total aggregate data
reported for 1973 in Section V. Since the quantity of total U.S. exports
VT.I-15
Arthur D Little, Inc
-------
TABLE VII-6
SHIPMENTS OF CONTAINERBOARD PRODUCTS BY END USE, 1972
I. Directly Proportional To Population Data
Percent
Food and kindred products 5.7
Meat products 5.8
Dairy products 1.9
Canning and preserving fruits, vegetables and
sea foods 6.1
Bakery goods 1.7
Confectionery and related products 1.3
Beverages 3.7
Fresh fruits and vegetables 1.7
Tobacco 0.7
Apparel 1.3
Furniture and fixtures > 3.5
Printing and publishing, except books 1.1
Drugs 0.5
Soaps, detergents, cosmetics, toiletries 2.4
Household appliances 3.1
Radio and television sets 0.4
Toys, sporting and athletic goods 1.3
42.2
II. Directly Proportional to Industrial Activity* 57.8
*Fibre boxes consumed in manufacturing, e.g., automotive
assembly.
Source: Extracted from "Classifications of Shipments by End Use,
1972" in annual report of Fibre Box Association.
VII-16
Arthur D Little, Inc.
-------
1
1
1
1
1
1
1
1
1
i^V
1
1
1
TABLE VII-7
SAMPLE CALCULATION OF COLLECTABLE TONNAGE FOR OLD CORRUGATED CONTAINERS
Basis: Base Year 1973
a
National Avg
Sample State
Total Consumed in State
Per capita consumption x
•iiro r -jr ton
X 2000 Ib
Collectable Tonnage
Amount from Retail
Gross (A) x % used in
444 x 42.2%
Collectable=(B) x PCF
187 x 96.3
Amount from Manufacture
Gross (A) x % used in
444 x 57.8
Collectable =(D) x "G"
257 x 1.022
. per Capita Consumption - 152.5 Ib
- Massachusetts (5,826,000 population)
(000 tons)
Gross Collectable
state population (A)
v R Q o (\ r\r\ n /• /i /»
X J • OZ. D • UUU trtftT
Retailb (B)
187
(0
180
Mfgb (D)
257
d (E)
262
TOTAL COLLECTABLE TONNAGE (C + E) 442
(Excludes double-lined kraft clippings)
Excludes converting waste,
which is assumed to be 10% of total consumption.
Shipment of Containerboard Products by End Use, from Annual Report
of Fibre Box Association, 1972
°"PCF" is that portion of a
over 100,000
"G" (Generation Factor) is
state's population located in counties of
the ratio of the state percent of employees
in manufacturing classifications and the U.S. total percent in man-
I
1
ufacturing - Ref U.S. Department of Commerce Publication Country
Business Patterns, 1972.
VII-17
Arthur D Littl
-------
00
1
rH
M
W
PQ
H
co
ON
rH
1
53
O
1 — |
O
fd
pi
o
M
EC
o
CD
C£
CN
0)
oc
rd
C
C
O
H
0)
rH
XI
CO
4J
a
0)
rH
.—1
0
°
1 — '
4J
C
QJ
1-1
ra
O.
<;
01
ra c
4-1 11 O
U 00 4J
aj rt
rH C O
4_( r-H C O
d) O O O
Z t-> H ^
e
o
•H
4-1 4J
c a-
0) g
Lj 3
4-1 n] 01
o a. e
a. o
!~S < U
0)
M
u oc
dl CO
O i-l C
o o
6-S 0 H
_
01
-H C
t3 0
o
H C
o
^^
01
•a c
0) O
LJ n tft ^
0 kJ 0
CX Uj • O
X 3 O
0)
c
•a o
3 C
CD o
C£ O
S
c
o
•H
C 0-
a) e
t. 3
UH 03 01
O O- C
D. O
fr-S <£ O
01
o
4-4
0
o
o
C rH ^--
•H d C
4-1 >H 01 O
CX 00 4J 4J
g -H (J
3 >j 3 O
01 o -a o
c o o
C_J O P-i
c
o
•H
00
c^
f^ rH
rH in
<~o o
csi
in CN
m ro
m ro
vj" »Hj-
vO *3"
CO O
^
O vO
co r^
-vt oo
CO vD
CO ON
in vo
ON ON
rH in
oo ON
ON O
CO
CN 00
CO O
O CN
r> *»
i— i ro
o
•H
4-J
P
T3 CQ
C rH
CO 4-J
rH <
oo
C OJ
Ed rH
*"O
.3 -a
CD -H
iz S
00
vD
vO
CN
CO
CO
-3-
CO
00
o
1 1
vO
o
i-H
CN
o
CO
**
rH
ON
vO
r«^
o
-J- CM CN rH
CO in Vt rH
*d" CO CO CN
rH r^ CM r-~
ON CN O vD
ON r^ CO CN
1 j
m oo
-d- 1 1
vD ON CN I — •
-sf rH O VO
ON r^ CO CN
"
i-H
o u
PM C
EH CO .^ ^
E3 rH 4J 4J
Ed 4J 3 3
U < C O
EC f
H 4-14-14-1
Pd 3 to tn
O o co a)
& en Pd IS
o- m >n oo oo oo
i^ o CM ? 6 " P co •
« <" -H rH < T3 ^v
4J CM CO •<»•
m x: i-i i
CO • 4J M >
CX -H
nJ CX 3 P 11
9 - ° ^
^ •* CO "I") rU
00 M CO 4-1 CO CO
00 OvOCU vD CN 1 4->cOBH
^ ^™& ^ S in-S^xco
." "^ ^ ^ C 3X)CO
rH " O X CO a)
in -H • co H 4-1
CO X IH 3 P C
O M 3 PO O O
o o en ex -H
rH i-H t/J X 4-J
•H O X 3 CO CO
CO 'rj 4J en *s
O -H C i-l )-i
iH x: o co n) co
_ _,»__, ,^ ,-, C04-ICOO4-JX)
VO ONVOrH 00 VO CCOPI.OCO
r^ moovt r^ oo oiico.4JT3
•H aw
60 V^ • *4-J *W
QJ O K-t r!3 O O
H-Hg,
•" CO
- 4-1 1 T3
tw CO 01
O inrHoo * « " M 4J UH
in CN co r*^ PM co o
•H ^ .§ X
^ u i w £r
"Ct M a 3
C En r-i co >
CO -H M co o
rH -H U " >J 0
pj ^ ^ £9/5*
•H ^ PH
CO CO
*sr1 Erj c3 • ...
O t/2 r-l CM n
CH ^3 r2J •
•iH O I-H 13
cO "H CO ^ c/3
PC 4J <4H 4
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
ON
1
1— 1
1— 1
>
W
rJ
H
ON
r*H
|
r^
O
L |
0
w
P5
CJ
H
33
P4
o
ej
1)
a:
CM
0)
or
n
c
0
01
r— I
.C
J C
O. U-, • O
X SO
w ^
0)
c
•c o
(U 4-J
en
3 C
J 3
IAJ tO Ul
O D- C
a o
B^° < U
en
C
o
^
o
o
c
^^
c •—* ^-^
O IB Ul
•H C C
AJ -H 01 O
CL OO 4-1 AJ
i'^30
in O tJ o
c o c
0 u-i |j •—
U O PM
c
o
*H
oo
Ol
O OOl O vOO vO 1 — OOCO 1 — CMvO^-f (
O rH 1 CM vO CO ON - CM *^ ^^ rH ["_^i Q
«\ *. »\ 91 «\ * *t ^
rH i— 1 CM CM rH CM rH
oooo oo o aioa)
-3 T< cu cu ceo
C UO<4JOU -HSf
T3 cd PG C CO cvj
CrHH,C.l-H cdJrC SPC
Cd4JC/l 4J4J53rH4J4-> ^
rH<3<|MMrd4J33 C ~,
i-i
HI
P-
6^5
CO
0 O CM
%i co ^ y
H CO . ra
iH CO
CM d)
• 3
a. oo
a -ri
~^oo ™ t*1
j> o y t;
^ CO *O i— 1
•V
r^ >, e
. 01 O
'X I-i 14-1
00 3
O W "O
rH H)
0 ^ ti
•o 4-1 irj
O -H r-l
^! 0 O
j_i cO CL,
30 vO 01 O- rt
00 B « JJ
• ^ ^
O r-l CU
M-i PH
< i
IB
4-1 1 T>
^ f- 5 T3 S
"O h-* QJ >-*
^- CM 00 CO O
^1 r^ -i-l CJ X
4J 06 W
^
O ••
a i-i
CL CU
3 a
0) 0)
•M O QJ ^
_r\ O o) cu
H 0
_J rJ rJ 0
"-At 59^
^! • ...
r^ r-l OJ CO
z
HO..
-------
0
rH
1
M
HH
>
r-ri
a
M
-•
H
1 —
r—
M
pc
.
h—
h-
^-M
C
JZ
<
£3
o
1— I
H
c
C/3
M
O
1
p;
^
f
W
CO
^
tu
D.
CO
Oj
4_i
en
co
3
U-i
O
i-t
>
o
u
(U
02
CNl
0)
c
q
o
H
i— H
J3
n)
4-j
CJ
QJ
i-H
Q
O
iH
4-J
C
0)
n
D
p
u
xi tn
rt d
U 0) O
0) Cfl
rH C 0
•u i— < £ O
QJ 0 O O
2 U H ^
O
•H
V %
rH 3
U-i ftf U)
O D- C
a o
f^ < 0
D
^
«
W dj
(J Q£)
QJ 03
U-I r-t C
O rH C
0 0
S^ U H
, — ,
en
•H C
CO O
o
H 0
O
O
'~N
U)
"D C
QJ O
u o tn
O V- O
CU M-H • O
X p 0
u •—'
t/1
c
-a o
0 U
3 O
d) o
Otf O
^
o
•H
4J U
C CL
QJ B
u-j rQ u)
o a, c
a o
B^ < ._)
Ul
c
o
o
o
O n3 en
•H C C
4-1 -H tn o
CL &D -U .u
E -H U
D U 3 C
U3 O T3 O
C O O
O u-t V-t *— '
U O DH
c
Q
WJ
5
miH vO -*ON CM CMOOrH i-H mrHOO -3"
mo in voin CM ONCOVO ON voa^.vo CM
oor-- m I-HO CM CMCOOO -* mo r~
CMCOrHi-HCM rH i-H rH
vor^ r~ ONO CM oooooo r~- mcMO ON
coco co r*^cM vo voinco in in co
oooo oo r-^r~ vo oco I-H| m oo O O O
coco co r"-*cM vo ONr*-- in| r^ vo in
oo o oo o ooo o oo o
cor-. o oo o ooo o mmoi o
in vO CM ON -^ CO vO ON ON -^ vo C F*-*
r, * *, «\«t M *O*
i-HCMCO *in O oo-d" c^-i moNON co ^tc m
r>*,r> *>m n ^Q*
i-HCMCO vJCM CO
CM I)
rH >*
4-> I-l
co • ,
4-1 4-> I-l
co to a)
o
^ ^ cu
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
is small compared with the amount reused (less than 5%), the overall
effect of error introduced via the allocation of exports is slight. Of
particular importance is the export pattern on the Pacific region, since
fully 50% of the exports are from that region; field interviews of export-
ers were made by ADL representatives to get an approximation of the
quantity of each grade leaving that area.
Although we have reported recovery rates for each region, expressed as
percentages of both collectable tonnage and apparent consumption, we
recognize that there is appreciable shipment of these products between
regions. For example, many populous areas of New England are much closer
to a recycled board mill in the New York City area than to other areas
of the Middle Atlantic states. Hence, it is appropriate to assume—and
field interviews have confirmed—that interregional movements of waste
paper do occur which cannot be accurately documented. A more meaningful
interpretation is obtained by assessing the data for a larger geographic
region, e.g., by combining the New England and Middle Atlantic regions
into the Northeast. In practice, of course, recycle patterns are deter-
mined by the cost of transporting waste paper to the consuming mill,
not by the size of census regions.
With the caveat that the calculated recovery rate by census region is
simply an indication and not a precise figure, the analysis reveals
that net collectable tonnage of OCC (i.e., the additional amount available
for recovery) was 9.7 million tons in 1973. Tables VII-9 and VII-10 pre-
sent the same analysis projected for 1977 and 1983 respectively.
Figure VII-4 summarizes and illustrates the relationship of apparent
consumption of containerboard, the calculated collectable tonnage, and
recovery of OCC on a national basis from 1973 to 1983. Total recovery
includes estimates exports, which are projected to grow from an esti-
mated 250,000 tons in 1973 to some 450,000 tons by 1983.
Figure VII-5 indicates, by region, the recovery rates required to achieve
the growth pattern illustrated previously. The analysis reveals that
the rate of recovery is increasing faster than the rate of projected
demand for the original product, as indicated by increased recovery rates.
Moreover, to sustain the increased recovery rate at the same level in
1977-1983 as is projected to occur in 1973-1977 would necessitate
unprecedented recovery rates, particularly in the South and North Central
regions. There is no industry experience to indicate that such recovery
rates are achievable on a sustained basis.
Figure VII-6 is a graphic representation of the data in Tables VII-8, -9,
and -10. This presentation makes it clear that while the recovery of
OCC in the South between 1973 and 1977 will increase significantly faster
than in any other region on a percentage basis, the North Central region
will continue to lead in terms of actual tonnage.
VII-21
Arthur D Little, Inc
-------
25
c
o
o
20
15
10
0
1972 1974 1976
Sources: Tables VII-8, -9, and -10.
1978
1980
1982
1984
FIGURE VI1-4 AVAILABILITY AND RECOVERY OF OLD CORRUGATED CONTAINERS IN THE UNITED STATES
VII-22
Arthur DLittleJnc
-------
I
I
I
^m i uu
1
• 80
1 !
O)
CD
- § 60
1 °
•
Recovery of Collectab!
.fc.
o
* 20
1
1
O North Central
0 Northeast
A Total U.S.
D Mountain and Pacific
A South
o-^~~
fi^
2^
^^
^
~^*i~'-
_^—^
~~~~^l
^•B — ^—
^^
^
*„—— —
^
^^
~~~*
— — °
A
572 1974 1976 1978 1980 1982 1984
1 Basis: Assumes that the quantity of OCC recovered will continue to increase at the
same rate in 1977—1983 as it is projected to increase in 1973—1977.
— Source: Tables VII-8, -9, and -10.
_ FIGURE VII-5 RECOVERY OF OLD CORRUGATED CONTAINERS BY MAJOR GEOGRAPHIC REGIONS, 1973-1983
I
I
VII-23
| Arthur D Little, Ii
-------
o>
I
CD
tr
o
CO
O
O
CO
r-.
O5
C
ra
cp
CO
_
XI
(0
1
I
t/S
cc
8
o
D
cc
tr
Sg
0 «
u. rx
O £
- 2
I -
< I
Q <
Z (C.
< CD
n m
2 c
o >
U OQ
CO
LU
cc
D
SUOJ_ UOJ||I|/\|
VII-24
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Again, there is no industrial experience to indicate that the recovery
rates shown for 1983 are obtainable. The analysis was included simply to
illustrate what the recovery rate would be if the same rate of growth
projected for 1973-1977 were to continue through 1983.
3. Summary of Analysis
a. Pertinent from 1973 to 1977
• The recovery of OCC is projected to increase from some
5.5 million tons (31% of apparent consumption) to 7.6
million tons (38% of apparent consumption) during this
period;
• The North Central currently has and will continue to have
the highest recovery rate and actual usage of any census
region;
• The recovery of OCC is growing faster in the South than
in any other region and will surpass all but the North
Central by 1977; and
• In spite of the substantial growth of OCC recovery, the
net collectable tonnage of OCC will be some 9.6 million tons.
b. Pertinent from 1977 to 1983
• To maintain the 1973-1977 rate of increased OCC usage, the
North Central and South would need to recover at levels of
62% and 57% (of apparent consumption). The attainability
of these rates has not been demonstrated on a sustained basis.
C. COLLECTABLE TONNAGE OF NEWS
1. Bases of Evaluation
As the name implies, "news" (or "old news") is derived from used news-
print; hence, the theoretical supply can be correlated directly with that
one original product. In 1973, U.S. consumption (hence supply of news)
was about 10.5 million tons; this is expected to grow to some 11.7 million
and 13.6 million tons by 1977 and 1983 respectively.
As will be recalled in the transformation of the individual paper stock
grades into major waste paper categories (Table V-5), news also includes
two types of preconsumer waste—groundwood shavings and over-issue news.
In 1970, the combined tonnage of these two preconsumer grades was less
than 2% of the total theoretical supply. Reportedly, the percentage
of over-issue news has dropped recently as prices for newsprint rose.
Because the preconsumer paper stock grades are such a small percentage
of the total theoretical supply, they were combined with the post-consumer
news grades.
VII-25
Arthur D Little, Inc
-------
The key factor to assessing the potential recovery of news is the PCF.
Earlier studies by the Forest Products Laboratory have established that
about 80% of all newsprint is discarded as household trash; only a
small portion is discarded by the commercial/industrial sector. Thus,
the potential availability of old news may be assessed by studying popu-
lation distribution patterns.
The American Newspaper Publishers Association (ANPA) lists newsprint
consumption by state.* According to ANPA, daily newspapers accounted
for 84% of the total newsprint usage in 1973. With this percentage and
their data on daily newsprint consumption exclusively for newspaper, we
derived the total newsprint consumption for all purposes (including
weekly newspapers, commercial printing, shopping news, etc.). We then
applied the calculated PCF to the derived newsprint consumption to es-
timate the collectable tonnage in each state. These figures were ex-
trapolated to 1977 and 1983 in proportion to the newsprint demand pro-
jection reported in Section III. The state-by-state calculations are
contained in Appendix C-3; only the summary regional data are discussed
in this section.
As stated previously, since waste paper is a mixture of grades, it does not
lend itself to precise analysis. For example, in calculating the net
collectable tonnage of news, the projected old news recovery is subtracted
from apparent consumption of newsprint; however, a substantial amount of
news ultimately goes into mixed waste (averaging 10% of mixed waste) and
is hence available for recovery from that grade. The estimate of net
collectable tonnage is thus overstated by the quantity that appears in
mixed waste.
2. Regional Supply/Demand Patterns
Table VII-11 summarizes the apparent consumption of newsprint (the original
product), the collectable tonnage, and the recovery of news in 1973. The
analysis reveals that on a national basis the collectable tonnage is some
8.1 million tons, or about 77% of the 10.5 million tons of the apparent
newsprint usage. This ratio of potential recovery is only slightly less
than the 86% potential for OCC, which ranks first among all grades.
Table VII-11 also shows the high variability in potential recovery rate
as affected by the PCF, ranging from 88% in the congested population areas
of the Northeast to 69% in the more sparsely populated areas of the South.
Total recovery (i.e., domestic reuse and exports) was about 2.7 million
tons, corresponding to 26% of the apparent consumption, or 33% of the
collectable tonnage. Not shown in this tabulation is the amount recovered
from mixed waste, which was about 300,000 tons in 1973, making the overall
recovery about 30% of the total apparent consumption.
The Northeast is by far the single largest user of waste news, recovering
about 1.0 million tons or about 36% of the apparent consumption. The South
*"Newsprint Statistics," ANPA, Newsprint & Traffic Bulletin No. 12, April
12, 1974, p. 27
VII-26
Arthur I) Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
has the lowest actual tonnage usage and recovery rates. The net collect-
able tonnage (5.4 million) indicates a much larger supply is available.
Tables VII-12 and -13 present a similar analysis for 1977 and 1983 res-
pectively. The analysis for 1977 is predicated on announced new capacity;
that for 1983 assumed a continuation of the rate projected for 1973-1977.
This assumption was made simply to determine whether the potential supply
would grow fast enough to sustain the rate of growth that is expected to
occur in the 1973-1977 period.
Figure VII-7 summarizes and illustrates the relationship of apparent
consumption of newsprint and the recovery of waste news on a national basis
from 1973 to 1983. Again, the recovery as reported here includes estimates
of exports (particularly from the Pacific region) but does not include
waste news recovered from mixed waste papers.
Figure VII-8 indicates, by region, the recovery rates required to achieve
the growth patterns illustrated previously. It reveals that the recovery
rates for the Northeast and North Central regions are substantially greater
than the national average; continued growth in these areas is likely to
keep pace with the additional supply. The Mountain and Pacific region is
expected to achieve the greatest percentage increase in recovery.
Figure VII-9 graphs the data in Tables VII-11, -12, and -13; it shows that
despite changes in their respective rates of recovery, the regions will
retain their relative standings in terms of actual tonnage.
3. Summary of Analysis
a. Related to 1973-1977 Period
• The recovery of old news is expected to increase from some
2.7 million tons to 3.1 million tons during this period, thus
maintaining the recovery rates of about 25% of the apparent
consumption of the original product, or about 33% of the
collectable tonnage;
• The Northeast and North Central regions are by far the
greater users of this material, both in actual tonnage and
percent recovery;
• The net collectable tonnage is projected to increase from
5.4 million tons in 1973 to 6.0 million tons by 1977. At
1.8 million tons, the South will have the largest segment
of the under-utilized resource.
b. Related to 1977-1983 Period
• If the use of old news continues to increase in this period
as it did in 1973-1977, the highest recovery rate will be
experienced in the Northeast and North Central regions.
VII-27
Arthur D Little, Inc
-------
I±L 1
1
^ ,
t"~t
ft
C£.
H
01
TO c
4-1 (U O
U t>0 4-J
d) nj
rH C O
4J l-H C O
01 O O O
Z 0 H ~
c
CO
r^-
Os
rH
1
&
o
M
0
w
Pi
u
EC
PH
P-)
o
o
w
0
PS
o
rH
W
CO
Je5
Ed
H
CO
*^
^g
r^
O
S_i
r_j
pH
rJ
H
pQ
rJ
1 — 1
*^
5
p^
•"^
O
M
H
CO
!z
0
U
1
SH
S
3
§
(.0
en
QJ
ft
TO
OH
QJ
4-1
cn
TO
^
U-i
O
r>l
i-i
QJ
O
O
S
o
•H
4J 4J
c a
QJ E
V-i 3
AJ TO cn
o ex c
CX O
^ < O
QJ
Xi
TO
4J QJ
CJ CUD
QJ TO
O rH C
O O
fr-8 U H
05
rH C
TO O
Q
H O
O
O
f- N
in
TJ C
QJ O
4-1 E *->
MOW
O r-J O
X rD O
w -
cn
c
-a o
QJ 4-J
a o
QJ O
OS 0
CM
oc
TO
C
C
o
H
CJ
^
TO
4-1
U
QJ
rH
^
(_j
c
o
•H
C a
QJ B
u-j TO in
o ex c
&. o
6-5 •< O
,_,
in
C
o
o
o
o
C iH -—•
o TO cn
rH -H C C
4-J J-J -r4 CO O
c cx DO .u iJ
QJ E -H U
^ 3 r-l 3 O
TO cn O 13 O
a c o c
< CJ O P-
c
o
•H
00
0)
r^ enl o CM o
r"*« in en ^o en
CM rH ~S; 00 CO
t> »
rH| rH
CN OO CN OO
OS vO rH 1 —
rH OS rH in
n
rH
00 OS CO CN
in m CM co
vO CM OO
rH
O.-H
vo a s M , CO OJ
• 01 CJ 0) ^
>> r< 3 rJ C
M 3 P3 0 O
o cn o. -H
r-4 W W JJ
vo oo oo in o
OO OO 00 I-- vO
CM CO CN O
r-~ r- m r--
Os OO VO CN
vO vO OO vO
O >-, 3 0) CO
•O 4J 01 ^
CN I-~ O -H C rH H
on r^- ^: cj ai «j oj
• 4J CO CJ 4J J5
C 01 a o oj
•rt ' O cn
CO O M £> O O
•H UH Pw
CJ C-Hr-.
cdtd cdcd "2I-1 umo)
MM MM CPU ^S>
O 4-14-1 4-I4J Cd-HH r<0
•H CC OC3C t-H-rlO OlrJcj
4-1 (U (U rJ *H 0) 0) Ccfluu -rilspH <;
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CM
rH
1
H
£>
W
1-2
PC
H
a)
^ en
a c
4-1 H
PQ
^
M
a
w
H
en
^4
S
O
H
M
rH
«
^
M
2-
-"
S
1
C/0
fr^
OJ
[•v
c a.
QJ E
-u, ro S
O D, C
C. O
N? •< CJ
OJ
-O
2 o
u oc
fi _j r1
ro1 O O
0-i p-S U H
0,
S
^5
Q
>
o
o
0
^
U)
T3 C
QJ O
i-i £ 4-J
OP O
CL <4-j • O
X O O
y— s
U)
C
T3 O
QJ JJ
yj
P O
fli r~ i
os o
u
(ti
c
c
0
H
0)
rO
4J
u
OJ
t— 1
o
O
*-) 4J
C O-
QJ E
P D
y-< rt u)
O a c
D- O
&^ < u
^^
c
0
^
c
o
o
o ci3 en
.— 1 'H C C
-u i-> -H en o
C Q. bC AJ 4-J
QJ E -H U
P D rJ D O
VQ V) O T3 O
a c o c
rO
rH rH
CO CO LTl
T-H O iH rH ^£>
CM OS rH CO
*.
rH
O O O O
-3" O LO LO
CM ON CM VD CO
in rH 1 r^ r^- *^
J ^
CM| CM rH
in ml O vo oo
rH 00 O -
ft fl
rH rH
ON in CO ON
CM rH CM
O rH in CO
>* CM ~tf rH
co r^ in oo
00 r-» O ON
00 CM rH
o o
0 rH 1 1
co r~ m oo
CM vD O ON
00 CM rH
CM CO CM O
r*^ r — . in r*~
o CM -a- oo
O •* co co
CM CO CM r^
CM rH
-* 00 OO vol
r- -* vt - CM CM
vO O OO VO 00
-^ CM r-- NO m
rH CM CO CO ON
CO CO *^- f^
CM rH rH
CM CO CM OO CO
^" r*^ vo m ON
CO -* NO rH
CO rH CM
/^N C_?
T3 M
C fe
ca -H M
rH -H O
c ca r»
^ J« P"N
CM ^
>- S
• cu o
>* H 4-1
00 3
O C/5 TJ
rH 0)
0 >s 4J
TJ 4-1 CO
» — O -rf rH
r-I f V 0
' AJ n) a.
Q) &« flj
CJ 4-1
M X
o M a)
"" ^ i
<^ 4-1 1 TJ
CM n] a)
° "S ti
" M 01 O
ON C 3 (X
•H O X
4-1 OS U
O ••
P. l-i
a. aj
3 a.
to a
Pu
O a) a>
O ro 4-1
•"-„ . ^ S
7 to to ^
r" i d) ty
rH 4J 4J tw
a g o
4J 4J *-i
01 n
o
hJ »-J O
Q Q QJ
-------
CO
1— 1
HH
f— 1
£>
W
1-4
s
H
01
-G CO
^ C
u CU o
0 M AJ
cu n]
T-H C O
4-1 rH C O
(1) O O O
2 CJ H •-'
C
rO
oo
ON
T-H
a
0
M
O
s
U
| |
33
PH
Si
O
o
w
o
prf
o
1-3
^
>H
pa
w
*rt
w
E-H
CO
^c
r^.
(O
L_(
1 — 1
M
PQ
L"J
""~j
^
••^
g
•^
S3
O
M
H
5
u:
rZ
O
o
1
^
p£
£
^
^
c/^
CO
r-l
QJ
D.
o
•H
c a
QJ E
-w (5 3
o cx c
a. o
^ < U
QJ
4-1 QJ
U OJD
QJ td
L*- r-H C
O r-H C
O 0
[XJE-S O H
QJ
•U
n3
U-H
O
>-,
l_.
QJ
>
O
fl>
02
'-"
CO
•-H C
r3 O
C
H O
o
C/l
T3 C
QJ O
u E ' 4-J
O ^ O
CX *4-i . o
X SO
W s-'
to
c
QJ 4-J
tr
n c
QJ O
o: o
OJ
&q
n3
C
c
o
H
QJ
i— *
-D
CO
U
r— I
C
O
C
O
•H
4J 4-1
C CX
OJ E
LM ra en
o ex c
a o
&--S J
« • CU
•a a
c o
0 -rl 6-5
O -H ^ CO
ff) CU CX 4J
V^ 03
U r~ CO
•H 1 QJ
£. e^i JH
a, r^- 3
Q OJ CTN GO
<» M"^ i
CO o IH
» QJ O fl
ro OOUH r^
IH T3 rH
O CU
•n 4-1 B
/—Ion
>> (XMH
M ^ CU
o ft H -a
r-H Q)
O -O CO 4-1
T3 QJ 03 03
f^ O 4J rH
^ 4J rH 4-» P,
CU O 03 03
B O. *H ^1
03 4J
^ U OJ X
o 4J B cu
MH X 03
QJ CO 1
in «
"^ « "S
"* -O T3 iJ
" CU ^i
O oo co o
rH C 3 0.
-H OJ X
4-1 P^ U
r-
O ••
CX V-i
cx
O a> a)
O CC 4J
^ ^2
_ 'CO
— r w aa >
CO QJ H >,
4J 4-) J-i
to w a)
0) 0) >
, _ o
I-J rJ O
S 9 /S
• ...
C/j; iH OJ m
•
r^
cn
hJ ?:
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
20
16
12
c
o
c
o
Apparent
Consumption
1972 1974 1976
Sources: Tables VII-11,-12, and-13.
1978
1980
1982
1984
FIGURE VII-7 AVAILABILITY AND RECOVERY OF OLD NEWS IN THE UNITED STATES
VII-31
Arthur D Little, Inc.
-------
50
c
c
o
JO
to
o
o
CU
8
CD
QC
40
30
20
10
o
A*
D
A
r^=
. — "!•'
— s-H —*
*""^^^^^ ^^^H0 4HBi^H
^
— — -n
. — A
A
O North Central
• Northeast
A Total U.S.
D Mountain and Pacific
A South
I
)72 1974 1976 1978 1980 1982 19
Basis: Assumes that the quantity of news recovered will continue to increase at
the same rate in 1977-1983 as it is projected to increase in 1973-1977.
Source: Tables VII-11,-12, and-13.
FIGURE VII-8 RECOVERY OF OLD NEWS BY MAJOR GEOGRAPHIC REGIONS, 1973-1983
VII-32
Arthur D Little Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
c
o
Q. O)
I I
8 o
o I-
O a>
oj
c <° ^
CD 4_» QC
is °
CO QJ "Til
Q Jll CD
I-
00
suoj_
VII-33
O-
08
CO
00
en
O
r-
i-.
a
CO
T3
n nj
o CN"
I
cc
O
I
>
00
GO
Ul
O
LL
O
Q O
5 v
< ai
2 CC
O O
8§
o>
>
LU
oc
a
-------
I
I
D. COLLECTABLE TONNAGE OF P/S AND HIGH-GRADE DEINKING GRADES
1. Bases of Evaluation •
A wide variety of original products from several functional groups
contribute to the supply of waste paper in this category. The analysis
presented earlier, which grouped the numerous Paper Stock Institute
grades into five major waste paper categories, indicated that the prin-
cipal sources are printing and writing papers (Functional Group 5),
industrial packaging, converting, and miscellaneous papers (Functional
Group 6), and pre-consumer (converter) waste from the conversion of
these products.
Accordingly, with minor exceptions, the demand projections of the ori-
ginal products contained in these groups were used as the basis for
deriving the theoretical supply of pulp substitute and high-grade
deinking. For the amount derived from the printing and writing category,
the regional distribution was estimated from the reported value of
printing industry shipments. The calculated regional distribution was
used to allocate the total tonnage and subsequent scrap originating
in each region. The analysis thus reflects the well-established fact
that the bulk of this industry is located in the Middle Atlantic, the
East North Central, and the Pacific (California) regions.
We made two simplifying assumptions in estimating the total P/S and
high-quality deinking grades from "other converting papers": (1) all
of the converter waste is economically available for recovery and (2)
the supply of these grades comes exclusively from converting operations.
Obviously, these assumptions do not reflect actual industry practice;
all of the converter waste is not economically available, and only
about 70% of these grades are converter waste. (See Table V-5 and Fig-
ure V-4.) Nevertheless, we believe that the simplifications provide
a reasonable basis for projecting total availability. The volume of
the original products consumed and the amount of scrap material asso-
ciated with their manufacture were allocated to geographic regions in
proportion to their populations. Table VII-14 shows the derivation
of the estimates for 1973; for the 1977 and 1983 estimates, these
quantities were simply increased in proportion to the projected demands
for the original products.
As the subsequent analysis will indicate, the supply of P/S and high-
quality deinking from post-consumer waste must be increased substantially
if the demand for these grades is to be met. There are two potential
areas of additional supply—beneficiation of mixed waste and improved
source segregation. Techniques for the mechanical beneficiation of office
waste are presently in the early development stage, but their potential
is significant.* Since the initial writing of this report, EPA has been
taking steps leading to the eventual source segregation of office waste
* F.D. lannazzi, "Technical Developments that May Increase the Use of
Secondary Fiber," 1975 Secondary Fibers Testing Conference, Madison,
Wisconsin, September 16-18, 1975.
VII-34
Arthur I )| ittk' Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
»^H.
rH
1
M
M
^
W
rJ
M
H
O
H
M
W
P
i
o
1
rU
O
M
CC
P
<-
C/1
^-^
PH
Pi
0
PH
O
13
j2
o
H
W
rJ
rH
H
c_>
Ed
rH
rJ
O
U
|iH
O
!Z
0
H
W
O
CO
*G
cfl
CO
3
O
.n
4-1
c
•H
CO
0)
60
cfl
d
c
o
4J
,_!
i-H
tfl
• #v
cfl
cfl
•n
fc
C_TV.
rH
• •
CO
•H
CO
cfl
PQ
TJ
3 B oo
H -HP,
o 4| a +
o u *t
p. oo o
og eg c U
00 0 IH -rl M CJ
O U CD CM M
H CO 3 rH O,
IH __
>,£~OD
43 4J B
O 1-1 x-^
OJ r 4J vO
CO 00 rl
a-1 i — a •• cu x
B B CO >
PH B cu E m
< O rl O — '
PH H O CO T)
S -H 3 B
O 4-1 01 CO
CJ a E CO
04 3 CJ co O
(d p. OJ -B
S5 O <4H H P
H PH O < •»'
*~* IH
U CU 1
^1 P. E
E 0
O :: CJ E '-•
CJ 00 O CO
m B co -H E
VH IH 4J 4-1 O
CU 4-1 -H P. 4-1
45 IH p, 6 ^
4-1 cu a 3
p > o 01
"
p
p. oo o
•a- e I* •* »* o
o o en m co
H CO D rH to
Cfl
00
.-* f—t a \ rA «-^
EC r-i (_ | (Q '^
W *H CO CU CM
PH rH 4-1 CU IH
< a E -o
rH O
in -a-
r-. in
00 rH
O r-
00 O
CO CO
..
rH in
CO CM
CJ
•H rH
4-1 a
E V.
a 4-1
u §
< CJ
1
TJ !!
S W
m
CM
CD
00
00
rH
r-.
m
vO
rH
~a
r^
-a
rH
Ov
CN
00
Ov
^
OO
i-H
a
n
B
CJ
u
BE
S
oo
o
m
CM
CO
o
in
CM
0
Ov
rH
CO
CT^
O
O
O^
lTt
vO
r*-
m
0
rH
i-H
O
00
CN
CN
i-H
-^•^
U
•H
4J
a
rH
£
CO
^
rH
CM
0
-»
rH
CO
VO
rH
CM
Ov
CN
rH
r^
CO
^
•a-
rH
ON
-.^^
-a-
rH
a
^1
E
CU
CJ
en
W
VO
O
-a
rH
CM
^
00
rH
CO
r--
00
Ov
rH
^^^m
rH
CN
CO
^3.
rH
-• •*
in
rH
a
4->
B
cu
CJ
CO
3
0 -»
CO CO
rH -9-
CO 0
^ W
CO
in in
r- o
CM
m in
rH -J
VO 00
oo r-
^••^^^
Ov CO
vO st
CO 00
rH
I-. vO
m oo
-a CM
CM CM
rH
M-^— -_
CM O
rH
B
•rt O
a -ri
4-1 UH
B -H
3 0
o a
vo
o
-a
CO
m
CM
CM
CO
00
00
rH
00
00
CO
CO
o
CM
OV
O
O
CO
^
00
rH
VO
CO
CM
CM
rH
vO
OO
CM
CM
rH
O
O
rH
CO
a
53
H
g
r-> CN in co
•a- CN m CM
CO rH Ov CO
•0
a
•0 0
4J a rJ
UH O CU
a 43 P.
t^ CU PH
o-
r. • a •
CJ i-H PH 4J
P. 43 rl
a [H • OJ
PH 3 4-1 >
rl B
• 4J CJ O
> P. > CJ
g CU B
M O O O •
PH CJ X U t)
< 0 B
. . I-l
CN T3 00 'O
r- E B B i-3
Ov H iH M
i-H 4J •
• PH
VH 00 B 00
CJ r^H O -& 4-1
a a
PH 4J • 4J M
4H T3 *+H ±6
UH a E a
O V. M V, -O
^ t»H QJ
CJ • CJ
•H rH • rH a
4J 43 0043 CJ
01 B r-. B rH
•H a PH a PS
4J
a
CO
s^.
O
rl T3 rH
4J cu a
01 CO 4J
3 O B
•O P, CD
B 0 I •
•H VH E 00
PH O CN
00 H
B UH "rH •
•H O > P.
4-1 E
B Cfl M ••
•H -H -tf
IH CO • r-
P* >i CO Ov
rH . rH
UH a a
O E 4-1
< : co
o .3
3 0 r*. 60
rH -H VH 3
a B 4J -51
> O 0)
B 3 •>
cu o -O co
45 cj B m
4J W M 0
; i
O 00 **
4-1 B B r^
rH 4-1 rH
a TJ E —
B O -H O
O 4-1 IH CO
•H CO PH CM
4J -H 1
V. rH | CJ m M
CO rH CM
CJ 43 1 CO
^ 4-1 a PH CU
43 M H Tt
rH 4-1 0) M
^ CO " CJ 0)
O -H C/l
rH UH r- IH
a o ov cj -
4J rH C/l CJ
O B 1 CJ
4-1 O O rl
•H vO • CU
4-1 a rH 4J i
lH rH VH O
P. 3 * Q U
a p. co P.
CJ O B CJ UH
1 P. O IH O
VJ -H
CJ CJ 4J B •
PH 45 a O 4-1
4J rH 1H P.
3 4-1 0)
UH p. a o
O O rH
P, 3 •
CO P.CO
o 3 P. a
•rl 0) C
4J B 4-1 >v
U CJ E 43
OJ O CJ
•r-) VH CM r
Q -V H t~. J
V4 B 3 Ov
PH a 0 rH c
^-s
•a
r^
ON
rH
rH
•H
P, ^
< CO
B
1 0
4-1
4J
rl O
O 0
P« O
CU v^
Pd
VH 00 VO O CO OV
4-J O ^ rH Ov CM
01 co m o o co
3 i-H CO CO rH CO
•0
S
M
00
>i T3 B
rH CU iH
rl 4J 4J
cu am
4J O CU
rl O >
a E B
3 a o -a
O- CJ cu
1 4-1
oa a oi -o
T3 ^ O rH CJ
IH CU 00 U O 4-1
a P. E E 4-1 a
O a 'H a CO rH
pq PH 4-1 -H CJ
E - rl Pi
O rl CJ "3
IH O PH P.-O
cu a a cj oo
P. -X3 TJ PH 45 B
a B cu cj -H
Pu 3 4J X a 4J
o a o o -H
• VH O O rH IH
p. o cj co pa 3
rH
3
PH
^
&
H
U
0
3
U
H
3
0
H
in
I -a
M CJ
M V4
I— 1 CJ
•a
0 -H
rH CO
43 B
B O
H CJ
B cu
a
•a
CJ 01
4-1 CJ
VO CO «rl
00 -H IH
CN rH O
00
CM 4-1 OJ
rH a 4J
45 a
4J CJ
43
B 3
a 01
43
4J 4-1
B
rl CJ
CJ VH
00 CJ
VH UH
a UH
rH iH
T)
4-1
a t>v
45 rH
CU ,£
S 00
O -H
0) iH
01
CO
•rl CJ
CO x-v
rH 3 •
a a cu
4-1 U VH
o cu o
H 43 4=
00
B
•a
B
a
a
CJ
T3
IH
o
&
p.
a
43
P.
a
VH
u
w
|
VII-35
Arthur D Little, Inc
-------
in all government offices; effective implementation of this program
could increase the supply substantially.*
While we presently lack hard data on the additional supply of P/S and
high-quality deinking that might be recovered from office waste by either
of these techniques, we would estimate it at 4-5 million tons annually.
This estimate is based on the assumptions that annual U.S. consumption
of printing and writing paper is about 10 million tons and that roughly
half of it is used in large commercial buildings and public agencies
where recovery would be practicable.
Both source segregation and mechanical beneficiation of office waste
hold promise for increasing the supply of these grades from post-
consumer waste, but our discussions with dealers indicate that neither
has contributed substantial volume to date. For this reason, we have
not included additional tonnage that might be available from these
sources in our estimates of potential supply.
2. Regional Supply/Demand Patterns
Table VII-15 summarizes the apparent consumption of the original products,
the collectable tonnage, and recovery of P/S and deinking grades in 1973.
It shows that on a national basis, 3.4 million tons, or 83% of the
current total supply (i.e., preconsumer waste) is presently being utilized.
Unlike the comparatively low-value bulk grades previously discussed
(OCC and news), there are significant regional deficiencies in the supply
pattern: the New England and East North Central regions must import a
significant amount of their total fiber usage. Only the Middle Atlantic
and West North Central regions appear to have a significant excess supply
beyond regional demands. These excess supplies apparently are being trans-
ferred within their respective census regions to bring in balance the overall
supply/demand pattern for the Northeast and North Central areas.
Tables VII-16 and -17 present the same analysis for 1977 and 1983 respect-
ively. The projected demand (plus our estimated exports) appears to be
growing faster than the additional new supply: the potential supply is
*We are informed that the following give pertinent information on this
subject:
• SCS Engineers, Inc., "Analysis of Source Separate Collection of
Recyclable Solid Waste: Separate Collection Studies," Environmental
Protection Publication SW95C.1, U.S. Environmental Protection
Agency, 1974, 157 pp (Distributed by National Technical Infor-
mation Service, Springfield, Va., as PB239 775).
• SCS Engineers, Inc., "Analysis of Source Separate Collection of
Recyclable Solid Waste: Office Separation Systems," U.S. Environ-
mental Protection Agency (in preparation; to be published in
spring of 1976).
VII-36
Arthur! >! ittk- Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
rH
M
1 |
W
^5
H
cu
J3 CO
TO C
4-1 CU O
U 00 AJ
0) TO
"-H C O
A-I ^H c: o
01 O O O
Z c_> H >-'
C
o
co
ON
, — |
I
£7
O
H
O
w
PS
a
w
K
P-I
p§
o
o
w
o
PS
o
<
§
>H
PQ
w
Q
<^
o
o
1—j
£5
M
w
a
t^J
^^
^^
P-I
TT |
O
M
PQ
rJ
>
O
^J
^^
&
o
1 |
H
CO
^^
O
U
1
^H
Pi
g
a
£3
co
1 -H
Lc a
aj e
nj u,
i O CL C
C- O
H < u
OJ
O O vO OJ iH
oo O CM in r^
rH CO ,—| CO CM
1 + + 1 +
CO ON CM 00 CM
CM rH rH
r— 1
"rl
ro vi a>
CJ &C
i-j. CJ nJ
OjU-, ^ c
a. o --H c
f^1 0 O
txte^ u H
, O
U v— '
o
«-d" O OvTJrH
ON - <4H A!
EH 4J4J4-J EH g'HCO
PS 3COCO p 3OCO
O OcOO) O OcflrH
a cowES to SCn CM
00 00
*3" CO
f
CO
0 AJ
Cfl -H
CJ O
0 CO ,5 a
^£> OO LO rH -O
rH rH (U CN CO C
iJ CM CO
e • o ii .
•H i-H < T3 ,— ^
4J CM cfl -^
CO f: U. I
a; • 4J M»
0, iH
^O ON Q o tH
CM ON 5 • CO -n jo
CO I— 1 CO 4-1 CO CO
* i w ra e H
CO <0 "O
1 tn TD x i)
C 3 J3 CD
O I>-i to to
•H • tl) 11 to •—•
4J ^ > JH AJ
CO X IH 3 I-i B
O 00 3 pa O O
o o en p. -H
rH t-H tO X AJ
H o >> 3 ai ra
CO T3 AJ to Jj!
(V, fy, 0 -H C rH *
J_j j_j rHXOIUcOcO
c CD a o 01
O S CO • 4J -TJ
•H O tO
GO IH . UH uj
« 0 I-i S O 0
• - CO
: *J I -o
Or-, v- ca cu
, ~ cu -a -a u
rH t^ p, QJ ^i
\£) O eo 00 co O
* PH C 3 D.
^1- -rl 4) X
*W 4-1 f**! fT1
0 I-i
o ••
CO O. iJ
CJ IJ. 0)
•H 3 (3.
AJ tO CO
O O -H 11 "*
O O AJ O 01
r~ o ra to AJ
„ r, AJ ^ tO
CO a)
h- * AJ UH
PL, CO O
O -H >,
H ' to cy
FZ-* tH CO >
M co O
C_) AJ I-J 0
<£ FH 9 cS
PH
^ ,H CN CO
a *
H fD
-------
cu
^ w
co c
J-i OJ o
QJ nj
H C O
4J ^H C O
OJ O O O
2 U H "— '
C
(--.
ON
rH
1
£5
0
M
O
w
o
M
re
PM
o
o
w
o
Cd
o
1-1
^
>-<
i
0
53
1 |
53
H
W
o
t£J
to
"fc"^-
o
r*
H
H
--4
P3
<1-
,-J
H
>
rj
f^t
t^
CJ
1 — 1
H
rS
5
C/J1
&
o
i
£>H
fy^
«.£
|gr
£
CO
QJ
CL
r2
4J
c/:
"S
U~l
0
QJ
O
U
OJ
c£
o
•H
C CX
QJ E
rH a
O CL C
CX O
K < U
QJ
Xi
CO
4-J QJ
u &o
QJ tO
O r-l C
° °
^
cn
rt n
4-1 4_J
O
H O
O
Q
Ul
T3 C
QJ O
4-J £ *-•
l-i O C/1
O W O
CX 14-1 O
X ED O
'ffi'
c
13 O
CT
r o
] QJ 0
oi c
CM oj
n]"
c:
c
o
H
CJ
r— <
JD
4_,
U
OJ
^
O
o
•H
4-J U
C ex
QJ E
V-i 3
U-H ^* C/)
O D. C
cx c
Ox°
53 S3
rH CM
vo m
in
•<
rH
CO CO
rH rH
0 0
^^ vO
O CO
"
rH
0 0
0 0
VO 00
r^ CM
rH rH
cd cd
>H r<
4-J 4-1
C C
0) 0)
CJ U
4-1 4-1
M t-l
O O
4-1 4-1
CO CO
cd 0)
W 13
CO
in
CM
1
^D
tH
ON
rH
rH
CO
rH
^D
ti
rH
M
01
53
CO
rH
VD
*•
rH
CO
rH
O
vrj
CO
"
rH
O
O
LTl <± <±
*J" *«^" CO
O> O uO
CM i-H r-t
W) txO M
0) OJ QJ
(-^ »^ »^
f~* f+ *-*
<3 -^ CO
ON O m
CM rH rH
CM CO CM
I — ( rH t — 1
O O O
r-~ ~* -j-
m CM co
o o o
o o o
m oo r~-
<)• rH CM
tH rH
rd cd
S-i )-i
4J 4-1
CJ C C
•H 0) 0)
4-1 O CJ
§^
rH 4-J 4-1
4-J P P
<; o o
en en
(-!
4-J 4-J 4-1
P CO CO
O Cd OJ
en w |3
o o
ON rH O Ml rH
ON rH CM 0> CO
u~| rH 53 rH
1
v£) CO CO O O
rH rH
OO rH VD Ml rH
~* CM ON 0) OO
53
1
rH ON O Ml ON
in CM CM o) i*
00 3
O W T3
iH CU
O X JJ
•a a-j co
1-^ O -H H
_J X U O
rH u CO P-
OJ O. CO
S co t-*
O 4-J
^ X
O M 41
0
H iJ 0
9 9 cS
en i— i CM ro
•
1 — i ..
C/O
rJ W
< y
H g
g 1
Arthur D Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
rH
1
1— 1
>
w
rJ
PQ
H
0)
& CO
re c
4-10) O
u bC 4-1
oj re
rH C O
4-1 rH C o
CL) O O O
Z U H ^
C
co
00
ON
rH
1
O
o
w
u
1— 1
PC
PH
o
0
w
o
o
>-!
^
>-"
PQ
H
Q
"5
O
O
z
M
w
z
M
w
o
u3
CO
PL,
P"H
O
>-i
H
M
rJ
L j
«
<
rJ
M
-l
Pd
«<*
g
§
2
en
CO
r-J
GJ
D.
tfl
Pu
4-J
d
^
o
•H
C D-
aj E
a- r 5
o a c
CL O
K
o
^
OS
•0 C
OJ O
r-- O C-0
0 r-< C
a. <*j o
X SO
^-v
(fl
c
-c o
O 4-J
T
3 O
O O
o: o
C^l
at
c
c
Q
o
'o
eg
u
(U E -^ Z ^O
*>
CM
60 606060 60 60O60J O
0) 010)0) 01 OICMOHCM
Z ZZZ Z ZCMZI CM
O OOO O OO60I O
O *
CM
CO CMCOCM CO COCOO CO
i i i i i t i i
o ooo o oo&ol o
CM OOOOO vD r—sl-a) rH
VD vDCM-^- CO rH^Z 00
•i n
rH rH
O OOO O OOO O
O OOO O OOO O
CO -CfrHCM r^ COOOrH CM
t, r, f, ^ t, * *i n
CM intNCO O rH-* VO
rH rH ^-s U
cd cd TJ i — i
M rJ C PH
4-14-1 Cd -H M
O C (2 rH -H U
l-J -H 01 0) C Cd oo
^ r-l -H
O 00 <*J
Jr on
*^ OJ O f^
r~~ oo UH r~
<1- p T3 iH
O 0)
•r-1 4J B
r-- E O rl
>s O. UH
00 >x 0)
O .0 rl T3
iH OJ
O T3 CO 4-1
TJ o) co n)
O 4-1 rH
CO X CO OJ O
^ 4J rH 4J CL,
OJ O cO CO
S D. rl rl
CO 4J
rl rl OJ X
O 4-1 p OJ
"4H X CO
01 CO 1
CO
O 4J i -a
CM 03 QJ
rH -H >>
4J 4-1 V-
cn cn CD
1) QJ .>
o
rJ |-J (J
-------
projected to Increase from 4.1 million to 4.6 million tons by 1977, or about
500,000 tons, while projected recovery is estimated to increase from
3.4 million to 4.0 million, or about 600,000 tons. As a result, the
recovery rate of collectable tonnage will increase from 83% to 87%.
If the increase in usage projected for the 1973-1977 period continues at
the same rate in 1977-1983 some 93% of the estimated collectable tonnage
will have to be recovered to sustain it. Attainment of this recovery
level seems highly unlikely; therefore, new supply sources must be dev-
eloped if the growth of these waste paper grades is to be maintained.
Figure VII-10 summarizes and illustrates the relationship of apparent con-
sumption and recovery on a national basis. It is clear from this graph
that a very large quantity of these waste paper grades is not being
recovered.
Figure VII-11 indicates by region the recovery rates required to sustain
the reported growth pattern for the P/S and deinking grades. This analysis
indicates the dependence on imports by the North Central region to fill its
fiber requirements. The recovery rates calculated for the other regions
are understated, since they make up the deficiencies of the North Central
region as well as supply their own requirements.
Figure VII-12 is a graphic representation of fiber availability and recovery
in actual tonnage estimates rather than percentages.* The use of P/S and
deinking fiber in the studied areas is more conveniently compared in this
way.
3. Summary of Analysis
a. General
Because of the high value of these grades, we believe that many of their
traditional sources (converter waste) are highly exploited. Accordingly,
if additional supplies are to be secured to meet the increasing demand
for these grades, new sources must be identified. Clearly, the potential
rests with better exploitation of post-consumer waste via either source
segregation or mechanical beneficiation of office waste. Neither of these
techniques is presently yielding substantial volume, however.
b. Related to the 1973-1977 Period
• The recovery of these grades is projected to grow more
rapidly than the corresponding supply, thereby increasing
the recovery rate from 83% to 87% of the collectable
tonnage.
*Unlike the other bar charts in this section, apparent consumption of the
original product is not shown. Only a small portion of the theoretical
supply becomes P/S or deinking grade; most of it becomes mixed waste.
VII-40
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
c
o
c
o
40
32
24
16
Collectable
Tonnage
1978
1980
1982
1984
1972 1974 1976
Sources: Tables VII-15,-16, and-17.
FIGURE VII-10 AVAILABILITY AND RECOVERY OF P/S AND DEINKING GRADES IN THE UNITED STATES
VII-41
Arthur D Little, Inc
-------
150
125
c
c
o
0!
4->
U
O
o
8
0)
QC
100
75
50
25
O North Central
• Northeast
A Total U.S.
D Mountain and Pacific
A South
A
D
D
o
-- A
1972
1974
1976
1978
1980
1982
1984
Basis: Assumes that the reuse of P/S and deinking grades will continue to increase at
the same rate in 1977-1983 as it is projected to increase in 1973-1977.
Source: Tables VII-15,-16, and-17.
FIGURE VII-11 RECOVERY OF PULP SUBSTITUTES AND DEINKING GRADES
BY MAJOR GEOGRAPHIC REGIONS, 1973-1983
VII-42
Arthur D Little Inc
-------
V)
111
O
<
cc
a
LLJ
a
Q-
68
O)
oo o
oT I-
it CO
o s>
>r-
j g
co o
< OJ
< o
31
Q <
° S
c
c
o
.
_Q
s
0)
u>
0)
.0
CD
t>
_tu
O
^^ i—
1 1
8 u
x
S a
s i
m c
o
4-*
O
-a
c
CO
O >
o m
CM
CC.
D
O
>*
CN
q
CN
00
o
CD
SUOJ_
I
I
VII-43
-------
I
• The North Central region is expected to remain the single
greatest user of these grades. Its regional supplies are
currently inadequate, and the magnitude of the deficiency
will grow substantially with the completion of new facilities
scheduled for 1977.
• The New England region is also currently deficient in its
supply of these waste paper grades. It, too, will experience
an increased deficiency as conventional sources fail to
supply the additional tonnage required for 1977 recovery levels.
c. Related to the 1977-1983 Period
• New supply sources must be developed to sustain the growth
rate projected for 1973-1977 through the 1977-1983 period.
E. COLLECTABLE TONNAGE OF MIXED WASTE PAPER
1. Bases of Evaluation
A wide variety of materials from all the functional groups contribute to
the supply of mixed waste paper. As stated in Section V-C, the principal
Constituent (about 80%) is printing and writing paper; the remainder is
largely a combination of containerboard and news. Thus, the potential
theoretical supply of mixed paper from present sources (primarily office
waste) can be gauged by the apparent consumption of the printing and
writing grades. The total theoretical supply, however, could be expanded
greatly by including waste paper discarded from other sources.
As a simplifying assumption in estimating the total availability of
mixed waste, we have assumed that the same sub-categories of paper prev-
iously considered in deriving the quantity of P/S and high-quality deinking
grades (see notes b and c to Table VII-14) would also constitute the source
of mixed waste. From the total supply of these sub-categories, we deducted
the amounts of scrap that would normally be discarded by the converter —
15% of printing and writing and 12% of other converting papers; the re-
mainder was assumed to be available as post-consumer discards of mixed
waste paper. (Obviously, this figure is only an approximation, as some
converter waste enters the mixed waste stream.) The collectable tonnage
was broken down by region through application of the Population Concen-
tration Factor.
This approach does not take into account the quantity of the original
product that is retained as permanent records (e.g., bible paper) or that
loses its identity as paper (e.g., decorative laminates). However, the
Amount involved in these applications is relatively small — perhaps
1.4 million tons. Other assumptions regarding the composition of mixed
waste and its geographic availability could be used, but they would not
influence the findings of the overall analysis — namely that there is
an abundant supply of mixed waste and that its greater reuse is primarily
limited by the low commercial utility of the resultant fiber.(See Section VIII)
VII-44
-------
I
I
I
I
I
I
1
I
I
I
I
I
I
I
I
I
I
I
I
2. Regional Supply/Demand Patterns
Table VII-18 summarizes the apparent consumption of the original product,
the collectable tonnage, and the recovery of mixed waste paper in 1973.
On a national basis, some 20.6 million tons, or 76% of the amount gen-
erated, is economically available for recovery (i.e., collectable tonnage),
but only some 3.A million tons presently is being utilized. All geographic
regions have a substantial excess supply.
Tables VII-19 and -20 present the corresponding data for 1977 and 1983 res-
pectively. On a national basis, the demand corresponding to announced
new capacity is projected to increase slightly, but reuse will decline
as a percentage of collectable tonnage.
Figure VII-13 summarizes and illustrates the relationship of apparent
consumption to recovery on a national basis. The disparity between
collectable tonnage and recovery of this paper stock grade is clearly
shown.
Figure VII-14 illustrates the recovery rates for the major regions. It
reveals that while the recovery of this grade will increase in the South,
the other major regions show little growth or are actually declining.
Figure VII-15 is a graphic representation of the total theoretical supply,
collectable tonnage, and apparent recovery. Tonnage figures are presented
here rather than percentages to illustrate the magnitudes of the volumes
in each region.
3. Summary of Analysis
a. Related to the 1973-1977 Period
• While there are slight regional differences in the rate
of recovery, a substantial excess supply exists in each
of the Bureau of Census regions;
b. Related to the 1977-1983 Period
• The supply of mixed waste will continue to grow faster
than the expected demand. The increase in recovery rates
will be limited by the technical utility of the fiber.
F. ALTERNATIVE METHOD FOR CALCULATING COLLECTABLE TONNAGE OF OCC
Since the original data on the collectable tonnage of OCC were prepared,
we have developed a more direct and perhaps more accurate method for
assessing the apparent consumption and hence the resultant collectable
tonnage of this material. Although the net collectable tonnages esti-
mated by this method are not significantly different from the earlier
(Cont'd on page VII-52)
VII-45
-------
oo
,__!
1
HH
M
>
w
hJ
P"j
£— j
CO
ON
, -1
1
O
M
CJ
pq
Pi
CJ
M
m
QJ
O
U
QJ
CN
QJ
fl
c
c
o
H
QJ
i — (
j3
4-J
U
QJ
Q
r- 1
C
Q,
D.
G.
QJ
-D U]
•U 0) O
U 60 4J
QJ n]
— * C O
4-J I— 1 C O
QJ O O O
2 CJJ H ''-'
C
O
C D-
I- 3
-*-* rt yi
O D. C
cx o
QJ
.c
1-1 QJ
U WJ
O — ' C
o o
B-S 0 H
cn
•— < C
o o
Q
H O
C
o
-
XJ C
CJ 0
i-j E • u
U O W
O U O
CL U-< . O
X r=3 O
UJ x— '
,_,
tf!
C
-a o
QJ U
3 C
QJ O
p£ C
N*~'
n
2
c a
QJ E
V-i 3
U-4 Cfl tfl
O OH C
a p
6^ *^.
c/]
c
o
o
V
C f— I ' — •
O CT3 Ul
•H C C
i-l -H Cfi O
6 -H CJ
3 n 3 C
C ° S
U O &H
c
o
00
OJ
rH O
r- O
o oo
tH -*
tH rH
CM rH
CM rH
ON O
CM O
co r^
00 6-C
Ol O>
ON O
CM O
O 00
ON 00
0 0
0 0
^- in
IH m
o o
VO CM
m CM
rH O
C
4-
c
*"O ^
C rH
cd 4-j
tH <
60
C 01
W rH
T3
IS T3
01 -H
^H ,i
rH
00
m
CO
tH
m
rH
ON
CM
O
iH
60
0)
ON
CM
O
t — 1
ON
00
O
O
ON
vO
O
00
1-^
H
CO
HH
S3
H
g
Z
CO ol VO iH O
CO OO tH 00 00
co o O CM 1^- r->
CM rH CM rH tH
r^- i — . ^- ON o
VD tH 00 tH CM
rH tH CM 01
f-^ I^ ^f ON CO
VD rH 00 tH CM
rH rH CM -* rH
r< f*
rH tH
VD in O CM O
r~- in r- r- m
o o o o o
o o o o o
m CM t~^* in r^«
co
c
0 4-1
4J p
0 0
606060606060 60 . ,3^
OlOlflJOJOlOl 0) 01 rHnj
J2 *^j J^ J25 ^^ ^5 S2 Ol CNJ ctj C-
4-1 CNl CtJ
g » D QJ •
•H i— 1 < 13 x^
4J CM CC
OON co ^g:'g^a)
|--OOtH60rH 1^ Q OiH
CM 00 CMCOOJ in CO < -Ctj-r-i43
CM ^ CM " CO 4J Cd CtJ
er> n -a
0) T3 >. 01
C 3 43 01
o t^ co 01
•H • 01 0) 01 "— '
4-1 ^ > ^J 4-1
CO >, I-, 3 ^i C
cj oo 3 pa o o
O O C/2 P, -rt
iH H 01 X 4-1
H o >, 3 a) co
CO 13 4J 01 Jsi
rH r-. r-voo 0 o rHJ-'uS'ra!?
r*^ **o m oo vo oo r^ co 4-1 co c_j 4-* ,c
C tt) O. O O
O 6 CO • 4J T)
•H U V)
OO i-l • (4-1 U-l
0) O M U> O O
•- CO
0 0 000 0 0 \4 M ' "S
O O OOvo 0 vD cu-S-aS
mi^-inr~-- CM in CLCUVJ
rH~l
iH ^^ O | 4-) i-.
c^j ""O H^ tn GJ
h (- fn H CD >
4-1 Cd -rl H « g
S 7i 'S ^ ° Q *
QJ C Hj
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
ON
rH
1
hH
W
M
H
QJ
•-H .-~.
« C
4J QJ O
U OO 4J
QJ B
•H C 0
4-J ^H C O
QJ O O O
Z; CJ H -^
C
^
f^
ON
, |
1
z
o
o
W
Pi
U
a
PH
PH
o
o
w
0
(A
0
i-l
r-1
CO
W
S!
P-i
S
X
H
^
FT,
O
M
rJ
M
a
t—i
M
2j
§
^
g.
O
H
p_i
F^
CO
0
O
I
1
^H
Pjj
§
§
£5
c^
CO
QJ
CL
CO
Cu
1)
en
3
O
>.
j_,'
OJ
>
^
OJ
as
o
•H
4-1 4-J
C CL
u e
j-i tfl en
0 CL C
o, o
x < u
0)
(—1
03
U QJ
U bO
CD (fl
^4 -4 C
O rH C
0 O
t>5 U H
en
(fl O
0
H 0
O
^^
en
T3 C
CD O
4-i 6 * 4J
l-j O t/1
O l-J C
CX <4-< • O
X r3) O
LlJ s*-^
in
c
^
r-\ O cfl en
•H C C
C CL 00 4-J 4-1
OJ E -H u
r- 3 K 3 0
tfl en O T3 O
o. c o o
CL O «4-l r-l ^
< U O P-
c
o
•r-*
00
S
^ ^o
vO vO
r~H "»^"
rH m
ON O
rH rH
CM CM
CN rH
rH *3-
CO CO
co r*^
60 60
0) CU
B 25
i-H ~*
c^ co
ro r*^
0 00
ON OO
o o
O O
m CM
r-T vcT
o o
CO O
r- O
rH I--
o
•H
4J
c
ro (d
C rH
CO 4-1
rH CM|
iH rH
o3 oj
rl M
4-1 4-1
a a
CU CU
O U
n rH
4J 4J
VJ M
O 0
z z
4-1 4-1
CD CO
Cfl CU
W S
in CM oo ON!
CO vO VO ON
O CM vO CO]
|
" * H
in cs H|
in -* oo co
rH I-H rH
rH O\ vO 00
CM i— 1 rH i— 1
in 00 CM rH
vD CO CO O
CO in rH CO
rH
00 60 60 60
CU CU CU CU
Z Z Z Z
in OO CN rH
vO CO CO O
co in I-H co
*
rH
O CM O rH
r- r-- m r-
o o o ol
0 O O O
-d- oo oo t--l
vo CM I-H]
O 0 0 Ol
3 3
u <; o o
C/3 C/3
E-H 4J 4J 4J
Ci 3 co CO
O O efl cu
Z co w S
ON O ^ O
•rj M
CH PM
CO iH M
rH -H CJ
C cfl «t>
« io ^
J5^ pL| t^J
s»x
(3 ^ Z
•HO M
cfl *H Cfl -^
H C -H CD Z
t> 3 0 Cfl 13
O O CO i-H O
CO S PH < S3
co
r^
CO
ON
rH
CM
rH
VO
rH
[ —
00
vO
»s tH
co ™
^
^1
CO
a
60 g
CU CM
rH U]
CM CO
• 3
a oo
P. iH
r-~ a m
OO JJ r^
VO r2 ^
ri
co >, e
• HI O
>. W UH
60 3
O en T3
O !X 4J
"V 4-1 (fl
O -H rH
rf u Q
r-~ cu o. M
CJ 4J
O M CO
«
o 4J i -e
VO 'S T] 4J
O CO ^i
„ tit 01 o
p-1 _C 3 0.
0x1 4J PS W
o ••
a n
ex cu
3 a.
co nj
Pu
CD
O a) co
«3* CQ 4-1
"i •"!
* to co S
O a) QJ
fO 4J 4J Uj
22^
•H *H f>-,
4>J W r-l
CO CO 0)
QJ 0) >
O
r-1 rJ O
9 9 (S
• ...
rn r-t e**J <*>
P
en
a 1
0 0
H w
VII-47
Arthur D Little, Inc
-------
o
CM
1
M
M
>
W
lJ
pq
H
CO
CO
ON
rH
1
a
o
H
w
Pi
CJ
rH
PC
p-1
p?
o
o
w
o
o
1-1
^^
^3
SH
m
en
Pi
H
P-i
<:
p..
o
W
X
M
s
rt4
O
>-<
H
M
rJ
^r^
M
<;
rJ
M
gi
>;
<1
p
fe-
H
CU
o
(J
(U
«
CM
cu
GC
co
c
c
o
H
t-u
•£-
cti
U
r-H
0
CJ
rH
C
CJ
k-l
CL
o.
-D CO
ra c
4J 01 O
CJ 00 4J
CO ffl
rH C O
»-> rH C O
CU O O O
Z CJ H — '
C
o
•H
C p.
M P
-u nj en
O a- d
p. 0
^ < CJ
cu
Si
CJ 00
cu a
•^ ^4 C
O ^H C
0 0
B-S U H
^
Ul
"a o
4-J 4->
0
H 0
o
o
^
_, ^
CO
•a c
0) O
l~i o c/i
O u o
X 3O
u ^
, — ,
m
C
QJ 4J
CO
2 C
a: o
„
o
4-1 4J
C CL
0 E
O D- C
&-2 *£ U
^
C
O
o
o
o
^
C r-l ^
o rt co
•H C C
4J -H CO O
d- GO 4J 4-1
e -H o
3 u 3 C
•Jl O 13 O
e o c
O U-< l-j ' —
CJ O D-
C
O
•H
00
D^
o ol o
in CM 1 r^
\ 00
1^- ON rH
rH rH
ON O CM
rH rH rH
O O O
in oo co
CO |-~ rH
rH
60 60 60
0)
rH
O 00 ON
ON 00 OO
O 0 O
00 0
00
4-1
U C C
•H OJ 0)
4J U U
Cd 42 rC
i— 1 4-1 4-1
4-133
< O O
en en
t~^
4-1 4-> 4-1
3 cn w
o cd
rH
^
^
O
0
co
vo
O
^«
CO
fi
ON
W
H
O
C/1
O O O O
\o O **o CNJ
r-- co I-H
co -o-
«3- r~- o vo
m oo bol r-~
Jl
*z
O O 60| O
-* O 0) ~*
CO a CO
60 60 60 60
0) clJ CD 0)
a a a a
O O 60l O
Sf O 01 O ON
rH rH rH CO
*\ r\ n
t-H , 01
O J3 l-i T3
rH QJ
O T3 M 4J
T) 01 10 CO
J^ CO QJ O
VO 4J rH 4J P.
r^ o) o co co
B P. r4 M
CO 4-1
iJ t-J CU X
O 4-1 B 01
U-4 X CO
01 CO 1
CO
O 4J I T3
^ TJ T) 4-1
" 00 CO O
r^ c 3 P.
CM -r4 Ol K
ti W
O ••
P. r4
P. 01
3 P.
CO CO
O o) ^
00 01 QJ
00 J2. *i
" co
12 ui co 3
CM Q; Q>
CO co O
B E
•H 'H >>
4-1 4-1 1-1
01 01 >
O
hJ h-J O
§ § Dd
• ...
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
1
I
40
32
24
c
o
c
o
16
1972 1974 1976
Sources: Tables VII-18,-19, and-20.
1978
1980
1982
1984
FIGURE VII-13 AVAILABILITY AND RECOVERY OF MIXED WASTE PAPER IN THE UNITED STATES
VII-49
Arthur D Little Inc
-------
OJ
C
c
o
h-
O
O
o
>
cc
1
1
1
1
£.\J
20
15
in
1 U
c
j
0
o .
A — • —
• - •-.
" — -*
.—
— — o
.A *
••— — .
^^* ^^™ — ••
•*—•—• mmm
. ,
. — • — "
'— -— •»
~~~
- • Q
__ ^— TGI
••I A
~~~ — •
O North Central
• Northeast
A Total U.S.
D Mountain and Pacific
A South
1
1
1
1
1
1
1
1
1
1972 1974 1976 1978 1980 1982 1984 ""
Basis: Assumes that the quantity of mixed waste recovered will continue to increase ^
at the same rate in 1977 — 1983 as it is projected to increase in 1973—1977. •
Source: Tables VII-18, -19, and 20.
FIGURE VII-14 RECOVERY OF MIXED WASTE BY MAJOR GEOGRAPHIC REGIONS, 1973-1983 •
1
1
VII-50
Arthur D Little, Inc
-------
I
I
I
c
o
V-» CD
E I
§ 1 ^
O H g
U 0) O
<-• 7i °
c ^
111 ^
J < O
CO
VII-51
0.
08
LLJ
o
CO
o
63
00
D. I I
68
05
O
CN
O T3
CO C
CO «3
J
-Q
§
I
cc
O
00
cc
LLJ
0.
Q
LU
X
in
LU
CC
-------
I
figures, the alternative approach and results are presented here to
assist those who wish to make a critical examination of a particular
region.
Table VII-21 lists the key values and assumptions used. The original
method was based on a comparison of each state with a national average;
here, state retail sales and manufacturing employment are directly com-
pared with the corresponding total national figures to derive percentages
of collectable tonnage. Two principal simplifying assumptions are used:
• All of the OCC discarded from manufacturing activities is
"collectable";
• Linerboard and corrugating medium are converted to corrugated
boxes in the same geographic region in which the box is ulti-
mately used and discarded; thus, the amount of scrap from
these converting operations is directly proportional to the
derived apparent consumption of containerboard in a given
region.
Obviously, these assumptions do not apply to every case, and specific
regional studies would be required to refine the preliminary estimates
if they were to be used to guide the installation or expansion of a
manufacturing facility based upon recycled fiber.
Table VII-22 shows a sample calculation of the apparent consumption and
collectable tonnage of OCC in a selected state. Tables VII-23, -24
and -25 summarize the results of similar calculations for each census
region. Appendix C-6 lists population concentration factors and the
key indices of state retail sales and employment in manufacturing acti-
vities for all the individual states; using these, we have recalculated
the apparent consumption and collectable tonnages of OCC for each state
in Appendix C-7.
Figures VII-16, -17, and -18 are plots of the data obtained by the alter-
native method of estimation and are the counterparts of Figures VII-4,
-5, and -6. Comparison of the two sets of graphs reveals no significant
difference between the results of the two methods on a regional basis;
thus, the use of the alternative method of estimation would not change
any of our findings or the results of our analysis.
As would be expected, the disparity is greater for individual states.
However, the regional figures are more pertinent, since it is unlikely
that any mill considering the recycling of OCC would base its operation
on the collectable tonnage from a single state.
G. SUMMARY OF COLLECTABLE TONNAGE
Table VII-26 is a summary of availability and recovery of the major waste
paper grades by Census Bureau regions for 1977. The summary analysis is
based upon the 1977 period, since usage patterns between 1973 and 1977
(Cont'd on page VII-62)
VII-52
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VII-21
ALTERNATIVE METHOD FOR DERIVING COLLECTABLE TONNAGE OFOCC
Base Year: 1973
NATIONAL DATA
Total National Consumption of Containerboard (TNC)
National Consumption, Manufacturing
(NCM) = (TNC) x 57.8%*
National Consumption, Retail
(NCR) = (TNC) x 42.2%*
STATE DATA
M = state manufacturing employees, percent
S of U.S. total
R = state retail sales, percent of U.S. total
S
PCF (Population concentration factor) = Percent of
state population living in counties with pop-
ulation greater than 100,000
Pre-consumer (converter) waste = 10% of total
containerboard consumption
Pre-consumer and manufacturing waste are 100% collectable;
retail waste is collectable proportional to population
concentration factor.
(OOP tons)
17,700
10,230
7,470
Total State
Consumption
(TSC)
Total State
Collectable
Tonnage
Amount used in
Manufacturing
(NCM)(M )
Amount Used in
Retail
(NCR)(R
S
Pre-consumer
Waste +
Post-Consumer Waste
(TSC)(.10)
Mfg. Sector + Retail Sector
+ (NCM)(M )(.90)+ (NCR)(R )(.90)(PCF)
o S
*See Table VII-6
VII-53
Arthur D Little, Inc
-------
TABLE VII-22
SAMPLE CALCULATION OF STATE CONSUMPTION AND COLLECTABLE TONNAGE OF OCC
(ALTERNATIVE METHOD)
Sample State: Massachusetts
(000 tons)
R = 2.81%
s
M = 3.10%
s
PCF = 96.3%
See Appendix C-6
i Total State Consumption
(TSC) = (NCM) (M ) + (NCR) (R )
S S
= (10,230)(3.10%) + (7470) (2.81%)
317 + 210 = 527
• Total State Collectable Tonnage
= (TSC)(.10) + (NCM)(M )(.90) + (NCR)(R )(.90)(PCF)
S S
(527)(.10) + (317)(.90) + (210)(.90)(96.3%)
53 + 285 + 182 = 520
VII-54
Art hurl )l ittlclnc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
m
CM
1
I-H
H
W
rJ
H
i
H~
E-
t^
C
<
V-*
f£
M
f-H
J2
p:
r^"
tH
r—
<
V~'
cn
ON
rH
0
M
Cx3
fy^
C_>
M
PH
g
O
H
O
0
X
FQ
^3
CJ
0
o
£
I-H
HH-
1 — 1
pq
M
£
§
j«
•<]
S
|__j
H
u
&
CO
1^
f-»
<-}
£J
4
4J
CU r
S5 r
C.
CO
CU
P.
cd
PH
CU
4-J
co
cd
0
^
f^
CU
o
o
Pi
CM
CU
60
1
O
H
CU
rH
cd
o
r-J
rH
O
cj
1
4-1 1
C 4
CU
n
cd
a
P.
<;
c.
i
hi CU
J 60 ^
u cu cd o cn
H rH |3 0 C
H ,0 CO O
3 cd O ^ 4J
J H
1
•u a.
M-I e e PS
0 CU 3 0
M cn in
&* Cd C 4-1
a o
0, 0
i
4J (U
IH o CU 61
O 0) rH Cd
t— 4 _o rl
rn *u v*
B^ rH Cd C
O O
0 H
CO
rJ
rH O
CO 4-1
O O
H 0
O
**~s
^^
T3 CO
cu c
(H O CO 4-1
O r4 •
ex <4H & o
x o
w o
*— '
frt
CU O CO
ca o C
3 O O
QJ NMT/ ^J
prf
1
4-i a
c S
>4H CU 3 C
o M cn o
cd C *H
B-S a o 4-1
p. u
<«
_
cn
C
^
o
o
N — '
3 iH
3 CdrH /-^
H C cn cn
J -H 4J fj
3. 60 CJ O
3 -H 3 4J
3 ,-1 13
/> C O O
3 r-i 0
D 14H PL, O
JO ^
c
o
iH
60
CU
ON O
O ON
r^* co
CM
rH CN
CO CO
51 PH
v— '
C <•€)
•H 0
cd *H cd
tti 4J l+H r^
EH C -H CO
& 3 O cd
O O cd rH
CO S PH H I
CU • 4-1 60 >
H-l D, 3 rl 01
G „ 0 rH
vO CM *^ " CO T-) ^O
^ ~ CO 4-1 CO CO
""> ON | 4-1 CO B H
r^ CM co -a
•> cn 73 >», o)
m c 3 •& v
o x co cn
4-1 ^, > H 4J
CO iX rl 3 rl [2
O c>0 3 W O O
o o co ex -H
iH rH cn X 4-1
.-s ,-, rHO>-,30)CO
0 O CO 73 4-1 W ^1
ON ON O -H C rH rl
IH xi o a) co co
CO 4-1 CO U 4-1 ^3
C o) a oo;
O 6 CO • 4J T3
bO VH • M i UH
01 O rH 3 O O
rH in ri HH Pj
sf sf .. _ < '
sf OO r u | Tj
*• ^ rl CO 01
CM in 4) T3 T3 4J
rH D. Ol ri
co oo cn o
PH C 3 P.
•rl CU X
O rl
O "
G CX 01
_ -H 3 a
I — O 4J cn eo
O O cn PL,
r-^ r^ *tH tu
« * 4J CU CU
CM t^. 4-1 ^ cn
rH CO CO
r cn £3
4)
O -n >s
H 1 4J rl
r cn cu
& -3 " 1
U 4J J 0
rH CN fO
2U •
H ^D
H rJ W
Z <1 cj
i — ^ r j a!
i g |
VH-55
Arthur D Little, Inc
-------
CM
H
W
rJ
H
(—
c
h—
H
"^
^
t~;
•
^f
C
W
^_
E-
<
?
PL
^
v^
'
OS
1
^-y
o
o
Pi
u
t-H
i
O
0
W
o
0
*i
5^
&
u
C-2
o
P*4
o
M
M
i-J
H
ij
M
1
g
3
H
H
EH
c
CO
a
o
4
4J (
(
C.
CO
M
0)
P.
cd
PH
0)
4-1
co
cO
rs
I4H
O
>,
k
0)
^
o
u
CU
CM
01
00
cd
13
o
H
cu
rH
cd
4j
o
C O O
3 Cd O "— ' 4-1
3 H
1
*J P*
<4H fl 0 |3
O Q) 3 O
M CO -H
B*S cd (3 4->
CX O
P. 0
1
4-1 0)
14-1 O 0) 6C
O (1) iH Cd
rH 43 C
6^ rH crj C3
O O
0 H
CO
c
rH O
1 1 W
Cd 4-1
4J
O O
H O
o
^
^^
T3 CO
01 (3
4J 0 . O
l-i O W 4-1
O h •
P. MH D O
(d O
4) O /C0
co o c
300
4j >-/ 4J
1
4J CX
a e
14-1 cu 3 (3
O rJ CO O
cd C iH
s^s a o 4J
a 0
^3
CO
a
ij
o
0
o
B^t
r^
D Cd rH /~*
H Pi CO CO
-1 -H 4-1 Cl
3. 60 U O
3 -H 3 4J
3 M "O
J) C O O
3 l-i O
0 «4H p-i O
JO v-/
(3
0
60
Ptf
VO CM
O vD
OO CM
*
CM
rH -*
CO CO
CO VO
CO CO
VO OS
o P-
-3- CM
»i
rH
O 0
o- o
vO Os
CO i-H
rH
CM m
OS OS
CM rH
rH *^
CM m
i-H CO
m co
i-H rH
co P-
rH CO
O
•H
4-1
C
*"U cd
C rH
Cd 4-1
rH
rH
in vo o
•vi-
vo OS O
MH ^
C -H CO
3 a cd
o cd H
rH
vO
^
i-H
p*.
CO
rH
, W
T3 4-1 CO
O -rl rH
J= O O
4-1 CO (X
0) CX CO
C_J 4-J
l-i X
O M OJ
U-H pU
CO
4-1 I T3
to CU
•a T3 4-1
cu i-j
oo en o
C 3 D.
iH CU X
4-1 C£ W
o ••
CX M
O. 0>
3 O.
tn to
pu
CU 01
CC 4-1
*-* CO
to en 3
cu cu
4-1 4-1 14-1
to to o
e e
•H T-1 >-,
4-1 4-1 ^
to to oi
0) 0) >
O
i-J iJ O
33 i3
CO
w
u
o
co
VII-56
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
^-s
§
M
H
H
Ed
O
Ed
-1 Cd
w o
E""1 ^3
^
ffl
CJ
CJ
o
En
O
^t
EH
H
1— 1
PP
g
i — i
1
§
^
g
o
H
§
p-^
CO
53
o
O
4
4-1
CU r
C.
CO
r<
0)
p.
cfl
PH
01
4J
co
cfl
14H
O
S^
CU
O
u
0)
CM
01
00
cd
o
H
CU
rH
42
Cfl
4J
U
01
rH
rH
O
*^
4J 1
(3 4
0) 1
M
cd
p. t
p.
<; <
c.
1
-I CU
J 60 /-N
u cu cfl o co
H rH (3 0 C
H 43 C O O
0 cfl O ^-" 4->
J H
1
>4H C I* Pi
O CU 3 O
l-i CO *H
8»s cfl p! 4J
P. O
p. 0
1
4-1 01
4H cj oi ex
O Q) rH Cfl
rH 43 C
8-5 rH Cfl C
o o
0 H
CO
i— 1 O
' i *"*
Cfl 4J
4_J
o o
H 0
0
"^
T3 CO
cu a
4-10 • O
M O CO 4-1
O M •
P. <4H 53 O
X O
W O
_-
CU O CO
CO O C
3 O O
CU ^-^ 4-1
f*4
(
4-> P.
a e
<4H 0) 3 C
O IH CO O
cd C iH
s-s a o 4-1
^4
^
/— s
co
rj
§
4J
o
o
0
s™*'
3 rH
D CdrH /~>
H C CO CO
-> -H 4J a
3- 60 CJ O
3 TH 3 4J
3 H T3
fl C 0 0
3 MO
D IM PL, O
JO N-'
•H
60
fli
w
PQ
vO vC
oo m
CN
CM VO
en m
LO 00
00 co
0 O
co r^
in VD
*
1-1
o o
m co
rH
0 O
oo -a-
-3" in
rH
CN m
Cj^ O^
vO vO
rH CN
m *
rH ^
^ iH
vO vO
i-T-a-'
o
•H
4-1
c
T3 Cfl
f3 rH
Cfl 4-1
rH <
60
C cu
Ed rH
13
£ t)
OJ iH
55 S
CN 00 O
-* CN rH
r~- «d- O
CO rH rH
in r^. co
CO VD CM
P^ CO OO
co r^ CM
O 00
o o o
CSJ O"^ *vt"
ft ft
CM CO
0 O
oo oo i
rH
O O 0
CM CN O
o oo <•
CN CO
m CN' csj
OS OS 00
CN 00 O
<• CM rH
OS CO *^
« .
m m rH
m •<)• r--
OO OS CM
CM r-~ r-
f\ f> •
vo m I-H
rH rH
cd cfl
V4 M
4-J 4-1
C C
CU 0)
CJ CJ
43 43
H 4-I4J
C/3 1-4 M
4J
erf co en
O cd cu
f5 Ed &
00
CO
CNI
r^
m
^.
vD
O
O
CO
rt
•*
o
oo
o
CM
CM
^-
O
OS
oo
CO
r-
~
rH
CM
m
r-T
hJ
$
£— (
^
Ed
U
EC
H
Pi
O
CO OS O
CO rH O
vo r. •
CO rH rH
H rH
Cfl Cfl
U rt
4J 4J
0 C C
•H 0) 0)
4J O CJ
cfl 43 43
rH 4-1 4-1
4-133
Z
H
C cfl
•H £
cfl cfl
a EC
(3 (-3
•rl 0
CO -H Cfl
ffi 4-J 14-4 ^
H C -rl CO
CD 3 0 cfl
O 0 Cfl rH
w s PL, <:
00
s
rH
-3-
-3"
OS
•o-
O
o
r~^
ft
rH
O
vD
rH
0
o-
in
rH
!0
CTv
OO
.^
*^J-
A
CO
CN
oo
CO
CJ
M
En
H
CJ
O
<•#
z
M
H
53
§
S
O
OO
Os
O
in
vD
in
O
o
vD
CN
, — |
O
CO
•vf
O
rH
CM
, — |
O
Os
O
oo
CO
A
CN
CN
0
O
O
in
CM
•
CO
1 — 1
1 1
<^
s
H
• 0)
•o p.
o
•H B^S
iJ 00
CO
O. 4J
r- 3
>
4-1 4J Jj
in 01 cu
OJ QJ J>
o
,-J ,-i O
oo
U
CJ
o
C/l
OJ X
e oj
cd
01 I
•a
OJ
4-J
L.
O
cx
X
VII-57
Arthur D Little, Inc
-------
25
20
15
c
o
o
10
1972
1974
1976
1978
1980
1982
1984
Source: Tables VII-23, -24, and -25.
FIGURE VII-16 AVAILABILITY AND RECOVERY OF OLD CORRUGATED
CONTAINERS IN THE UNITED STATES - ALTERNATIVE CALCULATION
VII-58
Arthur D Little, Inc I
-------
1
1
1
| 100
1
• 80
Is?
7
Ol
c 60
1 J
• «
.O
to
O
1^
0
2
^ 40
II
£
QC
I 20
1
1
O North Central
• Northeast
A Total U.S.
DMountain and Pacific
ASouth
0-^"
Ag^— **
«^
^^^
_ •**
-^
..
-^S^'
9*~*^3
*
— •"""x^^
^
^
*
— — — -"H
^--— °
-^
— D
•
72 1974 1976 1978 1980 1982 1984
Basis: Assumes that the quantity of OCC recovered will continue to increase at
• the same rate in 1977-1983 as it is projected to increase in 1973-1977.
™ Source: Tables VI I-23, -24, and -25.
• FIGURE VII-17 RECOVERY OF OLD CORRUGATED CONTAINERS
™ BY MAJOR GEOGRAPHIC REGIONS - ALTERNATIVE CALCULATION
1
1
™ VII-59
1 Arthur D Lit
-------
g
a
E
C
O
a
a
a
TO
C
O
U
a>
CC
I
0)
a.
63
o
to
o
n
oo
05
V)
oc
Z I-
O <
O -I
§3
D w
CC >
EC |-
O <
O Z
Q OC
-I LJJ
o
>
<
I
- z
-1
< uj
d oc
II
Q <
Z OC
< a
§2
2 CD
o >-
U DO
CM ,-.
CO
CM
_0)
ja
UJ
oc
D
SUO_L
VII-60
I
I
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
NO
CM
1
M
1 — 1
J>
W
^
cn
<£
H
r~^
f —
ON
rH
Z
M
cn
W
Q
<£
pq
O
Pi
W
PH
<£
PH
H
cn
•<^
[2"
Pi
O
1—3
<£
)E
fi_
O
f^
pi
w
c
0
w
Pi
Q
Z
<;
H
(—1
)-J
f— t
PQ
•<^
i-J
M
4-t
QJ
z
£>-,
p
0)
£>
o
CJ
QJ
Pi
Td
cu
4-J
O
0)
•I—)
0
(H
PH
CU
60
CO
d
c
0
H
QJ
rH
CO
4J
O
QJ
rH
rH
0
4-1
d
Q)
rH
CO
p
ex
^£
rH CJJ
cfl 60 O
4J CO H
a d
rH 0 0
rH EH O
O ^
0
Q)
rH
43 QJ
Cfl 60
4-1 CO
MH CJ C
O QJ d
rH O
B-S rH EH
O
O
d
o
4-1 -H
d 4-1
cu ex
MH ,H g
0 cfl 3
cx cn
^ ex d
3" in NO NO NO CO 00 rH ON
CNCNCNrHON iHrHrHrHm
NO CN in iH -3 rH O rH -3- ~3"
co in *«3" *3" *st° *d~ ^" CM co co
in ON >H^ £NJ OO NO ON "d" OO NO
CO ON oo co c> co ~a°
OOCNrHiHCO rHOOOOOOO
NO r^. rH rH NO rH CO -3- NO O
rH CN CN rH r-~ rH CO
NO "3" NO OO NO 00 CN ON CN r-^
ON ON r— • r^* oo oo I"*- NO oo r^*
inoocNONr^ oo^moN
OiHrHfOI-^ CMOrHONCN
NO CM r^ r*^ CM r^« CM co i — • o
^inrH-d'O rHOCOiHr^-
-vf m NO co o co co ro CN i — i
CM rH
0 0
•H -H
MH MH
•H -H
CJ O
H cfl • rH CO •
cfl PH cn co p.! cn
^H • M •
4-14-J t^JJID 4-14-) fa£}JZ3
cn d cn d
COQJ dl-J COO) drJ
wo -H <; wo -H <;
CO H Cfl EH
J4^J34-iO 43^^4JO
4-14-14-ldH JJ4-l4JdEH
rH,H33 Cn(HrH33
OOOOO 5OOOO
oZZcng Wlzjzcns
0 z
r^- co ON i — i -
rH in ON CO C
rH CNI in rH I
+ 1 + +
rH ON OO rH t
ON rH -tf OO C
rH
CM NO NO O I
rH rH rH i
CO CO rH ON
in rH in -3"
CM NO in in
rH rH
^ CO CO CO C
rH rH rH rH .
O O O O
i — • NO in oo N
CO CO rH NO
•H rH rH
o o o o e
O O O O C
O -* O CN r
O O ON in >
rH rH
CJ
•r<
MH
O -H
Z CJ
M rH CO
$4 CO PH c
Z rJ
j ( 4-J 4_> c<3 |
w cn d
O « cu d t
WO -H •
Q cfl
4J 4J ^
cn d
J cfl cu d
=C w o -H
H CO
O J= f. J2 4-1
H O 4-1 4-1 4-1 d
W VH H 3 3
x o o o o
M Z Z cn S
S
CO O
co in
ON in
rH CO
^o -3"
•H CO
CM OO
rH CNI
r^- NO
oo r^
NO CO
CO OO
rH
NO rH
r^- oo
O NO
NO CM
O ON
CO CO
CNI m
•fl
0 0
o- o
•H -3-
O NO
CO NO
cn
4J
CJ
3
Td
0
P
• • PH
cn cn
• r-H
P P CO
d
rJ hJ -H
<; < oo
H EH -H
O O rH
EH HO
.
cn
ff. d
CJ O
•H H
^
& o
0
MH O
O •
O
- OO
T3 OO
CU
4J rH
(H CO
O 4-1
p. 0
[V)
^ K
r-l MH
CU O CO
> d
O CO O
CJ Q) 4-J
CU 4-1
M CO O
0 0
MH -H O
O 4J *
CO O
d CN
0 r-5
•H Q 60
4-J < d
cfl -H
rH + Ai
3d
CJ » -H
rH TJ CU
cfl QJ P
cj cn
3 --a
T3 QJ
d Pi cn
cfl ^
O PH
d 4J
O ~
•H 00 CO
4-1 d d
CX -rH O
e & 4-1
3 -H
cn cfl o
d 4J o
O r-l O
p. o
4-1 CO
d co co
Q) 4J
rH Cfl CO
CO P S
CX QJ
CX >. Z rH
CO CU CO
> " 4J
MH s-i cn o
o 3 d 4-i
cn o
cn 4-1 d
Q) ^ -H
4J 4J O
CO -H O T)
E o o cu
•H rt ** "^3
4-1 CX O 3
CO Cfl CO rH
CU O CO CJ
d
I-H H 0 -H
Q PH O
^ *^ O 4-J
o
z
• • CO
rH CM
. .
0)
CJ
3
O
VII-61
Arthur D Little, Inc
-------
I
are projected to change. On the other hand, the projections are fairly
reasonable, since the capacity to implement these changes has been
installed or is committed.
Note that the analysis is based upon the recovery from the original prod-
ucts and that all products are not included since some remain in perman-
ent records or lose their identity as paper. Hence, the apparent consump-
tion of the original products is less than the projected 75.4 million
tons of total U.S. paper and paperboard that will be consumed in 1977.
Also note that both P/S-deinking and mixed waste come from the same ori-
ginal material. For the purposes of this analysis, we have assumed that
only the portion discarded as converter waste becomes the P/S or deinking
grade; the remainder is assumed to be potentially available as mixed waste.
The side-by-side analysis of the major waste paper categories facilitates
their comparison. It reveals that by virtue of those factors which in-
fluence their respective usage and point of discard (hence their potential
for recovery), OCC is by far the single largest category, both in actual
tonnage and in percentage of apparent consumption. Some 17.3 million tons,
or 86% of the apparent containerboard consumption, is estimated to be
available for recovery (collectable tonnage). The projected recovery is
estimated at 7.6 million tons, or about 44% of the collectable tonnage.
News is the second largest category, with a collectable tonnage of some
9.0 million tons, or 77% of the apparent consumption. As in the OCC
category, the collectable tonnage expressed as a percentage of apparent
consumption varies widely among (and, as previously illustrated, within)
various regions. Recovery is projected to reach some 3.1 million tors,
or about 34% of the collectable tonnage.
P/S and high-grade deinking are unique, in that the apparent consumption
of the original products is the highest and the collectable tonnage is the
lowest of the studied waste paper grades. Only some 4.6 million tons, or
about 13% of the apparent consumption, is judged to be available from
traditional recovery sources—i.e., printing and converting plants. New
sources and new technology must be found to expand the supply of P/S
and deinking; these grades are in great demand, as evidenced by their
high rate of recovery.
For the purposes of this analysis, mixed waste is assumed to be derived
from the same original products as the P/S and deinking grades; it has
the largest potential supply—23 million tons, or about 76% of the apparent
consumption. With a projected recovery of 3.7 million tons, it ranks higher
than news (at 3.1 million tons) but it ranks lowest in the percentage of
the original products recovered.
This entire analysis, it must be emphasized, is predicated on the economics
of waste paper recovery, not necessarily its economical reuse in paper-
making operations. Other factors previously described—industry
characteristics and alternative wood supply—as well as others to be dis-
cussed under process economics, affect its competitive position. Thus,
VII-62
Arthur I) Little lix
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
the 1983 tabulation of data does not constitute a projection of the likely
reuse of waste paper in any studied region.
Since the recovery of waste paper is more traditionally expressed as a
percentage of total apparent consumption of all grades rather than as
a percentage of original products, the data in Table VII-26 have also been
presented in this manner.
Table VII-27 presents the calculated regional distribution of all paper
and paperboard grades based upon factors we used in postulating apparent
consumption—namely state-by-state level of commercial and industrial
activity (for OCC), actual consumption of newspaper (for news), and
location of printing and converting facilities (for P/S and Mixed). The
distribution (hence subsequently the regional recovery rates) derived in
this manner is quite dissimilar to that derived simply from national per
capita consumption. Table VII-28 uses this alternative method for deriving
regional apparent consumption to illustrate the magnitude of the dif-
ferences that result.
The recovery rates based upon our calculated regional consumption analysis
are summarized in Table VII-29. The analysis supports the widely known
fact that the North Central is by far the largest user of secondary fiber.
Further analysis shows the wide variance within the major geographic regions,
Indeed, some regions (e.g., New England and the East North Central) have
recovery rates comparable to some of the highest reported in the world.
National averages thus tend to present a distorted view of the waste paper
utilization pattern. It is appropriate to include the geographic and
demographic characteristics in evaluating additional opportunities.
Table VII-29 also lists waste paper recovery as a percentage of fiber
usage in each studied region. These data were derived from the capacity
survey data reported by API, Figure VII-19. Note that of the 7.7 million
tons of new capacity reported between 1973 and 1977, 3.2 million tons
or fully 41% is for waste paper.
VII-63
Arthur D Little, Inc
-------
TABLE VII-27
APPARENT TOTAL CONSUMPTION OF PAPER AND PAPERBOARD BY REGION
New England
Middle Atlantic
Total Northeast
East North Central
West North Central
Total North Central
South Atlantic
East South Central
West South Central
Total South
Mountain
Pacific
Alaska & Hawaii
APPARENT
1973
3.9
12.8
16.7
13.6
5.0
18.6
10.1
3.6
6.1
19.8
2.6
8.8
0.5
CONSUMPTION
1977
4.3
14.5
18.8
15.3
5.6
20.9
11.3
4.1
6.9
22.3
3.0
9.9
0.5
(MM tons)
1983
5.2
17.3
22.5
18.3
6.8
25.1
13.7
5.0
8.2
26.9
3.7
12.0
0.6
Total Mountain & Pacific
11.9
13.4
16.3
TOTAL U.S.
67.0
75.4
90.8
SOURCE: ADL estimates based upon published data from API
for 1973 and ADL projections for 1977 and 1983.
VII-64
I
I
Arthur D Little, Inc I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VII-28
ESTIMATED REGIONAL CONSUMPTION OF PAPER AND PAPERBOARD
BASED UPON POPULATION DISTRIBUTION
Basis: 1977 Projections
Region
New England
Middle Atlantic
Population
Distribution (%)
Total Northeast
East North Central
West North Central
Total North Central
South Atlantic
East South Central
West South Central
Total South
Mountain
Pacific (Mainland)
Alaska & Hawaii
Total Mountain &
TOTAL U.S.
Source: ADL Estimates
VII-65
100
Apparent
Consumption (OOP tons)
5.8
18.1
23.9
19.6
8.0
27.6
15.3
6.3
9.6
31.2
4.2
12.5
0.5
ific 17.3
4,400
13,700
14,800
6,000
11,500
4,800
7,200
3,200
9,400
400
18,100
20,800
23,500
13,000
75,400
Arthur D Little, Inc
-------
^
1
'
rH
HH
^
W
t— I
PQ
<
t-H
0)
co
0)
4J
crt
PH
^
rl
01
O
U
0)
Pi
^J
H
0
H
Sa
0
PH
P
Q
W
C/3
^j
PQ
W t--
M ON
M rH
PH
Pi
>H 0
<2
§J3
O
O M
U H
W PH
CO §
pS
pi co
o a
PH O
CJ
CO
W H
H 2
Si
>-< PH
Pi PH
^
O
U
w
Q
W
H
^
*rj
M
H
CO
Pd
C 6^8
O *~>
4-1 0)
P. 4J
0 OJ
3 PH
CO
C
o
CJ
C
O
. -rl
P, 4-1
P. P.
^ 0
p
IH co
O C
O
S*S CJ
rH
^"^
CO
C
o
It
0
o
o
N"-^
cu
H
CM
O 00
rH CO CO
rH rH -3" 1
-* CM
0 O 03
vO OS
m i
in o o 4->
m o p! ,0 -H
•> OHO
«* -H 01 OJ
4J p, P,
P< cfl CO
0 P. CJ
3
O O
rH rH
CM ON
O O O
CM CN v£>
rH 00
«i
rH
O O O O
oo oo o o
00 CN rH rH
o o o
oo ff)
•%
rH
O O O
i-H 00 H 4-1 «rl
P. 00
Cfl 6 01
4-> 3 H
o o| o o o
0 0
co m
M *
*vf *^*
rH
0 O O
OO CO vO
M MM
oo m m
rH rH
O O O 0
o o o o
ON CO rH ON
M M M M
O rH PH
V«l fN , p^ 1 **^
4J 0) CO
COrHrHQJ rHrH C OrHO
ojcflcflo cflcfl -H P.CO-H
0) H H HH COU 34J4J
U,C 4J4J,C; 4J4J43 -H4J-H OCO
•H4-1 ClC!4J OCC4-I «H C l»H • H3 4-1 01
4JJ-I 0)0)M -H CU 01 3 CflS-rlCOO) 0
CO CJCJO 4-ICJCJO !5OCJ 'COiao
*"O tfl j^i ^) pj CO Cfl |> ] cfl ["> cfl p^ ^J
C iH r£*£ CflrCrC K fL< P^Cfl
C 0)
W rH
T3
0) -H
4-1
o
H
0 0
4J 4J
CO CO
0) 0)
4-1
H
< 0 0
CO CO
J3
4-1 4J 4-1
3 M CO
O 0) QJ
4-1
o
H
Mountain
Pacific
Alaska &
4J
O
H
H
O
Source:
o
o
4-1
Cfl
Cfl*
VII-66
Arthur D Little, Inc
-------
c
o
L_ Q.
s. E ^
™ 2 -^
°- c a
o
a
E
c
«> CM
S 0 2 0
5 c
S t-
0)
S1
_l
1
*K
X
*.
/
x
,x
,2
r- r-
O) O)
J
>
>
pn
ir
<
<
<
<
x
x
^x
PX
X
Jx
;x
X
y
x
x
X
x
X
x
><
"X
>
>
">
s
s
s
;>
%.
K
x
x
X
n
<:
/
x^
y
X
x!
X
V
"X
\
Si
>
\
>
"s
"\
^
<
f
/
^
.
.
*»
^
<
/
\
•e,
X
X
X
X
X
X
X
x
X
y
<
X
<
<
x
<
x
<
-
^^
n
i
d
fl
1
-
X
x
X
x
x
x
X
x
X
x
V
X
x
)<
^x
X
X
X
<•
<
X,
x'
<
x1
^
<
<
s
<
*"
^
<
^
<
<
x
x
X
x
Xj
__
P~I
p
^
«>
\
£
X
^
s
>
>
<•
X,
X
Xf
^
^
>
>
s<
%
>
\
>"
S * in co
5 « ^ "*'
5 £ - -
« fe 00 ^
S -Q CM IT)
H u! ^ ®
r- ro
r^ r^-
0 0)
<
<
<
<
<
<
<
<
<
<
<
1
x
><
/
^
CM
f> J
0)
s €
= > _
~ re
?
r- » §
1^ - 0
^ 0 OJ
s^?
3 S
IT-
c i^
= ?3
1- ro
*
nn
<,
X
<
X
X
X
x
•~
CD
*~ C
O
c ^
c o
< s
o
(0 ^
c
o
3
o
* o
_c
—
CM °
D
£
•o
(U
ro
0 ^
c
LU
c
—
<
5
n
I
o
S
o
<3
o
o
CJ
.c
o
I
I
s.
3
O)
o>
T-
O
a.
V)
O
U
oc
LU
m
o
o
LU
O
<
tfi
OC
LU
Q.
<
Q.
oo
I
u.
O
Z
O
O
o
O)
>
LU
OC
z>
o
VII-67
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
VIII. SUBSTITUTABILITY OF SECONDARY FIBER
This section seals with the suitability of secondary fiber as a substitute
for virgin fiber in the manufacture of selected paper and paperboard
products. The analysis is made on the basis of technical adequacy only;
the economic feasibility of using S/F as either a complete replacement
or a fiber supplement is discussed separately. Information used in this
analysis was obtained from both published and unpublished sources and
interviews with selected manufacturers.
A. APPROACH
The feasibility of substituting virgin fiber with secondary fiber is
not a precise technical evaluation. The quality of the recovered second-
ary fiber is influenced by (1) the characteristics of the original
product, (2) the history of the recovered waste paper, and (3) the
ability of the reprocessor to recover maximum utility (cleanliness and
strength) of the secondary fiber.* Furthermore, the properties of the
virgin fiber products are also subject to variation from alternative
pulping processes, choice and blend of wood species, and other process
variables.
Therefore, we shall present a discussion of the typical usage of virgin and
recycled fiber that illustrates the range of variability within and between
similar virgin and S/F products. Subsequently, we discuss the applica-
bility of S/F to specific grades of products within each functional group
selected for economic analysis.
B. HISTORICAL USAGE PATTERNS
Descriptive information on each of the major wood pulping process is given
in Table VIII-1. In chemical pulp (either kraft or sulfite), long-
fibered softwood species (the conifers) are generally used where tear,
burst, and tensile strength are desired; the shorter-fibered (deciduous)
species are used where opacity, printability, and sheet formation are
desired. In high-yield (mechanical) pulp, the softwood species are
generally preferred, because the wood fibers are long enough to survive
the mechanical attrition and yield suitable fiber.
The table also lists typical values of pulpwood yields to permit rough
comparisons. More detailed information on yields is given in Section IX,
Process Economics.
* J.H. Klungness, "Recycled Fiber Properties as Affected by Contaminants
and Removal Process", TAPPI, Vol. 57, No. 11, Nov. 1974
VIII-1
Arthur D Little, Inc
-------
I
M
W
hJ
PQ
-t • m
Xi O..-I D r-
3 »*-i *E d S
2: O -H
O -H U
.IS
g 3 i
(_) 0-,
E ^ *-j ^
H >H (fl 4J
ceo- N~"
rJ «J
O U W
H - C
• -G r^ C
Z2 C O O
>- <-< c
O- '•— '
c
C-
I --
o —
~Z f.
ii{|£
•o -c
c_ £
[f
re tx
c
2
0
CO
1
X W 4>
eo .-i (0 O u-i 0) O
OJ ,O M MD (fl M -5
r~* (d DC 1-1 00
pa ^
T!
m
1
00
(fl bC
or u TJ E c
C (U l-i -f
-rH CL (fl OJ 4-1
CL (fl O T3 C
a CL .0 (fl -a -*
(a i- c i-j
^, oc i- 4-1 oc nj a.
3 03 & C
4-1 O O QJ -H O (-
in u pa ^ x pa 3
P.
r-. C.
D- 3
•TZJ r "3 ~ C C
^H c i- -a 1- 'J"
o > ^ 30-
•T3^^ OC-EC
"at -a
5S^ g E
C 3^
c .c > -u -« .c
3 tir i- t- 13 ac
i! .c > x E E ^
O
5 5
1 i
£ "5
u~. X
Wood Hups reduced under steam
pressure to pulp with alkaline
chemicals (sodium hvd roxide and
sodium sulf ide.) .
n
o
E
00
O
00
o
o
o
c
c
(C
ac
i
"C
c
o
Y
E
^
c
3
c
or:
1
4
£
X
[f
-c
c
CJ
3
G.
C,
-o
O
~
1
tfl
D 0*
~o >
c •-* c tc o
3 pa H z cj 3 u
g s
Z 3 c c ^
JI C "3 — "C
4- C, O — O
"at 3
H - C
1 | 1
"D TJ "D
1 | 1
^
C
c- c aJ
-^ «- T3J C 5
cj £ u a* o i- v:
tj (t 0 -C o o
a« § o "£ TO «
X
pressure to pulp with an acid
chemical (cal c i urn, magnes l urn,
sod ium, or ammon ium bisul f ite
plus sulfurous acid)
m
i
•
5
c
'N u: *
(Q C 4)
ac -H o.
•fl 4J (D
E .e C &
C, T-l «
T3 (0 ^- i-. aj ac
tq OH C- O i-<
O H 4J C tH
pa _j o w pa
3
>< (3 •— <
C '-^ O
C
E -1
3 T3
•a E
HJ
CO
tn1
-Oi
O
o -~.
3 e
•a 13 D
1-0 OC
ffl1 O T3 '-'
S 30
CO 0
i_!O-4-> ui a) >j a- O- jii
£ H
Woodchips reduced under steam
pressure to pulp with an alkaline
chemical (caustic soda) .
0
o
0
o
f— t
o
CO
0
CO
vD
CO
ugating board
i-
o
corru-
c
c
o
c
E
:
"O
c
CO
T;
0
3
•o
a;
41
c
3
CJ
C
O
V
ffi
a
d
-a
0
o
Neutral
E
£
(L
OJ C
JZ tfl OC
C C C H •*-* TO 14
o na ac 3 tn
U. U £ Z M
O • D- D-
13 3 3
X Oj 3 O ^ u
a j= o w o
w .£ 1, X •*- t- 0
nj W r-H H O O l-
ac O oa E "5 1J-> CL
3
O
E
3
1
i
O
•D C O CJ C
s - » -s s.
-o jj t- a
t, a) C -H t-
O B. cfl 3 u- (fl (fl
<— W -^ H •- O V. Ci
tn oi c o en
steam pressure with chemicals are
reduced to pulp by mechanical
act ion .
li- 3 "C OJ l*-
.—1 u: -F- tj ra
a -H o •- i-
o
o
0
o
o
•£>
!
n;
c£
f.
>
I
3
"
i
S
O
a.
1
4-1
rt
IH
C
'o
c
0;
j-
Q,
3 C
00^
a. 1 o
c
T3
tJ
3 -•
£. E
7 —
0- (fl
or
Sulfite
VIII-2
Arthur D Little, Inc
I
I
I
I
1
I
I
I
I
1
I
I
I
I
I
I
I
I
I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
T)
4-1
O
u
M
w
(J
P
O
i
O
CO
w
CO
CO
w
u
§
o
OS
w
O
o
r- r-( 0) «
QJ 3 iH • n
§^-g Os
Z 0 -H
IH £
O T* 4J
- ! S
0) rH O
3 £ S
B "jr ~
1 S "a 'S.
'c Is 3. i
•H (3
a: 3
C U ^
o •• «
•H fl C
4-J 0
c/) 3 r-
O O I-f O
H 0
o. v
n 3
- TJ
H O
U- V.
P-
o.
a- -o
C 13
3;
c c.
V- o J3
J- "
\ ~ £ ^
-1 £-. tC U s--;
.- C £ 3 X
3 ""
C
•j- o
j C.
1- l-
X
1. 1,
TOG
Z 1-
c
^
n
.^
3 u"
^
«0
o
\O
O
in
O
T3 /
fl r-i
0 i
•o
OC C E
•a c n 3
O ro c O
t- W O -H
fl C O
X rH Ctf
J
E >-
o i
3
-1
^
c
cc
^
c
•C T3
O O
i|
O fl
TJ
1- O
x 3
E i-
fl 3 QJ
w E " fl
TJ x: fl
CJ E •
J-i -S X C
J- 1- "~ -
a. j -c T
03 C (-
T) r-, 0
0 0 C 0 T-
T3 1
SJ »- ^v
C -c x: o
C O. 3 u-i (7
C X -H s.
j" QJ o- -a
^ <
s
c
CO
0
CJ
E
E
f
'
0
o
I—I
V- 05
fl U
O U T3
X3 TJ 3 C
C TJ fl
OC fl O
C J- IH 4-1
H a aj c
4-1 TJ a. -H
ao n: av a a.
3 O T) [fl
O O E O C
U 00 PQ
.c
3
TJ t/)
X .-i
E a
C l-
C 0
3
O
3 —
TJ C
2:
in
O
OC
c
QJ i
a. i-
"o 3 a x
3^^_c £? c c 1
5S^5^S
01 (fi T3
C C N
QJ -H -H
g j_l (-,
i-l 3 QJ
QJ o "-<
QJ >i
-a TJ 1-1
r- X rj
E 0 i rt
> jr x:
M I |
y, -H
a. T3 C
H o QJ a
TJ x: a
0 i-t -3
rs §s
«
TJ
C
0
g
A
o
0
QJ
a
(0
o.
•g
m
TJ
O -H
OC ^H
3
x: w
4-1
•H T3
3 c
fl
TJ
s 3 a
3
o
O rH
" E
3
E •-•
3 TJ
T3 E
s:
u-
cr
0
oo
• • V-i •• u;
U" H [fl IH
TJ ft- TJ QJ
o^o x:
o E o QJ o -t-i
C [fl
QJ C
e o -
OJ 3
J-J O
TJ
rH QJ
£ iT r
C rH
QJ 3
&c E
J" -H
cx -a
-HO a.
tj 3
•u _c a
O -rt O
QJ
p
0
X
*0
1
o
o
oo
-3-
O TJ
0 ^
4-1 1 0
cm oc x:
•H c oo u; c
rV -H O OJ -H C
O. N rH 3 iH 0
1 SfS 5 1 S
z: s: u H H u
•o a
(U rH
X 3
•H a.
E
>. fl
3 "5 1
cn -H x:
D 3 u
3 3
J J
CT- a-
oil o:
TJ TJ
0 * 0
o QJ e u o
3 u fl 03
"o a 'fl -H I re
r^TI
-O C >•>
H rH
O. V- -H
r-t OC fl
O. 60 H
C C
O -H fl
TJ O QJ •
QJ > e a.
3 L. CO 3
T3 D-D.
QJ fl -H
C *U tJ
4-1 >-j T;
r- OC O QJ
O C N
CO QJ V-
T3 cn C QJ
O QJ O XJ
3 a w ^
TJ
0
0
3
c
3
o
o
rH
u
c
(0
a
13
U T3 nJ
ra M o
O ffl XI
X3 O
_£3 OC
QJ OC H
'c •»•! 01
U (C rH
TJ
0
I
C 0
^5
o c 1-1
3 O *. J
CT-H -H 4
4J -H rH rH « O
' C B « M 3
> 01 fl lJ 4J 00 CT
QJ C
> fl '
, < O OJ 4)
: rH u x: a.
j X) 4J tn
BJ • w
^ xi TJ c " T;
3 O QJ OJ QJ W
H h *J I-H tn c
< P- n n B -H
4 l-i > U XI
rH U- C C
i £ !X
. W 1- i*
C 4-> t- rH •
3 4-1 OC
a- o QJ
rH C E O. r
.C U-lrHfl4-i-HTJ4JO
E "-1
41 3 i
3 > r^ QJ £ 4J
4J -H O D. JZ OJ C '
l C 4-1 C. &. 3
-i-< **- fl ^
. n a. u
T3 V- •—i 1*
U tfl -rt QJ
c u- QJ e (j
H o x: QJ o
4J >- "tj D-
U- (5 O 4-1 !T
o u o , 4- C- J
t- O
O 3 QJ
> -a u :
003-
QJ rH
C £.
QJ fl
rH U C
TJ rH Q, 3 >^
c -H oc TJ ra
fl E _- C l-
: g K,
: x: O '
VIII-3
Arthur D Little, Inc
-------
In practice, interactions among wood properties, pulping conditions,
and end-use requirements of the resulting pulp influence the yield that
is actually achieved by any given mill. The Forest Products Laboratory
of Madison, Wisconsin, has compiled data on wood density and pulp yield
for U.S. pulpwoods.* In the eleven years since its report was issued,
some of the yields have been improved, but only slightly. Thus, the FPL
data are still useful for estimating purposes, in the absence of more
recent information.
Table VIII-1 illustrates the many pulping processes and wood species
that can be used in the manufacture of virgin fiber products. Implicit
in these choices is the fact that even virgin fiber products are subject
to quality variations.
Table VIII-2 lists the amounts of S/F used in the manufacture of paper
and paperboard. (Data for 1969 are used because they are the most recent
available in this detailed format; more recent data are aggregated in
much larger categories.) The table shows the relative importance of
S/F in key product areas, specifically corrugating medium, tissue, combi-
nation folding boxboard, and construction (builder's) paper and board.
The potential opportunity to increase S/F usage in each functional group
is discussed in the remainder of this section.
Mill survey data identifying the quantity of S/F used in the manufacture
of selected products is contained in Appendix C-4. The wide variation
of S/F used in the manufacture of even similar products supports the
initial statement: namely, that the substitutability of virgin with
secondary fiber is not (in our opinion) subject to precise technical
evaluation. Site and process conditions, which cannot be specified in
this generalized assessment, influence the quality of the recycled and
virgin fiber products. Nevertheless, the reported mill data and this
analysis provide the framework and insight to make a more detailed
analysis using more specific site, process, and product conditions.
C. CONTAINERBOARD
Two distinctly different products—linerboard and corrugating medium—are
included in this functional group. Each offers unique potential opportu-
nities for the use of secondary fiber. At present, S/F is used as either
a complete replacement or a partial substitution for virgin fiber in both
products.
VIII-4
Arthur D Little, Inc
I
"Pulp Yields for Various Processes and Wood Species," Forest Products •
Laboratory, February 1964. •
I
-------
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
1
TABLE VIII-2
PAPER AND PAPERBOARD PRODUCTION AND
Functional Group Production
and Grade (000 tons)
CONTAINERBOARD
Linerboard (virgin)
Linerboard (combination)
Total Linerboard
Corrugating Medium (NSSC)
Corrugating Medium (Comb.)
Total Medium
Container Chipboard
TOTAL CONTAINERBOARD
GROUNDWOOD PAPERS
Newsprint
Printing Papers
TOTAL GROUNDWOOD
TISSUE AND OTHER MACHINE
CREPED PAPERS
FOLDING BOXBOARD
Combination
Unbleached
Bleached (SBS)
Milk and Food Service
Non-bending and other
combination
TOTAL FOLDING BOXBOARD
11,157
402
11,559
3,547
939
4,486
283
16,328
3,253
1,208
4,461
3,575
2,852
322
1,434
1,574
1,164
7,346
VIII-5
WASTE PAPER CONSUMPTION - 1969
WASTE
PAPER CONSUMPTION^
(000 tons) % of Prod
200
436
636
672
663
1,335
300
2,271
372
100
472
962
3,280
I »
16
1,383
4,738
1.8
108.0
5.5
18.9
70.6
29.8
106.0
13.9
11.4
8.3
10.6
26.9
115.0
'3.4
1.0
119.0
64.5
(Cont ' d
% of Total
Waste
Paper
1.7
3.6
5.3
5.6
5.5
11.2
2.5
19.0
3.1
0.8
3.9
8.0
27.4
0.5
0.1
11.6
39.6
next page)
Arthur D Little,
-------
TABLE VIII-2 (Cont'd)
PAPER AND PAPERBOAKD PRODUCTION AND WASTE PAPER CONSUMPTION - 1969
(2)
WASTE PAPER CONSUMPTION
Functional Group Production
and Grade (000 tons)
PRINTING, WRITING, AND 10,038
RELATED (Excl. Groundwood
printing)
INDUSTRIAL PACKAGING,
CONVERTING & MISC.
Packaging & Converting 5,078
Special Industrial 443
Tube, Can, Drum (virgin) 207
Tube, Can, Drum (comb.) 527
Molded Pulp Products ?
(incl. fiber pipe)
Other Paperboard 815
TOTAL INDUSTRIAL 7,070
CONSTRUCTION PAPER AND PAPERBOARD
Gypsum Linerboard 847
Construction Paper 1,603
Insulation & Hardboard 2,773
Wet Machine Board3 148
TOTAL CONSTRUCTION 5,371
TOTAL PAPER AND PAPERBOARD 54,189
a. Not included in the analysis of this
SOURCE: (1) 1969 Historical Data: Bureau
(000 tons)
378
131
34
0
646
179
25
1,015
903
1,134
0
96
2,135
11,969
functional group
of Census, "Pulp
% of Prod.
3.8
2.6
7.7
0
122.0
?
3.1
14.4
107.0
70.7
0
64.9
39.8
22.1
, Paper and
% of Tot
Waste
Paper
3.2
1.1
0.3
0
5.4
1.5
0.2
8.5
7.5
9.5
0
0.8
17.8
100.0
Board",
Series M26A (70-13) for production.
(2) W. S. McClenehan, "Consumpti
on of Paper Stock
by U.S. Mills
in 1969 and 1970."
VIII-6
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
1. Linerboard
High burst, tensile, and tear strength are the major product requirements
of linerboard. To achieve these properties, softwood pulped via the
kraft process is used in its manufacture. Up to 20% of hardwood is
typically added, primarily to obtain smoothness and printability. The
hardwood furnish is applied via a secondary headbox on a conventional
Fourdrinier board machine. A pulpwood yield of 52-54% is typical for
the filler liner; somewhat lower yields (50%) are more typical for the top
liner.
Linerboard is characterized by a high degree of product standardization.
Interstate freight regulation Rule 41 specifies the burst strength and
basis weight of this product. In general, the ratio of burst strength
to weight for recycled linerboard—so called "jute liner" is inferior
to that of virgin kraft liner. To obtain the necessary strength, the jute
liner has three alternatives:
(a) Increase the degree of refining of the waste paper furnish;
(b) "Give away" basis weight—e.g., provide 45-47 pound per 1000
sq ft (Ib/MSF) as a replacement for 42 Ib/MSF virgin liner,
in effect discounting the price on a weight basis by 10-15%;
(c) Add dry-strength chemicals to achieve comparable strength
at the same basis weight as that obtained for virgin kraft;
Choice (a) is seldom exercised, since the excessive refining slows
drainage on the machine, thus ultimately reducing machine production.
The choice between (b) and (c) depends on the economics of the situation,
including the prevailing cost of waste paper; thus, the decision may
change with shifting economic patterns.
Old corrugated boxes, with butt rolls of virgin liner or double-lined
kraft cuttings occasionally included, are the typical fiber furnish for
the manufacture of jute linerboard. The presence of the short fiber
in the corrugating medium plus the simple loss in bonding strength
intrinsic with reworked fiber cause the reduced tear, tensile, and bond
strength that are characteristic of jute liner.
In order to remove one of the factors contributing to the deterioration of
strength, a number of processes have been developed to separate the soft-
wood kraft fibers in the liner fraction from the hardwood fibers in the
medium fraction. The use of fiber separation techniques is reported to
impart superior burst and tensile strength in the liner fraction at higher
freeness values.*
*L.E. Clark and F.D. lannazzi, "Fiber Separation as a Means of Increasing
Utilization of Waste Corrugated Boxes," TAPPI, Vol. 57, No. 11, November 1974.
VIII-7
Arthur D Little, Inc
-------
I
In addition to complete replacement of virgin with S/F, as practiced
by nonintegrated mills making jute liner, many integrated mills are
blending OCC with virgin fiber in the manufacture of kraft linerboard.
Reportedly, 20-25% OCC may be incorporated with virgin fiber with no
significant deterioration of strength qualities or runability on the
paper machine.* It is assumed that the hardwood content is reduced as
the S/F content increases.
2. Corrugating Medium
Linerboard is combined with fluted medium to produce combined board or
corrugated containerboard; the liner provides the tensile and tear
strength, while the medium provides rigidity for crush resistance. For
this reason, the medium is generally manufactured from hardwoods and
almost exclusively by the NSSC process to provide high yield and max-
imum retention of the high-bonding-strength hemicelluloses. Pulp
yields of 72-75% are typical for this grade.
To improve the "runability" of the fiber furnish in the paper machine,
10-20% kraft fiber is generally added to the NSSC pulp. Typically, the
kraft fiber is obtained by repulping new double-lined kraft clippings
from corrugated box plants. Clippings are the preferred material in this
application because their quality and cleanliness are assured.
Beyond the typical 10-20% S/F included to improve runability of the fiber
furnish on the board machine, corrugating medium is also made from various
ratios of fiber blends ranging up to complete replacement of virgin fiber.
The cost of new double-lined kraft clippings generally is higher than that
of producing virgin NSSC pulp; hence, clippings are used principally to
improve runability on the board machine. OCC is typically the preferred
source of S/F as a complete replacement or partial substitute for NSSC fiber,
but some firms reportedly add news or mixed waste paper (see Appendix C-A)
to the fiber furnish. In our analysis, we assumed that OCC was the source
of replacement fiber for NSSC pulp.
Historically, there has been considerable controversy about the relative
strength qualities of virgin and recycled (bogus) medium. Contacts we have made
in the performance of this study and information reported in the published
literature** indicate that comparable properties can be achieved with either
material. The choice of the fibrous raw material and the pulping and paper-
making conditions have a greater effect on the product than the choice of
virgin or recycled fiber. In this study, the quality obtained from fiber
blends or complete replacement of NSSC pulp is assumed to be comparable to
that of virgin semichemical medium.
* G.T. Edmonds, "Economics of Recycle Usage," TAPPI, Vol. 57, No. 12,
December 1974.
** "Paper Recycling — The Art of the Possible, 1970-1985," report to
the Solid Waste Council of the Paper Industry, Midwest Research
Institute, 1973, p. 90.
I
VIII-8
I
Arthur I )l ittlc Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
D. GROUNDWOOD PAPER
There are three principal grades of groundwood paper, each with its own
product requirements and opportunity to utilize secondary fiber—namely.
groundwood printing, newsprint, and groundwood specialties.
1. Groundwood Printing and Uncoated Publication Paper
As much groundwood as possible is used in this grade to obtain printa-
bility, opacity, and low cost. Chemical fiber is blended with the
groundwood fiber (mechanical pulp) to obtain the necessary tear, tensile,
and burst strength required for the end-use application.
Within the numerous products included in groundwood printing and publi-
cation papers and their respective end-use requirements, the ratio of
groundwood to chemical fiber decreases as the quality improves. A
high-quality publication grade, such as "Time-Life paper" includes
about 50% groundwood combined with a mixture of bleached softwood and
hardwood chemical pulp. The chemical fiber component is about three-
fourths softwood and one-fourth hardwood pulp, prepared by either the
sulfite or kraft pulping process. One of the principal reasons for
the comparatively high chemical fiber furnish is to carry the inorganic
pigment fillers that are incorporated into the sheet. Some high-quality
groundwood papers are coated with inorganic pigments.
Other grades within this category, e.g., catalog paper, typically have
a higher groundwood content—about 65-70%. End-use requirements and
cost considerations dictate the proportions of chemical and groundwood
fibers used in each grade.
Old news could be used as a complete or partial replacement for the
groundwood in these grades. Similarly, P/S and high-grade deinking could
be used as a complete or partial replacement for the hardwood segment of
the chemical fiber portion. Possible reduction in opacity is the major
consideration when a high percentage of reworked news replaces virgin
mechanical fiber. Tensile and tear strength are diminished when the
chemical fiber is replaced with P/S and high-grade deinking S/F. Accord-
ingly, replacement in these light-basis-weight grades is typically
aimed at the substitution of the hardwood fraction only.*
*Source: ADL personal communication with private firm making these
grades from a combination of virgin groundwood, deinked pulp,
and market pulp.
VIII-9
Arthur D Little, Inc
-------
2. Newsprint
I
I
In newsprint manufacture, groundwood pulp (made almost exclusively with |
softwood) is combined with softwood chemical fiber. Groundwood pulp can
be prepared in either stone grinders or refiners. Pulp yields are in the _
order of 93 to 95%. Softwood chemical pulp can be made by either the •
sulfite (unbleached) or kraft (semi-bleached) process. Typical yield ™
via the sulfite process is about 62%, while that for semi-bleached kraft
is 45%. •
Typical northeastern and northwestern newsprint furnishes have about
15-25% sulfite chemical fiber; the remainder is mechanical fiber. In the •
South, the combination is 25-30% semi-bleached kraft and the rest pine •
groundwood.
The use of old news as a complete replacement for the virgin fiber furnish •
is well established. Garden State Paper Company operates mills in •
Garfield, N. J., Alsip, 111., and Pomona, Calif, with a 100% old news
furnish. Traditionally, a high-quality "super" news grade was used in •
this application. Specifications established by Garden State necessitated B
hand sorting to reduce the presence of contaminants to an acceptable level.
The dealer received $5-7 per ton more for this superior grade than for •
the more traditional grade (No. 1 news). •
More recently, the practice of using a substantial portion of deinked news
as a fiber blend with virgin fiber has been established. Startup of a
deinking facility at the Southwest Forest Industry mill at Snowflake,
Arizona is scheduled for this year. Approximately 40% of the fiber furnish
will consist of deinked news. It is also reported that Publishers Paper
in Oregon will use a combination of two parts deinked news to one part virgin
fiber. In both cases, we understand the mills will accept No. 1 news; addi-
tional cleaning equipment has been designed into the facilities to accommodate
this grade.
3. Groundwood Specialties
This category includes a wide variety of groundwood-content grades, such as
wallpaper, poster, white tablet, target, manila drawing, and colored spe-
cialties. As in newsprint manufacture, the practice of using secondary
fiber in these applications is well established. Typically, the fiber
furnish includes 15-20% bleached chemical market pulp, and the remainder
is about equally divided between groundwood and deinked pulp. The recent
scarcity and high price of virgin pulp has forced many of these producers
to sharply reduce or even eliminate the use of virgin market pulp. However,
groundwood specialties usually have a heavier basis weight than publication
papers or newsprint, so the loss in opacity with the replacement of virgin
groundwood with recycled news is not as significant.
Pulp substitute grades and high-grade deinking waste paper are used to
supply the chemical fiber requirement. The need for cleanliness in the
VIII-10
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
product rather than strength has been the principal factor hindering the
extent of S/F usage; blending the latter with virgin groundwood and market
pulp dilutes dirt and hence reduces the number of specks per unit area.
The dirt content is related not only to the cleanliness of the incoming
raw material, but also the sophistication of the cleaning equipment.
These site-specific considerations are not amenable to this analysis.
E. TISSUE AND OTHER MACHINE CREPED PAPER
There are two major types of tissue in this functional group, namely,
sanitary and nonsanitary. Sanitary tissue is by far the larger segment
and represents the greater potential for secondary fiber consumption.
The nonsanitary segment, which includes waxing tissue, wrapping, indus-
trial cellulose, and numerous miscellaneous grades, actually uses a greater
amount of S/F per unit of product, but it represents less than 7% of the
total production of this functional group. For this reason, we have not
included it in our analysis.
In the manufacture of most sanitary tissue products (toilet, facial,
napkins, etc.), the sheet needs only to be strong enough to get it through
the converting equipment. Since tensile strength is inversely related
to softness, manufacturers strive to make the sheet as weak—hence as
soft—as possible.
The fiber furnish for sanitary tissue is now mostly chemical pulp. The
blends of groundwood and chemical fiber that were common 10-15 years
ago have been displaced. The fiber blend is typically bleached sulfite
and bleached kraft pulp. To obtain softness, the manufacturer includes
as much hardwood pulp as possible, consistent with good performance on
the converting machine. In facial tissue, for example, the furnish may
include 40-50% hardwood pulp and the remainder softwood pulp. Amounts
greater than 60% tend to weaken the sheet excessively and hinder per-
formance on the converting machinery.
P/S and high-grade deinking secondary fiber provide an excellent furnish
for tissue manufacture. The fact that the recycled fiber has been
"reworked" reduces its bonding strength, thereby enhancing the softness
of the sheet.
It is technically possible to make sanitary tissue from 100% S/F, and
a number of small nonintegrated mills are doing so. However, a certain
amount of strength is needed when the tissue passes through the converting
machinery, so it is desirable to include some virgin softwood fiber.*
* ADL private communication with Mr. M. Reuben, Technical Director,
Erving Paper Company, Erving, Massachusetts.
VIII-11
Arthur D Little, Inc
-------
Again, cleanliness of the raw material and the adequacy of the plant
cleaning equipment are the major considerations.
In some of the low-grade tissue applications and toweling, a small
quantity (5-20%) of groundwood is still used. The groundwood fiber
may be supplied via virgin softwood mechanical pulp or deinked news.
F. FOLDING BOXBOARD
The folding boxboard functional group contains a wide variety of end
products, each with different property requirements and potential for
utilizing S/F. In this discussion, we will consider two principal
subdivisions: solid bleached sulfate or SBS containing 85% or more
bleached fiber) and combination or recycled folding boxboard.
1. Solid Bleached Sulfate (SBS) Board
As the name implies, SBS board is made up almost exclusively of virgin
bleached kraft pulp. Blends of softwood and hardwood are used, the ratio
depending upon the end-use requirements of the final product. In prod-
ucts such as milk carton stock where tear and tensile strength are
especially important, the softwood content would be in the range of
75-80%; in other products, such as meat trays, where tensile strength
is not important, about 20% softwood content would be used.
Historically, S/F has not been used in the manufacture of SBS board,
because virgin fiber has been more economical. From a technical view-
point, secondary fiber from P/S and deinking grades could be used as a
partial or complete replacement for the hardwood content; the likeli-
hood of this substitution is remote, however, because P/S and the high-
grade deinking waste paper are in demand for applications with higher
added value.
2. Recycled 18-Point Clay-Coated Folding Boxboard
At present, recycled-fiber folding boxboard is made up almost exclusively
from secondary fiber. Prior to the sharp price increases for market pulp,
it formed about 20% of the furnish for this type of boxboard. Under cur-
rent economic conditions, virtually no market pulp is used.
A typical fiber furnish includes about 20% pulp substitute grades, 74%
news and kraft clippings (80/20 ratio), and 6% clay coating (Figure VIII-
1). Mixed waste, specifically office waste, is a candidate replacement
material for No. 1 news in recycled board manufacture, but it has some
technical/economic problems, such as the following:
• Quality - Office waste contains a larger percentage of
contaminants than No. 1 news. For example, hot melt
adhesives (in labels and envelopes) and waxes (in carbon
papers) are found in office waste but are generally ex-
VIII-12
Arthur I) Little Int
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Basis Weight
(Ib/MSF)
15.
55.
74
Filer
Composition
80% Clay
12% Latex
8% Protein
Manila Jab Card
and/or Ledger
80% News
20% New Corrug.
Kraft Clippings
FIGURE VIII-1 COMPOSITION OF 18-POINT CLAY-COATED FOLDING BOXBOARD
VIII-13
Arthur D Little; In
-------
eluded from No. 1 news. These undesirable materials can
be removed by the stock preparation system, but addition
cleaning facilities would probably have to be installed.
For the above reasons, we believe that while office waste is suitable
as a partial substitute for No. 1 news in boar
unlikely to be used as a complete replacement.
VIII-14
Arthur D Little, Inc
I
I
• Economy - The high groundwood content of folding boxes made •
with news filler produces low bulk, hence greater yield per |
ton of product. We believe that complete substitution of the
mechanical fiber in waste news with the chemical fiber in _
office waste would reduce the bulk—hence reduce the area I
yield—per ton of board product. Traditionally, price adjust- ™
ments are made to reflect yield; thus a potential saving in
raw material cost may be offset by a reduction in selling price H
because of the lower yield. I
• PCS Contamination - The Food & Drug Administration (FDA) •
has found polychlorinated biphenyl (PCB) contamination in •
folding boxboard packaging materials. To protect the pub-
lic, FDA has proposed regulations restricting the level
of PCB in packaging materials. Since PCB has been traced •
to a type of carbonless copy paper, and since office waste •
is likely to contain this product, it has been avoided by
the board mills. However, PCB is no longer being used
in this product; as it gradually disappears from the waste
stream through normal attrition and selective sorting,
office waste may once again be attractive to the board •
mills. •
I
as a partial substitute for No. 1 news in board manufacturing, it is •
In some packaging applications, clay-coated folding box is in direct •
competition with SBS board; in other applications, it is the preferred ||
material because of its cost/performance properties. The recycled
board, which is typically made on conventional cylinder machines or any .
of the numerous multi-ply formers, is made in a range of calipers I
from about 14-point (0.014 inch) to 45-point (0.045 inch); SBS board m
is usually made on a Fourdrinier machine in calipers from about 10- to
28-point. Thus, the products compete directly in the 14- to 28-point 1
range; applications for 10- to 14-point and 28- to 45-point generally are •
served respectively by SBS and recycled board.
Where the two products do compete, the choice usually depends on the |
strength-to-weight ratio and its impact upon competitive cost. Typically,
SBS board has a higher strength per unit of weight. The critical measure
of the strength-to-weight characteristic of these materials is packaging
stiffness, which is influenced by the forming technique (Fourdrinier,
cylinder, or multi-ply former) as well as the type of fiber (virgin vs.
recycled).
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Figure VIII-2 illustrates the relationship between package stiffness and
weight for virgin-fiber SBS board produced on a Fourdrinier machine and
two typical recycled board products, one made on a conventional cylinder
machine and the other on one of the newer multi-ply formers. Compared
with SBS board, to achieve a 300 package stiffness, the weight "give-away"
for a board made on a conventional cylinder machine is about 20%; that
for one made on an improved multi-ply former, less than 10%. Hence, the
newer equipment should make recycled board more competitive with virgin
fiber SBS board. Table VIII-3 correlates the relationships among package
stiffness, basis weight, and caliper.
Because SBS board has greater stiffness than combination board for a
given basis weight, it is generally priced significantly higher on a
unit weight basis. Figure VIII-3 illustrates the relationship between
stiffness and cost for the competing products. In this graph, prices
are expressed on an area basis (dollars per thousand square feet) rather
than on the more traditional weight basis, because most end users com-
pare costs per unit of material packaged rather than per unit weight of
packaging material.
Aesthetic appearance is another key consideration in the choice of a
packaging material. For many high-added-value retail products, such as
cosmetics and pharmaceutical supplies, SBS board is used even though it
may be significantly more costly than combination board. Thus, while
combination board may have all the functional qualities required for an
end-use application at a lower unit cost, the perceived superior appear-
ance of SBS board may outweigh cost considerations.
G. PRINTING, WRITING, AND RELATED
The wide variety of products and end-use requirements that characterize
this functional group permit considerable use of secondary fiber. As in
the folding boxboard category, some products made from S/F are in direct
competition and others are supplementary to those from virgin fiber.
The intrinsic characteristics of the recycled fiber, as well as the end-
use requirements of the product and the ability of the manufacturer
to get maximum utility from the S/F, influence the substitutability of
the two fibers.
Products in this category contain no groundwood, because the latter turns
yellow when exposed to light. They are made from-a combination of softwood
and hardwood chemical pulps plus varying quantities of inorganic pigment
coatings. Printability, formation, opacity, uniformity, and permanence
are important in this product category. As much hardwood pulp is used as
possible to obtain these quality characteristics, softwood pulps are added to
develop the required tear and tensile strength and to carry the coating
weight as well as the nonbonding inorganic filler material. The actual
proportions of softwood and hardwood pulps depend on the end-use appli-
cation and can vary from relatively low quantities of hardwood pulp in
high-grade writing papers to 100% southern hardwood chemical pulp in some
business papers.
VIII-15
Arthur D Little, Inc.
-------
160
140
120
_ 100
LL
C/3
SI
O)
(0
CQ
80
60
40
20
Cylinder Clay-Coated
Multi-Ply
Former Board*
Low-Density
SBK
_L
150 300 450 600
Package Stiffness**
750
900
*Assumes basic board density @ 3.5 Ib/point/MSF,
coating weight @ 8 Ib/MSF
**Package Stiffness = (MD Stiffness)0'33 X (CMD Stiffness)0'667
Source: Fibreboard Corp.
FIGURE VIII-2 PACKAGE STIFFNESS OF SELECTED BOARD SAMPLES
VIII-16
Arthur D Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
CO
1
h-l
M
H
>
W
PQ
<
H
Q
pc
^
o
PQ
X
O
PQ
O
53
hH
Q
hJ
0
fa
p
H
i_j
O
>-i
w
pd
p
z
^
CO
OQ
CO
fa
CO
u
M
H
co
M
Crf
w
H
U
>
13
ca
o
PQ
"^ co
oo NO co i — i ON
co -, OO
r**» CB •
O rH CO
o
fO 1
\^j
1— I
ce
u
CM m r- o CN
rH rH rH CN CM
t^f
PQ
O OO -* O VO
00 1 — 1^ l*» VO
st m vo i — oo
^
PQ ^-
>-, CO >,
4-1 4-1
•H 13 -H
en o) en
C 4-1 C
01 ca cu
pop
1 U
? 1 oo
O ^» •
i-J cB co
rH
Oftjj
vii^
s^
:
«
U
o o o o o
o CN • o
CO 4-4
)-i
CU
*-*
p-
01
00
CB
a
cB
r^
vO
cx
o
4J
pj
o
^4
5
o
•
m
^s
CX VO
4J
'd
y oi
4J
ca
0)
rl
en
> cB
o m o m o m
m i — o CN m t~~
CN CM CO CO CO CO
CO ON in rH 00 CO
vo m m m -* -<
4-1
ca
o
u
*
fa
w
g
4-1
cx
*K
rO
rH
LO
*
CO
CEJ
^~i
,_J ci
•rl p
en o
G 4-1
01 4-1
13 0
13
ce o
0
rO £>
rH
o
•H O
en •
cB co
PQ
3
•
C
O
•rl
4-1
cB
rl
O
P-
}-4
O
o
ii
M
ca
f
0)
rl
•tH
fa
• •
w
u
Crf
!=>
0
CO
VIII-17
Arthur D Little, Inc
-------
c
o
03
C
IE
o
to
O
o
o>
cu
o
(O
0)
c
C/3
•o
0)
c
3
o
O
1000
900
800
700
600
500
400
300
200
10
11
14
15
12 13
Price ($/MSF)*
*Based on the following selling prices for rolls'. SBS - $350/ton; Combination - $255/ton.
Source: Arthur D. Little, Inc., test results and calculations; 1974 list prices.
16
FIGURE VIII-3 RELATIONSHIP OF STIFFNESS TO PRICE FOR SBS AND COMBINATION BOARD
VIII-18
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
The use of secondary fiber is well established in many specific grades
of this functional group. Typically, S/F is used to replace the hard-
wood portion of the virgin fiber, but it is sometimes used as the sole
fiber in the furnish.
Table VIII-4 shows the results of laboratory comparisons of paper made
from S/F and from various grades of bleached kraft. The following is
an excerpt from a letter by the Technical Director of Bergstrom Paper
Company, a leading manufacturer of printing and writing paper from
secondary fiber, who supplied these data:
"This information was extracted from a study that we did in
1971 to compare the properties of our deinked secondary fiber
(identified in data as bookstock) with the properties of
various grades of softwood and hardwood bleached kraft that we
were purchasing at the time. The data represent the test
results of laboratory pulp evaluation on each pulp (including
bookstock) using the Valley beater and TAPPI standard methods.
Data at "0" minutes and "10" minutes beating time are compiled;
10 minutes time in the Valley beater most closely simulates the
degree of refining done by our paper machine refiners on virgin
fiber.
"In general terms, the types of waste paper being furnished to
our deinking plant at the time that this study was made included
book, ledger, kraft, and tab card.
"It is rather difficult to characterize the strength properties
of our deinked fiber in quantitative terms without generalizing.
However, we regard bookstock as comparable to bleached hardwood
kraft as far as strength properties are concerned; the enclosed
data bears this out. Over the years, we have developed grades
which suit the characteristics of this bleached secondary fiber
and many of these grades are comprised of 100% deinked fiber.
"In the manufacture of paper, we will furnish as much deinked fiber
as possible in keeping with the end use requirements of the grade,
its runability on the paper machine and the availability of fiber
from our deinking plant. For lightweight papers (30-40 Ib.) less
deinked fiber will be furnished than for heavier weights (50 Ib. and
above). Refining of the deinked fiber portion of the furnish is
minimal (tickler refining after blending with refined virgin fiber)
while the virgin fiber portion is given a greater degree of refining;
all to obtain as good forming characteristics as possible.
"Many of the grades that we manufacture are for web offset applica-
tions and rarely have we experienced problems with web strength
which could be related to the use of deinked fiber."
VIII-19
Arthur Dl ittlc Inr
-------
TABLE VIII-4
STRENGTH AND OPTICAL PROPERTIES OF SELECTED
VIRGIN AND SECONDARY FIBER PULPS
(Handsheets prepared
Property
Canadian Standard
Freeness (ml)
3
Specific Volume (cm
Burst Strength (psi)
Tear Strength (gm)
Fold Endurance (no.
folds)
Breaking Length (m)
•5
Stiffness (cm /100)
Opacity (%)
Brightness (%")
Porosity (sec)
and tested
Beating
Timea(min)
0
10
/gm) 0
10
0
10
0
10
of 0
10
0
10
0
10
0
10
0
0
10
in accordance with TAPPI Standard
Softwood
674-748
632-704
1.75-2.22
1.57-1.87
20-61
72-136
148-252
138-238
3-53
109-879
1706-4263
3531-7090
98-111
98-116
72-78
68-73
86-89
0.1-2.4
0.6-6.9
Hardwood
581-680
492-628
1.69-2.19
1.54-1.89
10-38
27-86
36-112
72-110
0-8
4-67
1005-2439
2637-5813
85-107
85-98
76-82
73-81
87-90
0.5-3.3
1.4-8.9
T220m-60)
S/F
504
388
1.90
1.69
51
80
118
98
15
55
3090
5150
93
102
81
78
84
4.9
16.4
1
1
1
•
1
1
1
1
•
1
On Valley laboratory beater 1
Range of values for
Range of values for
Source: K. L. Maves
pulps from
pulps from
four major suppliers
five major suppliers
, Director of Research and
Development ,
Bergs trom Paper Company.
VIII-20
Arthur D Little, Inc
1
1
1
1
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
H. INDUSTRIAL PACKAGING, CONVERTING, AND MISCELLANEOUS
As with printing and writing paper, a wide variety of products and end-use
requirements are included in this functional group. The use of S/F varies
from 0% for those applications in which a high strength-to-weight ratio is
required (e.g., saturating paper for tube stock in the manufacture of
electric fuses) to 100% in specific grades of combination tube, can, and
drum stock for mechanical applications.
Two specific grades, unbleached kraft bag paper and tube paper, were
selected for economic analysis in Section IX; accordingly, our dis-
cussion of the potential substitutability of virgin with S/F will be
directed to these products.
Unbleached bag paper for multiwall sacks and grocery sacks is made pri-
marily from unbleached softwood kraft pulp. In certain specific appli-
cations, northern softwood pulpwood species are used to obtain maximum
strength-to-weight ratio. The paper is also creped while on the paper
machine to permit extra elongation. This "extensible kraft bag paper"
represents a substantial portion of this functional group. S/F is not
well suited for this application.
For less demanding applications within this subcategory, such as notion
bags, strength requirements are lower and some virgin hardwood fiber
pulp or S/F pulp can be blended with the virgin softwood fiber. The
actual proportion would be dictated by the end-use requirements; for
our economic comparison we used 30%. Waste paper grades used in this
application include P/S and OCC (specifically, pre-consumer waste box
plant cuttings).
In tube paper, tear strength, tensile strength, and rigidity are all
important characteristics of the product. Their relative importance is
influenced by the specific end-use application.
An example of an application in which tensile strength is important is
that for unbleached kraft tube paper used in the manufacture of
phenolic-resin-impregnated tube stock for electrical fuses. In this
application, high tensile strength is required in the saturation step;
rigidity is imparted via the resin. Cleanliness and absence of electro-
lytes are other key requirements of the pulp furnish for these appli-
cations; hence, the possible variability of these qualities in S/F would
make it unsuitable for this application.
On the other hand, there are other applications for tube paper in pack-
aging and materials handling in which S/F is a suitable replacement
material. These applications include fiber drums and core stock. In
these applications, tensile strength need not be so high; rigidity is the
critical property. A wide variety of waste paper grades are used here,
ranging from a high percentage of news in tube stock for toilet tissue and
roll toweling cores to zero news and a high percentage of OCC (specifically,
double-lined kraft clippings) in tube stock for paper rolls, fiber
drums, etc.
VIII-21
Arthur D Little, Inc
-------
J. SUMMARY
ADL private communication with retired mill manager of a roofing
felt manufacturing facility.
VIII-22
I
I
In our economic comparison, we assumed an unbleached "kraft" tube paper
that might be used as core stock in gift-wrap paper or linoleum tubes. _
We estimated that 20% double-lined kraft clippings and 80% P/S grades could •
be used in these applications. Other fiber furnishes could be postulated —
for different applications.
1. CONSTRUCTION PAPER AND PAPERBOARD
As indicated in Table VI1I-2, the level of S/F usage in this group |
varies greatly from one product to another. In this functional group,
it ranges from 0% for insulation board and hardboard to 100% for gypsum _
linerboard. Recent experimental work carried out by the Forest Products •
Laboratory indicates that it is technically possible to use up to 25% OCC
in medium-density hardboard without reducing its strength properties.*
In other work by FPL, waxed container waste was used in the manufacture I
of hardboard. Up to 50% fiber replacement was found to be possible with- I
out loss in drainage characteristics of the stock on the forming machine
or reduction of the physical properties of the resultant product.** About
25% OCC and 75% news is used in the manufacture of gypsum linerboard.
I
From a technical point of view, we know of no obstacle to utilizing S/F _
(specifically old news) in the manufacture of insulation board. The use •
of S/F in the manufacture of insulation board has been tried experimen- *
tally, but we do not believe it is being done on a commercial scale.
In the section on Process Economics, we have considered the manufacture •
of roofing felt, a major component of the construction paper subcategory.
Tensile strength and absorptivity are key requirements of this grade. About •
55% S/F (44% mixed waste and 11% OCC) and 45% mechanical fiber is used in |
this grade. Increasing the S/F content significantly above this level is
reported to reduce tensile strength below that required in the asphalt
saturation step.*** The prospect of removing the weaker medium fraction •
from the liner fraction in the recovery of OCC suggests that higher pro- •
portions of S/F may be possible, but sufficient data are not now available
to validate that hypothesis. •
I
The previous grade-by-grade analysis supports our initial statement that
the practicality of substituting virgin fiber with secondary fiber is _
not amenable to precise analysis. The quality of the recovered S/F, •
I
** FPL Research Paper 254, "Dry Formed Medium Density Hardboard from
Urban Forest Material." •
*** P. E. Steinmetz, "Hardboard: a Potential Outlet for Waxed •
Containers," TAPPI, Vol. 57, No. 2 (February 1974) p. 74.
I
Arthur D Little, Inc I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
and hence the quality of the recycled product, are influenced by the
characteristics of the original product, the history of the recovered
waste paper, and the ability of the reprocessor to recover maximum util-
ity from the fiber. Therefore, it would be misleading to state specific
percentage ranges that would apply to the substitution of secondary for
virgin fiber in each paper and paperboard product.
However, it can be said that there is significant commercial experience
to validate the use of a high percentage (in some instances 100%) of
secondary fiber in the manufacture of certain products; these products
are listed below, together with an indication of the grades of waste
paper that can be used. Further information on typical furnishes for
various products containing waste paper is given in Appendix C-4.
Linerboard
Corrugating Medium
Newsprint
Napkins, Box Facial
and Toilet Tissue
Printing & Writing
(selected grades)
Coated & Uncoated
Groundwood Papers
Folding Boxboard
(combination)
Combination Tube,
Can & Drum Paper
Gypsum Linerboard &
Construction Paper
OCC
V
V
V
V
V
News
V
V
V
V
V
V
V
Deinking
V
V
V
P/S
V
V
V
Mixed
V
V
V
V
There are experimental data to indicate that S/F can be used in major
applications in which it was not previously used, such as medium-
density hardboard. Thus, greater usage of S/F has not been blocked by
a lack of technical suitability, but by commercial and economic problems.
Table VIII-5 summarizes the virgin fiber and S/F fiber furnishes used in
the economic analyses of selected paper and paperboard products in
Section IX. The range of substitution is indicated by the inclusion of
examples using 100% S/F. This is not intended to imply that equivalent
product qualities will be achieved in all cases; rather, it indicates
that some products made from S/F have discrete end-use applications
suited to their price/quality structure.
VIII-23
Arthur!)Little Inc
-------
TABLE VIII-5
SUMMARY OF FIBER FURNISHES USED IN THE
ECONOMIC ANALYSIS OF SELECTED PAPER AND PAPERBOARD PRODUCTS
I
I
Functional Group
and Grade
CONTAINERBOARD
Virgin Fiber
S/F - Virgin Fiber Blend
S/F
Virgin Fiber
Kraft Linerboard
Jute Liner
80% SW UBK
20% HW UBK
Semi-Chemical Corr. 85% NSSC HW
Medium
Bogus Medium
GROUNDWOOD PAPER
Newsprint
Uncoated Printing
Paper
15% New Kraft
Clippings
25% SW SBK/UBS
75% MF
35% SW SBK
65% MF
TISSUE AND OTHER MACHINE
CREPED PAPER
Toilet/Facial
50% SW BK
50% HW BK
FOLDING BOXBOARD
18-Point Clay-Coated
20% OCC 80% SW UBK
100% OCC
33% OCC
10% Kraft
Clippings
100% OCC
57% NSSC HW
1) 33% No. 1 News
2) 100% No. 1 News
1) 33% No. 1 News
2) 80% No. 1 News
20% Ledger
1) 13.2% IBM Card
13.2% Ledger
6.6% No. 1 News
2) 40% IBM Card
40% Ledger
20% No. 1 News
Top Liner-100% Ledger
Filler Liner -
80% News
20% OCC
17% SW SBK
50% MF
26% SW SBK
41% MF
33.5% SW BK
33.5% HW BK
SBS Board
60% SW BK
40% HW BK
VIII-24
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VIII-5 (Cont'd)
SUMMARY OF FIBER FURNISHES USED IN THE
ECONOMIC ANALYSIS OF SELECTED PAPER AND PAPERBOARD PRODUCTS
Functional Group
and Grade
PRINTING, WRITING AND
RELATED
Bond Paper
S/F - Virgin Fiber Blend
Virgin Fiber
50% SW BK
50% HW BK
S/F
Virgin Fiber
Book Paper
20% SW BK
80% HW BK
1) 13.2% IBM Cards
13.2% Ledger
6.6% No. 1 News
2) 40% IBM Cards
40% Ledger
20% No. 1 News
1) 20% IBM Cards
20% Ledger
10% No. 1 News
2) 40% IBM Cards
40% Ledger
20% No. 1 News
33.5% SW BK
33.5% HW BK
50% HW BK
INDUSTRIAL PACKAGING
AND CONVERTING
Unbleached Kraft
Bag Paper
100% SW UBK
Tube Paper
100% SW UBK
1) 6% Double Kraft
lined corr. cuts
24% P/S UBK grades
2) 20% Double Kraft
lined corr. cuts
80% P/S UBK grades
1) 14% Double Kraft
lined corr. cuts
56% P/S UBK grades
2) 20% Double Kraft
lined corr. cuts
80% P/S UBK grades
70% SW UBK
30% SW UBK
CONSTRUCTION PAPER AND
PAPERBOARD
Roofing Felt
44% Mixed Waste
11% OCC
45% SW UBK
SOURCE: ADL estimates and information derived in interviews with industry
representatives previously identified.
Key: GW « Groundwood
SBK = Semi-bleached kraft
SW - Softwood
S/F = Secondary Fiber
HW - Hardwood
BK - Bleached kraft
UBK - Unbleached kraft
CF - Chemical fiber,
either kraft or
sulfite
VIII-25
MF * mechanical fiber,
either stone or
refiner GW
Arthur D Little, Inc
-------
I
I
Table VIII-6 lists some of the leading manufacturers of selected paper •
and paperboard products. While all producers that use secondary fiber •
as a partial substitute or complete replacement for virgin fiber are
not included in this list, it provides a representative sample of major
companies that do extensive recycling of waste paper. •
I
I
1
I
I
I
I
I
I
I
I
I
I
I
VIII-26
Arthur!) I.ittlelnc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VIII-6
COMPANIES UTILIZING SECONDARY FIBER IN
THE MANUFACTURE OF PAPER AND PAPERBOARD PRODUCTS*
CORRUGATED SHIPPING CONTAINERS
Alton Box Board Co., Alton, 111.
Bird and Son, Inc., East Walpole, Mass.
Boise Cascade Corp., Boise, Idaho
Consolidated Packaging Corp., Chicago, 111.
Consolidated Papers, Inc., Wisconsin Rapids, Wis..
Container Corp. of America, Chicago, 111.
Continental Can Co. Inc., New York, N.Y.
Crown Zellerbach Corp., San Francisco, Calif.
Diamond National Corp., New York, N.Y.
Federal Paper Board Co. Inc., Montvale, N.J.
Fibreboard Corp., San Francisco, Calif.
Fleming and Sons, Inc., Dallas, Texas
Flintkote Co., White Plains, N.Y.
Hoerner Waldorf Corp., St. Paul, Minn.
Inland Container Corp., Indianapolis, Ind.
Mead Corporation, Dayton, Ohio
Menasha Corp., Neenah, Wis.
Owens-Illinois Inc., Toledo, Ohio
Packaging Corp. of America, Evanston, 111.
St. Regis Paper Co., New York, N.Y.
Simkins Industries, Inc., New Haven, Conn.
Stone Container Corp., Chicago, 111.
Time Container Corp., Chicago, 111.
Union Camp Corp., Wayne, N. J.
Unitec Board and Carton Co., Ridgefield, Park, N.J.
Weston Paper and Mfg. Co., Terre Haute, Ind.
Westvaco Corp., New York, N.Y.
SOLID FIBER SHIPPING CONTAINERS
Alton Box Board Co., Alton, 111.
Bird and Son, Inc., East Walpole, Mass.
Consolidated Packaging Corp., Chicago, 111.
Consolidated Papers, Inc., Wisconsin Rapids, Wis.
Container Corp. of America, Chicago, 111.
Continental Can Co., Inc., New York, N.Y.
Fibreboard Corp., San Francisco, Cal.
* Partial listing
VIII-27
Arthur D Little, Inc
-------
I
TABLE VIII-6 (Cont'd) •
COMPANIES UTILIZING SECONDARY FIBER IN
THE MANUFACTURE OF PAPER AND PAPERBOARD PRODUCTS
SOLID FIBER SHIPPING CONTAINERS (Cont'd)
VIII-28
I
I
Inland Container Corp., Indianapolis, Ind.
Mead Corporation, Dayton, Ohio <•
Menasha Corp., Neenah, Wis. |
Packaging Corp. of America, Evanston, 111.
St. Regis Paper Co., New York, N.Y. _
Stone Container Corp., Chicago, 111. •
John Strange Paper Co., Appleton, Wis.
Union Camp Corp., Wayne, N.J.
Westvaco Corporation, New York, N.Y. •
BOXBOARD CARTONS
Alton Box Board Co., Alton, 111. •
Austell Box Board Corp., Austell, Ga.
Beloit Boxboard Co., Beloit, Wis.
Beveridge Paper Co., Indianapolis, Ind. •
Carolina Paper Board Corp., Charlotte, N.C. ™
Columbia Corp., Chatham, N.Y.
Consolidated Packaging Corp., Chicago, 111. tt
Consolidated Papers, Inc., Wisconsin Rapids, Wis. |
Container Corp. of America, Chicago, 111.
Crown Zellerbach Corp., San Francisco, Calif. m
Diamond National Corp., New York, N.Y. •
Downington Paper Co., Downington, Pa.
Federal Paper Board Co., Inc., Montvale, N.J.
Fibreboard Corp., San Francisco, Calif. •
Fleming and Sons, Inc., Dallas, Texas •
Flintkote Co., White Plains, N.Y.
Georgia-Pacific Corp., Portland, Oregon M
Hoerner-Waldorf Corp., St. Paul, Minn. |
Lowe Paper Co., Ridgefield, N.J.
Macandrews and Forbes Co., Camden, N.J. «
Mead Corporation, Dayton, Ohio •
Michigan Carton Co., Battle Creek, Mich.
Packaging Corp. of America, Evanston, 111.
St. Regis Paper Co., New York, N.Y. •
Simkins Industries, Inc., New Haven, Conn. •
Stone Container Corp., Chicago, 111.
John Strange Paper Co., Menasha, Wis.
Tennessee Paper Mills, Inc., Chattanooga, Tenn.
Union Camp Corp., Wayne, N.J.
United Board and Carton Corp., Ridgefield Park, N.J. —
Westvaco Corp., New York, N.Y. •
Whippany Paper Board Co., Inc., Whippany, N.J. ™
I
I
Arthur D Little, Inc. I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE VIII-6 (Cont'd)
COMPANIES UTILIZING SECONDARY FIBER IN
THE MANUFACTURE OF PAPER AND PAPERBOARD PRODUCTS
PRINTING AND WRITING PAPER
Allied Paper Corp., Kalamazoo, Mich.
Bergstrom Paper Co., Neenah, Wis.
Fitchburg Paper Co., Fitchburg, Mass.
Newton Falls Paper Co., Newton Falls, N.Y.
Oxford Paper Co., Richmond, Va.
Rising Paper Co., Housatonic, Mass.
Riverside Paper Corp., Appleton, Wis.
St. Regis Paper Co., New York, N.Y.
Simpson Lee Paper Co., Kalamazoo, Mich.
Tileston & Hollingsworth Co., Boston, Mass.
Valentine Pulp & Paper Co., Lockport, La.
Ward Paper Co., Merrill, Wis.
NEWSPRINT AND OTHER GROUNDWOOD PAPER
Garden State Paper Co., Inc., Garfield, N.J.
Hennepin Paper Co., Little Falls, Minn.
Manistique Pulp and Paper Co., Manistique, Mich.
Southwest Forest Industries, Inc., Phoenix, Ariz.
TISSUE, TOWELING, AND OTHER MACHINE CREPED PAPER
Berkshire Tissue Mills, New York, N.Y.
Crown Zellerbach, Carthage, N.Y.
Fort Howard Paper Co., Green Bay, Wis.
Hudson Pulp and Paper Co., New york, N.Y.
Kimberly-Clark Corp., New York, N.Y.
Marcal Paper Mills, East Paterson, N.J.
Morgan Mills, Lititz, Pa.
Patrician Paper Co., New York, N.Y.
Romar Tissue Mills, Inc., Wheelwright, Mass.
Scott Paper Co., Philadelphia, Pa.
Swanee Paper Corp., New York, N.Y.
Wisconsin Tissue Mills, Inc., Menasha, Wis.
VIII-29
Arthur D Little, Inc
-------
TABLE VIII-6 (Cont'd)
COMPANIES UTILIZING SECONDARY FIBER IN
THE MANUFACTURE OF PAPER AND PAPERBOARD PRODUCTS
FINE AND SPECIALTY PAPER
Eagle-A Paper Mills, Holyoke, Mass.
L. L. Brown Paper Company, Adams, Mass.
Crane and Co., Inc., Dalton, Mass.
Esleeck Manufacturing Company, Turners Falls, Mass.
Fox River Paper Corp., Appleton, Wis.
Gilbert Paper Company, Menasha, Wis.
The Harding-Jones Paper Co., Middleton, Ohio
Hawthorne Paper, Kalamazoo, Mich.
Howard Paper Mills, Dayton, Ohio
Millers Falls Paper Co., Millers Falls, Mass.
Parsons Paper, Holyoke, Mass.
Rising Paper Co., Housatonic, Mass.
Rochester Paper Co., Adams, Mass.
Simpson-Lee Paper Company, San Francisco, Calif.
Southworth Company, West Springfield, Mass.
Strathmore Paper Company, West Springfield, Mass.
Byron Weston Company, Dalton, Mass.
Whiting-Plover Paper Company, Stevens Point, Wis.
MOULDED PULP CONTAINERS AND TRAYS
Alton Box Board Co., Alton, 111.
Bemis Co., Minneapolis, Minn.
Diamond National Corp., New York, N.Y.
Hawley Products Co., St. Charles, 111.
Keyes Fibre Corp., Waterville, Me.
Packaging Corp. of America, Evanston, 111.
NOTE: Many products used for industrial and home construction
purposes are also made from recycled material—insulation,
construction board, roofing, sound-absorbing material,
padding, etc.
SOURCE: National Association of Secondary Material Industries, Inc.,
New York, N. Y.
VIII-30
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
X. POTENTIAL FOR SECONDARY FIBER USE, 1973-1983
A. APPROACH AND BASIS OF EVALUATION
This section attempts to assess the levels of reuse that secondary fiber
might attain by 1983. The 1973 Capacity Survey of API — the most cur-
rent data available during the study period — was used to project both
waste paper consumption and paper production through 1977.* The capacity
data (although unfortunately not the data on waste paper use) are rela-
tively reliable; lead time requirements are such that any new capacity
decisions made now would not be in effect until later than 1977.**
Various factors that determine the competitive position of virgin versus
secondary fiber have been described in the preceding sections and taken
into consideration in this qualitative analysis. However, numerous
intangible and unpredictable factors will also influence the industry's
ultimate decision. These factors include (1) the overall state of the
U.S. economy, (2) the rate of economic recovery from the current depressed
level, (3) local, state, and national regulations on solid waste disposal
and the resultant impact upon the cost and availability of waste paper,
(4) the influence of the cost and availability of capital on new plant
decisions, (5) possible discriminatory freight rates for virgin fiber
products, and (6) changes in paper and paperboard specifications
prompted by attempts to save energy or encourage recycling. As noted
earlier, this assessment assumes that no financial incentives or other
legislative stimuli will be enacted to increase the use of secondary
fiber, that the national economy will begin to recover in the last half
of 1975, and that there will be no major disruption of business activity
for the duration of the period studied.
Since these and other implicit factors are critical to assessing the
potential usage of secondary fiber, this analysis can indicate only the
potential for recycling.
* In API's 1974 Capacity Survey, projected waste paper usage and
capacity expansion have been revised downward significantly.
** Reductions in capacity through 1977 have recently been announced
due to unfavorable business conditions. These changes include indef-
inite delays in a few projects and stretched-out completion dates for
others. Although the affected plants form a significant part of the
announced year-end capacity for 1977 (about 15%), they constitute
less than 2% of the total U.S. capacity; hence the API Capacity
Survey data still provide a valid basis for analysis. In addition
to the delays and stretchouts, a number of secondary fiber mills
have closed since the time of our original analysis (1974) and may
not reopen. Obviously, the papermaking capacity reported for 1977
would have to be modified to reflect these closures.
X-l
\nhin ! )l ittlr
-------
I
Also fundamental to the entire assessment of opportunities for greater
waste paper utilization is the unlikelihood that virgin pulp mills will
be idled or production reduced simply to provide an opportunity for pro-
cessing secondary fiber. The cost of idling or curtailing pulping pro-
duction would erode any savings resulting from the use of secondary fiber.
Some pulp mills will be shut down for other reasons, such as for pollu-
tion abatement or technical or economic obsolescence; however, our em-
phasis is on the likelihood that new pulping capacity, prompted by over-
all increased market demand for the original products or by the retire-
ment of obsolescent pulp mills, will be captured by secondary fiber.
In this section we first review the factors that were used in making the
qualitative assessment of the potential recovery rate that is technically
feasible and economically possible without deterioration of product qual-
ity. We then summarize the potential usage in 1983 and analyze the
rationale for the projections in greater detail.
B. FACTORS CONSIDERED IN ESTIMATING POTENTIAL FUTURE WASTE PAPER USAGE
1. Comparative Economics
A number of factors have contributed to the increase in the use of waste
paper in the pulp and paper industry during 1973 and the first half of
1974. One of the most important of these has been the scarcity of mar-
ket pulp, accompanied by a rapid rise in its price. This situation
strongly stimulated the demand for waste paper, specifically the pulp
substitutes and high-quality deinking grades. The projected deficiency
of the market pulp supply, both in the United States and on the world
market, is expected to continue through the 1980 period and sustain the
incentive for finding an alternative raw material supply.
Another cause of the sharp increase in waste paper usage during this per-
iod has been the skyrocketing cost of building new grass-roots facilities.
This investment has escalated not only because of inflation, but also be-
cause of larger unit size manufacturing facilities and additional capital
requirements for pollution abatement and energy conservation.
Combined, these factors have increased the capital intensivity of pulp
and paper manufacturing facilities far more rapidly than construction
costs have risen: while the construction cost index has increased about
40% from 1969 to 1974, the investment for a new mill has doubled. For
example, the investment for a 650-tpd "economic size" plant for bleached
kraft in 1969/1970 was about $70 million; today, the capital requirement
for an 800-tpd "economic size" plant would be over $140 million (not
including escalation during construction).
A fourth consideration is the cost and limited availability of wood re-
sources (particularly softwood) to support a new minimum-economic-size
C.E. Plant Cost Index, Chemical Engineering, March 17, 1975
I
X-2
ArthurDl.ittlelnc I
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
grassroot operation. While the total availability of wood resources is
ample to supply industry needs, it has become increasingly difficult
and costly to obtain a sufficiently large, concentrated supply for a new
pulping facility.
The combination of the above factors has led the industry to seek out
opportunities for incremental expansion of its pulping facilities, which
is conveniently possible through the usage of secondary fiber to sup-
plement a virgin fiber supply.
The replacement of pulp mill capacity with secondary fiber capacity is
another source of potential growth for secondary fiber. The retirement
of pulp mill capacity due to technical and economic obsolescence (efflu-
ent limitations, low capacity and efficiency, etc.) is not unusual.
To replace this capacity with new virgin-fiber pulping in reasonable
volume requires major capital expenditures and significantly increased
marketing ability. It is unlikely that retired pulp mill capacity
could be economically replaced with new capacity at the same scale, or
that a company could economically erect a single facility to replace
capacity retired at several locations, except in very special situations.
We have prepared economic models of a new, integrated pulping facility
based on various blends of virgin and secondary fiber. These models
also provide a means for estimating the cost and profitability of adding
incremental secondary-fiber capacity to a specific virgin pulp mill whose
conditions are known. The economics of incremental expansion in existing
mills may be expected to vary widely, since the technical feasibility,
capital, and operating costs are all highly dependent on specific mill
conditions; however, recent industry trends clearly indicate the attract-
iveness of incremental capacity expansion and the merits of secondary
fiber as a supplementary raw material for such expansion, particularly in
linerboard and newsprint production.
As discussed in connection with the economic models presented in Section
IX, the profitability of new secondary-fiber capacity is less attractive
than new, integrated virgin-fiber pulping and papermaking capacity for
all products except newsprint. However, ROI is not the sole criterion
for judging the attractiveness of using secondary fiber. The more modest
size of a secondary fiber installation (300-400 tpd) allows smaller
steps of capacity increase than for a 500-1000 tpd virgin pulp mill.
Because of its smaller size and lower unit capital requirements, a second-
ary fiber mill has a much smaller capital requirement ($30-$40 million).
The actual magnitude of total capital requirements for virgin fiber
pulping could be even higher than the $100-200 million we have esti-
mated (excluding any capital associated with wood resources). Thus,
the higher profitability of a virgin pulp facility is available only to
those companies that have the ability to raise these sums and companies
that can absorb large capacity increases. A tabulation of the invest-
ment, capital intensivity, and profitability of selected products
studied in this analysis will be found in the section on Process
Economics (see Volume II, Table IX-N-1).
X-3
Arthur Dl.ittlclnc
-------
I
In addition to competing directly with products from integrated virgin
fiber pulping and papermaking, secondary fiber products also compete with
products from nonintegrated mills that use virgin fiber market pulp as
a raw material. The nonintegrated paper industry is difficult to
characterize because of its wide variety of products and processes.
Some nonintegrated mills are owned by large pulp producers to serve as
a market .for their pulp, and the selection of market pulp over second-
ary fiber may be influenced by mill ownership; however, a sizable portion
of the nonintegrated paper industry is not connected with virgin fiber
or wood resources.
The products and processes we selected for comparison of nonintegrated
production indicate the clear economic superiority of secondary fiber
as compared with virgin market pulp sources. Since this difference will
continue and be emphasized by the reduced supply and increased prices
of market pulp, the high-grade pulp substitute and deinking waste papers
will find a ready market in the nonintegrated paper mills, as long as
the latter remain economically viable.
2. Product Quality
Waste paper may be reused for either 100% secondary fiber products or as
a supplement to virgin fiber for blended products. Products using waste
paper fall into two relatively distinct groups:
• Those that do not compete with virgin fiber products and
thus have their own price/quality structure based on per-
formance alone (noncompetitive products are primarily 100%
recycled fiber);
• Those that are directly competitive with virgin fiber products
and whose quality standards are therefore determined by the latter
(competitive products may be either 100% recycled or blended
fiber).
In some cases, most notably tissue and printing/writing paper products,
where a broad spectrum of quality is represented, waste paper reuse may
fall into both the competitive and noncompetitive categories. Thus, there
are specific grades within these groups whose quality requirements can be
met with 100% S/F or blends of virgin and secondary fiber, as well as
grades whose quality requirements are best met with virgin fiber.
In preparing our estimates of process and product economics, we have made
judgments with respect to prices and quality on the basis of current
technology and market conditions. For those specific grades in which
products made from secondary fiber are considered to be of lower quality
than virgin fiber products, the selling prices are lower. Even for those
grades where quality differences are insignificant (e.g., newsprint or
corrugating medium) market conditions may at times require discounting
the price to secure market outlets.
I
X-4
ArthurDl.ittlelnc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
While noncompetitive markets provide a stable outlet for significant
quantities of secondary fiber products, the major opportunity for
increased utilization is in direct competition with virgin fiber prod-
ucts-, where an increased share of the market can be achieved. In some
product areas, technical improvements are required to eliminate quality
and performance distinctions, but in others the technology is known
and available—economics simply has not favored the use of secondary
fiber.
3. Accessibility of Secondary Fiber
a. Available Grades
Products made from OCC and news can compete with virgin fiber prod-
ucts, and significant quantities of fiber are available; thus, there
are expansion opportunities in these grades. Pulp substitute and deink-
ing grades, on the other hand, have a very high existing utilization
and thus low net available collectable tonnage, as would be expected
from their strong competitive position with respect to virgin fiber mark-
et pulp as a raw material for nonintegrated papermaking. Thus, unless
new sources of these waste paper grades are developed, their limited
availability will constrain their increased usage. (See Section VII-D.)
Mixed grades have high availability; however, their increased usage is
limited by technical considerations. Since these grades are cheap and
readily available, they are already used to the maximum extent tech-
nically possible. The large available tonnage does not represent a
significant growth opportunity under present conditions, since usage
would be limited by growth of the existing products. However, one seg-
ment of mixed paper—specifically office waste—contains a large pro-
portion of waste potentially suitable for high-quality deinking grades.
If this portion of the existing mixed waste stream could be segregated
or reclassified economically, it would find an immediate market as a
replacement for market pulp.
Clearly, therefore, the opportunity for any significant increase in waste
paper recycling rests with the bulk grades of waste paper, namely OCC and
news.
b. Economic Accessibility
A waste paper recovery operation does not require a large investment and
can operate efficiently at a volume as small as 50 tpd. Therefore, it is
economically feasible to recover the collectable tonnage of waste paper
within an area of relatively small population. Papermaking is another
matter, however; it is such a highly capital-intensive industry that it
requires a much larger scale of operation. Unit costs may vary 5-10%,
depending on the volume of waste paper that a collector handles, but a
paper mill that reduced its output from, say, 300-400 tpd to 150-250 tpd
could expect its unit costs to rise 20-30%. Thus, a small metropolitan
area that might support a recovery operation would probably not support
X-5
Arthur I )l ittlc Int
-------
a paper mill based on secondary fiber. Furthermore, because transporta-
tion cost is a major component of the total delivered cost of the low-
added-bulk waste paper grades, it is impractical to ship this material
to a distant mill. For these reasons, the collectable tonnage — i.e.,
the 'quantity of waste paper that is available for recovery — is often
not economically accessible for reuse in papermaking.
Accordingly, one of the prerequisites of economic accessibility is a
large, concentrated population that can provide at least the minimum
"critical mass" of waste paper to support economical papermaking operations.
As an aid in evaluating the potential for obtaining this critical mass of
waste paper from a given area, we have used the concept of the "90-minute
market," which is the area that can be reached by highway transport, travel-
ing at legal speed, in an hour and a half. (With today's high-speed trans-
portation systems, the size of a market is measured in terms of time, not
mileage.) Figure X-l shows the location of the most densely populated
90-minute markets in the United States, and Table X-l groups the top twenty
of these areas according to the geographic sections used in this analysis.
The waste paper requirements that cannot be obtained from within the 90-
minute market must be brought to the mill, largely by rail, from collection
points that may be hundreds of miles away. To describe the zone surround-
ing the 90-minute market and extending perhaps 600 miles from the mill, we
have applied the concept of the "second-morning-service (S-M-S) market";
the ten most densely populated S-M-S markets are shown in Figure X-2.
Analysis of waste paper transportation costs indicates that shipping by
rail to the midpoint of the S-M-S market costs about the same as truck
transportation within the 90-rtinute market.
In our cost calculations for newsprint and recycled containerboard, we
have assumed that about 60% of the mill's waste paper supply would come
from within the 90-minute market and that about 40% of the finished prod-
ucts would be sold there; the S-M-S market would supply the remainder of
the waste paoer and buy the other 60% of the finished products. These
assumptions were made to optimize transportation costs and the profit-
ability of the mill.
Neither "collectable tonnage" nor "economically accessible tonnage"
reflects the willingness of the original generator of waste paper to prac-
tice source segregation, which is essential for economical recovery. We
cannot judge whether a given population center has the potential to
supply enough additional waste paper to meet a new mill's requirements
unless we know both the current rate of recovery and the maximum rate
that is possible in that area. Substantial "spot" data are available
on levels of recovery that have been achieved in various suburban
communities, but few (if any) definitive assessments have been made of
maximum recovery rates obtainable on a sustained basis; for this per-
centage, we must rely on informed judgment. For the purposes of this
analysis, we have assumed a maximum 50% recovery of the total theoretical
supply of OCC and news. This is equivalent to 58% of the collectable
tonnage of OCC and 65% of the collectable tonnage of news, since the
I
X-6
Arthur D Little, Inc |
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
3
CO
CO
(U
£
c
_
0?
CN
O
"S
(A
2
CO
C
.2
'•M
I
a
I
I
CO
LLJ
CC
I-
i
o
z
a
<
U4
X
LU
CC
X-7
Arthur D Little, Inc
-------
TABLE X-l
Section
NORTHEAST
New York
Philadelphia
Boston
Pittsburgh
Buffalo
Total 90-Minute
Total Section
NORTH CENTRAL
Chicago
Detroit
Cleveland
Dayton
Cincinnati
Columbus
St. Louis
Milwaukee
Indianapolis
Minneapolis-St. Paul
Total 90-Minute
Total Section
SOUTH
Washington D.C.-Baltimore
Dallas-Fort Worth
Miami
Houston
Atlanta
Total 90-Minute
Total Section
WEST
Los Angeles
San Francisco
Total 90-Minute
Total Section
Total U.S. 90-Minute
Total U.S. Population
Source:
JO-MINUTE MARKET AREAS BY MAJOR GEOGRAPHIC SEi
Population
Millions
17.8
8.4
6.5
3.8
2.4
38.9
49.8
8.5
6.1
4.3
4.1
3.0
2.8
2.6
2.5
2.4
2.4
38.7
57.5
:e 4.8
2.8
2.5
2.3
2.1
14.5
64.9
10.3
5.0
15.3
36.0
107.4
208.2
Statistical Abstract
% of Total Section
35.7
16.9
13.1
7.6
4.8
78.1
14.8
10.6
7.5
7.1
5.2
4.9
4.5
4.3
4.2
4.2
67.3
7.4
4.3
3.9
3.5
3.2
22.3
28.6
13.9
42.5
51.6
of the United States,
U.S. Department of Commerce, 1973; 90-Minute Market data based
on 1972 Sales Management Survey of Buying Power
X-8
Arthur D Little, Inc
-------
00
LLI
UJ
O
cc
111
CO
z
cc
O
s
Q
I
111
CO
Z
a
ro
II
£
E
c -2
in o)
CM M^
O
CO
X-9
Arthur D Little, Inc
-------
collectable tonnage of OCC averages 86% of the theoretical supply and
the collectable tonnage of news averages 77% of the theoretical supply.
With.these concepts in mind, and a knowledge of the per capita con-
sumption of the specific original paper product, one can derive the popu-
lation needed to support a papermaking operation. This permits a rough
screening of candidate sites within the larger geographic areas in which
additional collectable tonnage is determined to be available. Clearly,
the top ten market areas shown in Figures X-l and -2 would be the most
likely candidates for new or additional sites for paper mills using
waste paper; however, to be in the prime northeastern market region, a
mill need not be located in one of the particular cities named. South-
west Pennsylvania, for example, does not appear as a specific S-M-S
market, but it is within reach of nearly 70% of the nation's population
(Figure X-3). It is also within 500 miles of 65% of U.S. business
establishments, 75% of all employment, and 71% of the nation's value
added by manufacturing.
Another factor affecting the economically accessible tonnage is the
tradeoff between the cost of additional raw material and the potential
savings from a larger scale of operations. For example, the economic
analysis of jute liner manufacture (Section IX-E) indicated a net
increase in the pre-tax margin of some $2 million per year if the scale
of operation were increased from 300 tons per day (100,000 tons per
year) to 450 tpd (150,000 tpy). This implies that the hypothetical
jute linerboard mill would find it more profitable to pay up to $40 per
ton more for a 50,000-tpy incremental supply of OCC than to operate
at a lower scale of operation.
Obviously, other factors also influence the selection of scale of
operation; the preceding discussion merely illustrates some of the con-
siderations involved in assessing the quantity of waste paper that is
economically accessible for reuse.
c. Use of S/F as a Supplementary Furnish
The "critical mass" required for economical reuse of paper as a fiber
supplement is generally substantially lower than for 100% secondary
fiber reuse. As a supplement, waste paper could be economically attrac-
tive at a scale of operation of 25-50 tpd; as a sole source of fiber,
200 to 300 tpd would be more typical. It is the scale of the total
papermaking operation that affects economic feasibility, not the scale
of waste paper repulping alone. Thus, smaller quantities of waste paper
can be economically reused as supplementary furnish for a larger paper-
making operation. The same principles of economic accessibility dis-
cussed above apply here, but a less concentrated supply is needed. A
considerably larger fraction of the residual collectable tonnage is
available for economic reuse as supplementary furnish than for 100% re-
cycled products.
In the sections that follow, we analyze the potential opportunity for
the reuse of the major waste paper grades in the various studied func-
tional groups.
X-10
Arthur I) Little.Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
250 MILE RADIUS cr
-------
I
I
C. OVERALL POTENTIAL WASTE PAPER USAGE —
Based upon the above-listed considerations, we derived the 1983 level
of waste paper usage. More specifically, we estimated the quantity of
waste paper that would be economically accessible to support recycled •
paper and paperboard manufacture, the amount that could be used in the •
individual grades without deterioration of product quality, the 1977-
1983 increase in capacity to supply the projected paper consumption, •
and the demographic data which influence the cost and availability •
of waste paper. A comparison of ROI between virgin and recycled paper
manufacture was used as one criterion to identify possible areas where _
waste paper use might increase. Another criterion was the magnitude •
of the capital investment required for a new virgin mill versus one •
based on recycling. Within the bounds defined by these considerations,
we then made a judgment of the potential for increased waste paper use I
in each functional group. I
As noted, since the preparation of this report, data have become im
available which indicate that the 1977 levels for paper consumption, •
papermaking capacity, and waste paper usage used in this assessment
were all too high. Obviously, therefore, the projections contained
herein must be interpreted in the light of these new data and others •
as they become available. ™
I
I
Figure X-4 shows, in part, the additional amount of secondary fiber that
is projected to be used in each functional group by 1977. This infor-
mation is based on consumption figures estimated by the American Paper
Institute (API) in its 1973 Capacity Survey which we apportioned among «
the various product groups on the basis of published data where avail- •
able, or our assessment of the categories in which the secondary fiber
was likely to be used.*
This graph also shows the increases in production that we expect by •
1977. This is also based on the API survey of new capacity and expansion
scheduled for completion by that year. We apportioned these increases
among the product groups and estimated the corresponding production in
1977.
Similarly, Figure X-4 shows the potential additional amount of secondary
fiber that could be used in each functional group by 1983 and our pro-
jections of the additional production requirements to meet the estimated
apparent demand.
It should not be inferred from Figure X-4 that the additional secondary
fiber will be used exclusively in the new capacity. The intent is
simply to show how much more secondary fiber might be used in each of the
studied functional groups to meet the fiber requirement resulting from
* The 1974 Capacity Survey projects significantly smaller increases
in waste paper usage and capacity.
X-12
Arthur I) Little Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Container-board
Groundwood Papers
Tissue and Other
Machine Creped
Papers
Folding Boxboard
Printing, Writing,
and Related Papers
Industrial Packaging,
Converting, and
Miscellaneous
Construction Paper
and Paperboard
'73-77
'77-'83
'73-'77
'77-'83
'73-'77
'77-'83
'73-77
'77-83
'73-77
'77-'83
'73-77
'77-'83
'73-'77
'77-'83
Increase in Waste Paper Usage
ncrease in Total Production
Summary
1973-77
Total Increase in:
Production 7.7
Secondary Fiber Usage 3.2
0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0
Increase in Production and Secondary Fiber Usage (Million Short Tons/Year)
Basis: Total Increase at End of Studied Period
Source: 1973-1977, API 1973 Capacity Survey, reaggregated by ADL; 1977-1983, ADL Projections
FIGURE X-4 COMPARISON OF POTENTIAL SECONDARY FIBER USAGE
WITH PROJECTED INCREASE IN PRODUCTION
X-13
Arthur D Little, Inc
-------
I
I
the growth in demand. From this standpoint, it is irrelevant whether _
the secondary fiber is used in new or existing production facilities;* •
the key questions are (a) whether total U.S. paper and paperboard con- ™
sumption will reach the estimated 75.4 million tons in 1977 and (b)
whether U.S. consumption of secondary fiber will reach the total of •
17.5 million tons projected by API. |
The total annual production of the U.S. paper industry is projected to •
increase by 7.7 million tons between 1973 and 1977. The containerboard •
category is expected to account for some 2.7 million tons, or about 35%
of this, and therefore presents one of the most attractive opportunities
for secondary fiber. Between 1977 and 1983, overall U.S. production is •
projected to increase by an additional 15.0 million tons; we believe •
that containerboard will also account for 35% of this increase, or 5.5
million tons. •
Secondary fiber could gain a large share of the new capacity (additional
or replacement) in the containerboard category. It could also gain a •
larger share in the groundwood paper area because of the availability •
of old news to support additional production and the greater cost-
competitiveness of this fiber compared with that of the alternative
raw material. •
On the other hand, the overall percentages of secondary fiber used in
tissue and printing and writing paper may decline; this reflects our •
assessment that the industry is exploiting existing sources of pulp- |
substitute and high-grade deinking stock as rapidly as possible, leaving
less reserve supplies to support expansion. However, regulations are _
under consideration that would require all government agencies to prac- •
tice source segregation of office waste** Their enactment could signifi-
cantly increase the supply of high-grade deinking waste.
Whereas Figure X-4 is based upon projections of increases in U.S. pro- •
duction, Figure X-5 illustrates the role of secondary fiber in relation
to the total U.S. demand (consumption) of paper and paperboard products. •
Since 1973 data show historical performance, the demand represents actual I
paper and paperboard consumption. Estimates of secondary fiber usage in
1977 and 1983, on the other hand, assume that paper consumption will _
* The distribution of secondary fiber between new and existing facil- •
ities is briefly discussed in Sections X-D and X-E with respect to
its two major applications — namely, the recycling of old corru- •
gated containers for containerboard and the use of old news in Jj
recycled newsprint.
** "Materials Recovery: Solid Waste Management Guidelines for Source •
Separation," U.S. Environmental Protection Agency, Federal Register, |
Vol. 40, No. 181 (Sept. 17, 1975), pp. 42986-42990. See also SCS
Engineers, "Analysis of Source Separate Collection of Recyclable Solid
Waste—Office Buildings," report to Resource Recovery Division, Office
of Solid Waste Management Programs, U.S. Environmental Protection
Agency, October 1975.
X-14
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Contamerboard
Groundwood Papers
Tissue and Other
Machine Creped
Papers
Folding Boxboard
Printing, Writing,
and Related Papers
Industrial Packaging,
Converting, and
Miscellaneous
Construction Paper
and Paperboard
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
1973
1977
1983
;' • j is
%
23%
[ .1 30%
1 5%
j 5%
y
1;,
29%
1 31%
|x:-j 32%
Iitl.v1
' fcSRI
63%
62%
;iJ;i».?:'. | 63%
3
7%
H 9*
8%
feil m
il
21%
ffl 24%
H 24%
• •.''••;-j 36%
SI
36%
,'•' J 36%
Li
T<
Se
igend:
>tal Consu
'-*ta_^_
mption
-^-N
^•'.-.1
s»
condary F
— V~ '
iber
12 16 20 24 28
Consumption (Million Short Tons)
32
FIGURE X-5 PRESENT AND POTENTIAL USE OF SECONDARY FIBER IN
STUDIED FUNCTIONAL GROUPS
X-15
Arthur D Little, Inc
-------
* W. S. McClenehan, "Consumption of Paper Stock by U.S. Mills in 1969
and 1970," Division of Information Services, The Institute of Paper
Chemistry, Appleton, Wisconsin, 1971.
X-16
Arthur D Little, Inc
I
I
equal market demand projections for the original products. These figures
reveal a substantial dissimilarity in the potential for secondary fiber B
penetration of the various product groups. Again, they reflect our con- |
sidered opinion regarding the availability of the appropriate waste paper
grade to support expansion, and the potential for recycled fiber to dis- •
place or supplement virgin fiber. For groundwood papers, the contrast •
between Figures X-4 and X-5 reflect the fact that about 65% of all news-
print used in this country is imported.
Figures X-4 and X-5 also point up the difference between competitive and •
noncompetitive products with regard to their projected use of secondary
fiber. In competitive products (containerboard, newsprint, tissue, and •
printing and writing papers), secondary fiber has the potential to cap- |
ture additional markets; its penetration will be limited primarily by
its economical availability. Secondary fiber in noncompetitive products, «
on the other hand, will probably not show substantial growth, as it is •
not expected to capture markets but simply to follow the growth of those
that now exist.
Tables X-2, -3, and -4 are supporting data for Figures X-4 and X-5. They •
are based on waste paper usage by waste paper grade in various original
products as first reported by McClenehan* and our estimates of fiber sub- •
stitution. The data include historical performance and projected demand |
through 1977 as reported by API; projections beyond 1977 are ADL esti-
mates of potential waste paper usage. •
Since the various sources of information are not always complete or
use the same segregation of products, these tables represent our esti-
mates rather than hard data. We have based the projected growth of •
waste paper reuse, particularly in recycled newsprint and containerboard, •
on the conditions discussed earlier in this analysis. Growth in non-
competitive grades is based on demand, with waste paper mix determined •
from McClenehan and API data plus consideration of the fact that demand |
for OCC and news by containerboard and newsprint mills may result in some
replacement elsewhere, by a variety of waste grades.
The distribution by waste paper grade in noncompetitive products is
intended as an approximation only. The primary intent of tabulating
these data is to indicate the relative levels of growth in noncompetitive
products where demand is limiting, compared with the growth in contain-
erboard, newsprint, tissue, and printing and writing, where the eco-
nomical availability of fiber is the main constraint on market penetration.
To put the 1983 projections of waste paper usage in proper perspective,
Table X-5 shows their relationship to the quantity of the original
products and to the estimated collectable tonnage of the corresponding
waste paper grade. This table shows high utilization rates for OCC
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE X-2
1973 PAPER AND PAPERBOARD CONSUMPTION AND WASTE PAPER CONSUMPTION
(000 tons)
Waste Paper Usage
Functional Consump-
Group and Grade tion Total OCC News P/S
1. CONTAINERBOARD
Linerboard (virgin) 11
Linerboard (comb . )
Corrugating Medium (NSSC) 4
Corrugating Medium (comb.)
Container Chipboard
Other Unbleached Kraft Board
TOT\L CONTAINERBOARD 17
2. GKOUNDWOOD PAPERS
Newsprint 10
Printing Papers 1
TOTAL GROUNTWOOD 12
3. TISSUE AND OTHER MACHINE
CREPED PAPERS
Tissue 4
4. FOLDING BOXBOARD
Combination 2
Bleached (SBS) ) 3
Milk and Food Service /
Nonbending and other
combination
TOTAL FOLDING BOXBOARD 7
5. PRINTING, WRITING, AND 11
,340
284
,302
981
247
574
,700
,726
,560
,300
,000
,678
,655
990
,300
,800
500 500
340 340
900 900
1,200 1,200
270 90 180
3,210 3,030 180
490 - 360
90 - 15 75
580 - 375 75
1,180 120 100 860
3,200 500 700 900
200 70 - 40
1,200 200 400
4,600 770 1,100 940
850 - - 800
Mixed
-
130
130
100
1,100
90
600
1,790
50
RELATED (EXCL. GROUND-
WOOD PRINTING)
X-17
Arthur D Little, Inc
-------
TABLE X-2 (Cont'd)
1973 PAPER AND PAPERBOARD CONSUMPTION AND WASTE PAPER CONSUMPTION
(000 tons)
Consump-
tion Total
Waste Paper Usage
OCC
News
P/S
Mixed
6. INDUSTRIAL PACKAGING,
CONVERTING & MISC.
Packaging & Converting
Special Industrial
Tube, Can, Drum (virgin)
Tube, Can, Drum (comb.)
& other Packaging
Molded T>ulp ^roducts
(incl. fiber pipe)
TOTAL INDUSTRIAL
3,805
478
220
600 )
2,165 1
9
240
40
—
1,015
200
20
-
-
600
_
20
-
-
130
100
150
40
-
85
100
50
-
-
200
~
7,300 1,495 620
250
375
250
7. CONSTRUCTION PAPER AND
PAPERBOARD
Gypsum Linerboard
Construction Paper
Insulation & Hardboard
TOTAL CONSTRUCTION
1,050
1,812
3,746
1,100
1,300
-
500
250
-
250
200
-
100
50
-
250
800
-
6,600 2,400 750
450
150 1,050
TOTAL PAPER AND
PAPERROARD
67,000 14,315 5,290 2,455 3,200 3,370
Source: Consumption figures from 1973 API Capacity Survey,
reallocated by ADL to the functional groups and grades
shown here, based on "Consumption of Paper Stock by
U.S. Mills in 1969 and 1970" (W. S. McClenehan)
X-18
Arthur D Little, Inc.
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
TABLE X-3
1977 PAPER AND PAPERBOARD
POTENTIAL WASTE PAPER
Functional
Group and Grade
CONTAINERBOARD
Linerboard (virgin)
Linerboard (conb.)
Corrugating Medium (NSSC)
Corrugating Medium (Comb.
Container Chipboard
Other Unbleached Kraft
Board
TOTAL CONTAPTERB'HRD
CROUND^OOD PAPERS
Newsprint
Groundwood Papers
TOTAL GROUNDWOOD
TISSUE AND OTHER MACHINE
CREPED PAPERS
Tissue
FOLDING BOXBOARD
Combination
Bleached (SBS) |
Milk and Food Service )
Nonbending and other
combination
TOTAL FOLDING BOXBOARD
(000 tons)
CONSUMPTION AND
CONSUMPTION
Waste Paper Usage
tion Total OCC News P/S
12,630
550
4,530 1,
)1,360 1,
280
640
20,000 4,
11,900
1,700
13,600
4,500 I,
2,900 3,
3,960
1,020 1,
7,900 4,
940 940
650 650
150 1,150
600 1,600
300 100 200
640 4,440 200
540 - 410
100 - 20 80
640 - 430 80
420 150 120 1,020
500 600 840 880
220 80 - 40
200 200 400
920 880 1,240 920
Mixed
-
130
130
130
1,180
100
600
1,880
5. PRINTING WRITING AND
RELATED (EXCL. GROUND^OOD
PRINTING) 13,600
1,200
1,140 60
X-19
Arthur D Little, inc
-------
TABLE X-3 (Cont'd)
1977 PAPER AND PAPERBOARD CONSUMPTION AND
POTENTIAL WASTE PAPER CONSUMPTION
(000 tons)
Functional Consump-
Group and Grade tion
Waste Paper Usage
Total
OCC
News P/S Mixed
6. INDUSTRIAL PACKAGING, CON-
VERTING & MISC.
Packaging & Converting
(Incl. virgin tube, can
& drum)
Special Industrial
Tube, Can, Drum (comb.)
& other Packaging
Molded Pulp Products
(incl. fiber pipe)
TOTAL INDUSTRIAL
7. CONSTRUCTION PAPER AND
PAPERBOARD
Gypsum Linerboard
Construction Paper
Insulation & Hardboard
TOTAL CONSTRUCTION
TOTAL PAPER AND
PAPERBOARD
4,400
230
20
20
600 50
3,150 1,450
? 200
980
150
100
1,100 1,200
2,060 1,500
4,400 ^_
7,600 2,700
75,400 17,500
550
280
270
220
170
50
100
100
70
220
8,200 1,980 1,000 270 420 290
110
60
270
940
830 490 170 1,210
7,300 2,750 3,750 3,700
Source: Consumption figures from 1973 API Capacity Survey, reallocated
by ADL to the functional groups and grades shown here, based on
"Consumption of Paper Stock by U.S. Mills in 1969 and 1970"
(W. S. McClenehan)
X-20
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
i
I
I
I
TABLE X-4
1983 PAPER AND PAPERBOARD
POTENTIAL WASTE PAPER
(000 tons)
Functional Consump-
Group and Grade tion
1.
2.
3.
4.
5.
CONTAINERBOARD
Linerboard (virgin) \
Linerboard (comb.) j
Corrugating Medium (NSSC) )
Corrugating Medium (Comb.) j
Other Unbleached Kraft Board
Container Chipboard
TOTAL CONTAINERBOARD
GROUNDWOOD PAPERS
Newsprint
Groundwood Papers
TOTAL GROUNDUOOD
TISSUE AND OTHER MACHINE
CREPED PAPERS
Tissue
FOLDING BOXBOARD
Combination
Bleached (SBS) |
Milk and Food Service )
Nonbending and other
Combination
TOTAL FOLDING BOXBOARD
PRINTING, WRITING AND RELATED
(EXCL. GROUNDWOOD PRINTING)
16,510
7,340
800
350
25,000
13,820
1,980
15,800
5,200
3,310
4,520
1,170
9,000
16,800
CONSUMPTION AND
CONSUMPTION
Waste Paper Usage
Total
1,700
1,800
1,500
2,200
380
7,580
1,130
120
1,250
1,650
4,000
250
1,400
5,650
1,800
OCC Ncwr ?/S Mixed
1,700 -
1,800 -
1,500 -
2,200
130 250
7,330 250
1,000 - 130
20 100
1,020 100 130
170 140 1,180 160
600 900 1,000 1,500
80 - 50 120
220 450 - 730
900 1,350 1,050 2,350
1,700 100
X-21
Arthur D Little, Inc
-------
TABLE X-4 (cont'd)
1983 PAPER AND PAPERBOARD CONSUMPTION AND
POTENTIAL WASTE PAPER CONSUMPTION
Functional
Group and Grade
(000 tons)
„ Waste Par>er Usage
Consump-
tion Total OCC News
P/S Mixed
6. INDUSTRIAL PACKAGING,
CONVERTING & MISC.
Packaging & Converting
(Incl. virgin tube, can
& drum)
Special Industrial
Tube, Can, Drum (comb.)
& other packaging
Molded Pulp Products
(incl. fiber pipe)
TOTAL INDUSTRIAL
7. CONSTRUCTION PAPER AND
PAPERBOARD
Gypsum Linerboard
Construction Paper
Insulation & Hardboard
TOTAL CONSTRUCTION
5,240
710
3,750
9
9,700
1,350
2,540
5,410
9,300
330
60
20 20
1,700
200
2,290
1,500
1,850
1,100
_
1,120
680
350
180
100
300
340
270
190 100
60
120
100
470
300
400
130 350
70 1,160
3,350 1,030 610
200 1,510
TOTAL PAPER AND
PAPERBOARD
90,800
23,570 10,550 3,670 4,700 4,650
Source: Table X-3, projected to 1983 by ADL using the methodology
described in Section X-C.
X-22
Arthur D Little, Inc
-------
m
I
XI
w
rH
PQ
<3
H
4J
CU
z
CO
oo
ON
i-H
z
M
CO
w
3
w
U
erf
W
5!
PH
w
H
CO
5
@
H
CJ
W
>T>
O
fi
>>
i-l
01
p>
o
o
01
erf
i— i
rt
•H
4J
a
0)
4J
O
fx<
cu
6C
cfl
8
0
H
CU
rH
,0.
CO
4J
O
CU
rH
rH
O
CJ
C
o
cj
4J
C
CU
)-l
cfl
P.
CX
<
cu
rH
,TJ
cd
4J
o
cu
rH
rH
O
cj
M-I
O
6^8
M-I
O
fr-S
CO
3
rH
P.
13
CU
CO
3
CU
erf
M-4
O
&•«
1
•H
>H
O
M-I
O
(3
O
iH
4-1
CX
6
9
CO
-
/— \
co
C
o
01 4J
60
CO (3
C O
C3 -rl
O rH
H rH
•H
S3
N^
rH O CO O
O \O O CO
rH 01
CO 6£
4J CO
0 £3
CU C
rH 0
rH H
O
r T
CO
CO
co co co r^
U"l -* O\ rH
cfl
ON 0)
CO H
CO
co
M
01
u p.
CO
CX
13
O
4-1 -H
C 4J
a> a
n i
co 3
ex co
CX (3
< 0
CJ
T3
v£) CO CN CO
• C
M O
0 iH
X^
W iH
s!
s— '
CO 4J
H -H
60 M
9
m m rH vo
• t • •
I-H sr m »a-
rH
60
1^ C T3
•H 0
m ^ eo
CN C
•H 60
CU C
T3 -rl
4-1
T3 (3
C iH
Cfl M
C
O
4J -H
C 4J
cu a
K e
CO 3
CX CO
P. C
vo r~ co vo
00 f-* rH f^
3 >.
4-1 rH
rH -HO)
00 4-1 g
co cfl
& C
3 ^
c
O
•H CO
rH 0
rH O
•H H
j;
vo m •* vo
• • • •
rH o m r~
CN rH CN
rH
•
m
vo
X-N
CO CO
4J d
0 O
3 4J
T)
0 C
r< 0
PH iH
rH
l-H rH
Cfl -H
c se
1-1 ^^
60
cfl
vO CO CT*
• • •
m co I-H m
Csl rH •* CO
,c
e^
•
o>
r^
rH
Cfl
C
13 iH
CU 60
4-1 CO -H
Cfl M rl
60 CU >4 O
3 Pi I 60
M iH ,0 0) C
I-l Cfl 3 4-1 iH M CO
O 4-1 C/3 3 ^ • 4-1
CJ C 4J C t3 & CJ
O CO P.iH iH 0) 3
T3CJ > rH4JO) X t-H-O
rH CU 3WP -rl CflO
O ?5 PU S 4J U
O PH
H
CO
1 CO
P. 4J
i-H O
3 3
p.tJ
O
£ M
4J ri,
O
Xi rH
CO
CU (2
0 iH
C 60
i-l -H
CO M
O
*
i-H CU
co e
4-1 CO
O CO
4-1
CU
C £•
•H 4J
t3 0
CU O
T3 M
3 M-I
rH
0 T3
C CU
•H >
^1
4-1 M
O CU
Z T3
CO
T3
01
4-1
§
•H
4-1
CO
CU
•a
0
•H
M
CU
P.
M
O
M-I
C
O
•H
4J
P.
CO
G
0
o
•
w
•
E3
rH
CO
4J
O
4-1
• *v
•H
13
VI
O
13
0)
>,
cfl
rH
CU
*o
M
01
CX
CO
CX
01
4-1
CO
CO
u
cu
13
3
rH
CJ
C
•H
4J
O
C
CO
CU
O
Q
a
-
•
ca
C
O
4-1
C
0
•rl
rH
rH
•H
e
00
c!
ON
4-1
cfl
>,
t-i
0)
>
O
CJ
01
>H
M-I
O
co
c
o
•H
4-1
CO
i-H
3
CJ
rH
CO
O
13
Cfl
C
O
•H
4-1
a
3
3
co
C
O
CJ
4-1
C
01
M
cfl
P.
P.
cfl
MH
O
CO
CU
4-1
cfl
0
•H
4-1
CO
CU
hJ
q
<
..
0)
CJ
i-t
3
O
W
X-23
Arthur D Little, Inc
-------
and pulp substitute grades and an under-utilization of news and mixed
waste paper. (These estimates reflect our previous discussion regard-
ing the commercial utility of the studied waste paper categories, hence
their prospect for increased usage.)
The concentrated supply of OCC resulting from its high per capita con-
sumption and usage pattern was an important consideration in our assess-
ment of its potential reuse. Similarly, the projected cost of virgin mar-
ket pulp was a major factor influencing our assessment of the high util-
ization rate for pulp substitute and high-grade deinking grades.
News, on the other hand, appears underutilized. As a percentage of the
groundwood paper produced in the United States, its use is projected to
reach about 30%, a sharp increase from the present level of about 15%; how-
ever, the utilization rate of old news is clouded by the large amount of
imported newsprint.
Mixed waste is presently of limited commercial utility. Significant tech-
nological improvements, specifically in cleaning techniques, are required
to increase the utilization of this grade.
Table X-6 shows the use of waste paper in 1973 by major paper stock
category and the corresponding recycle rates in relation to U.S. paper
production and consumption. Also listed is the potential usage of
secondary fiber for 1977 and 1983.* Obviously, such projections are
subject to error. Some of the key assumptions on which these project-
ions were based were stated previously. Unforeseen variations from
these assumptions will influence industry's response to secondary fiber
usage. Overall, however, these projections indicate the potential
of secondary fiber as an alternative raw material to support the
industry's new and expanded production programs.
In the following paragraphs, we illustrate the rationale to derive the
quantity of each waste paper grade used in each of the studied func-
tional groups. The discussion is arranged by waste paper grade to
facilitate the compilation of total waste paper usage.
D. REUSE OF OCC
OCC can be used in the manufacture of products in functional groups 1
(Containerboard), 4 (Folding Boxboard), 6 (Industrial Packaging), and
7 (Construction Paper and Paperboard). Containerboard represents the
largest single application and opportunity for increased use of
secondary fiber. Uses in other areas are either noncompetitive, such
as in combination folding and nonbending boxboard, or presently hold a
*Exports in 1983 are estimated at 2.1 million tons on the basis that
the surplus supply in some states is more likely to be exported
than reused domestically. Because of this assumption, the figure is
considerably higher than the total of 1.1 million tons that one would
obtain by adding the export forecasts given in Tables VII-10, -13,
-17, and -20.
X-24
Arthur D Little, Inc
-------
1
1
1
1
•
1
1
1
1
1
1
1
TABLE X-6
SUMMARY OF POTENTIAL RECOVERY RATES
FOR SECONDARY FIBER IN 1973, 1977, and 1983
(millions of tons)
1973 1977 1983
Paper and Paperboard
Total Apparent Consumption 67.0 75.4 90.8
Total Production 61.7 69.2 83.9
Amount Recovered
Old Corrugated Containers 5.6 7.7 11.5
News 2.7 3.1 4.5
Pulp Substitute & Deinking 3.4 4.0 5.1
Mixed 3.4 3.7 4.6
TOTAL 15.1 18.4 25.7
Exported 0.7 0.9a 2.1°
Domestic Use 14.4 17. 5b 23.6
Recovery Rate (total recovered)
-r total app. consumption) 22% 24% 28%
Consumption Rate (domestic use
v total production) 23% 24% 28%
rlore recent published figures indicate that 1974 exports totaled 1.3
million tons; thus, the export estimate is probably low.
V,
This figure (from 1973 API Capacity Survey) is probably high, as
1974 Survey projects 16.0 million tons.
cConsists of approximately 0.9 MM tons OCC, 0.8 MM tons news, and 0.4
MM tons pulp substitute and deinking.
Sources: 1973 - API Capacity Survey data
1977 - API projections of total consumption
(1973 Capacity Survey) and ADL estimates
of waste paper exports
1983 - ADL estimates
X-25
Arthur HI i
-------
dominant position, as in recycled tube and drum paper. Increased
usage in these latter applications is tied more closely to demand for
the original products than to penetration of S/F as a fiber substitute.
Applications of OCC in each of the above functional groups are discussed
below. The tonnages expected to be used in each group in 1983 have
been summarized in Table X-4.
1. Containerboard
Use of OCC in containerboard can be either as 100% fiber furnish or as
a fiber supplement to virgin fiber. The process economics and potential
opportunities for OCC reuse in these applications are quite dissimilar.
As the sole fiber source, OCC may be used in the manufacture of jute
liner or bogus medium. The manufacturing technology and markets for
these products are well established, and their ability to compete with
virgin fiber products is sufficient to warrant more detailed evaluation
by potential manufacturers.
The practical minimum capacity for a jute liner or bogus medium mill
is about 300 tons per day, which is equivalent to about 120,000 tons
per year of OCC. To estimate how many sites are available to generate
the additional tonnage of OCC required to support a new mill, we shall
use the concepts of the "90-minute-market" and the "S-M-S market" prev-
iously described.
As stated earlier, it is assumed that about 60% of the waste paper require-
ment would be available within the 90-minute market. These assumptions
are critical to the estimated delivered cost of fiber to a proposed mill.
From the projected 1977 containerboard consumption, we can derive the
population required to generate the supply for a new facility based on
100% recycled fiber. Figure X-6 shows the relationship between popula-
tion and the apparent supply of OCC for various recovery rates.
Suppose, for example, that we were considering locating a mill in an
area containing a population of some six million within the 90-minute
market, and that 38% of the corrugated containers used in the area were
presently being recovered. To permit an economical plant size, we know
that we must obtain at least 120,000 tons of OCC per year within the
S-M-S market, in addition to that already being recovered. Sixty
percent of this, or 72,000 tons per year, should come from the central
90-minute market. On Figure X-6, a vertical line is drawn through the
6-million point on the horizontal scale. From its intersection with the
38% recovery line, we extend the vertical line a distance equivalent to
72,000 tpy (vertical scale). This brings us somewhat above the 50%
recovery line, which we have assumed to be the likely maximum rate,
so the recoverable tonnage of OCC would appear to fall a little short
of what is needed.
One should keep in mind that this graphical method is intended only
for a preliminary screening of sites. Without site-specific infor-
X-26
Arthur D Little, Inc
-------
1000
800
c
o
o
o
o
o
o
o
Q.
a
3
C/J
c
111
I
a
600
400
200
Recovery Rate
50%
38%*
30%
Basis: 1977 Per Capita
Consumption of
Containerboard =
175lb
I 4 8 12
Population (Millions)
"National Average Projected for 1977.
16
20
FIGURE X-6 RELATIONSHIP OF POPULATION TO APPARENT SUPPLY
OF OCC AT VARIOUS RECOVERY RATES
X-27
Arthur D Little, Inc
-------
mation on the quantity of OCC that is discarded and the current rate
of recovery, the results are obviously very imprecise. Moreover, it
might be practical to obtain more than 40% of the needed OCC from the
surrounding S-M-S market, if it contains sufficient population and is
not already supplying mills in other 90-minute markets. When these
markets overlap, as they do throughout most of the northeastern United
States, the problem becomes extremely complex.
Therefore, once preliminary selections of sites have been made, more
precise figures on collectable tonnage and existing recovery rates
must be derived for each area. Possible variations from national or
regional averages should also be determined; for example, smaller
population centers with recycle levels below the national or regional
average may prove attractive, whereas larger population centers with
above-average existing reuse or large quantities of exports may not
be suitable.
Within the margin of error for our graphic estimating technique, Figure
X-6 indicates that a 90-minute market with a population of somewhat
more than six million should be able to support a mill of minimum eco-
nomic size. Figure X-l lists six 90-minute markets with populations
of at least six million. Their total population was almost 60 million
in 1972 and is considerably more now. By 1983, it should be more than
enough to support the equivalent of ten additional recycled jute liner
mills as the total consumption of containerboard increases to 25 million
tons.* These mills would raise the consumption of OCC by about 1.2
million tons per year. Although the comparative ROI for the jute liner
is substantially lower than that for virgin liner, we have assumed a
high growth for this recycle application. The technical ability, the
difference in the magnitude of the investment, and the economic
accessibility of waste paper to support growth have prompted us to
postulate this expansion.
We assume that all new 100% OCC-using capacity will be for jute liner
and that no new bogus medium capacity will come on stream between
1977 and 1983. However, as shown in Table X-4, an increase in OCC
use is expected in existing NSSC and combination medium mills. We do
not intend this as a projection, but rather as an assumption to facil-
itate an estimate of total increase in OCC reuse; this assumption is
not inconsistent with 1977 conditions of semi-chemical and bogus medium
over-capacity.
OCC can also be used as a fiber supplement in the manufacture of all
products contained in this functional group. In virgin kraft liner-
board manufacture, it was shown to be economically attractive (Section
IX) and technically practical in proportions up to 20% of the total
fiber furnish (Section VIII). The sole reservation was that viable pulp
* This statement assumes that the population in these six markets gener-
ates OCC at the national average rate. A more precise method of
estimation on a regional basis is explained in Section VII.
X-28
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
mill capacity would not be idled to permit this substitution; those
mills in which this scheme would be economically attractive would have
an alternative on-site use for the diverted tonnage or, where it is
economically and technically possible, would incrementally increase the
production from their board machines. Although we did not derive the
cost of making market pulp from the diverted linerboard pulp, tech-
nical problems would probably make this alternative unprofitable.
We have not attempted to determine how many mills might find it tech-
nically and economically attractive to use OCC as a fiber supplement.
Such a determination would require knowledge of the specific board
machine, plant, and geographic region. In general, however, an incre-
mental increase in board machine capacity is more often possible than
incremental pulp mill expansion. Furthermore, the incremental supply of
OCC required to support an economic scale of operation for supplemental
use of OCC is less than half that required to supply a mill based upon
100% secondary fiber. Hence, there may be a number of board machines
on which it is attractive to use OCC as a fiber supplement and where
there are a number of areas from which to derive the necessary supply of
OCC. Because of the large production capacity for kraft linerboard,
even a modest penetration of OCC in this application would result in a
significant increase in waste paper consumption.
By 1977, the amount of OCC used in this application is estimated to reach
some 0.9 million tons, or about 30% of the theoretical maximum. If we
assume penetration of this market as well as normal increased demand for
the original product between 1977 and 1983, the quantity used in this
application could increase to about 2 million tons, or about 60% of the
theoretical maximum.
2. Folding Boxboard
Although old news is the principal waste paper grade used in folding
boxboard, some OCC is also used; therefore, this product group is in-
cluded in our discussion of OCC applications.
As stated previously, folding boxboard includes complementary as well
as competitive products. In many applications for high-caliper board,
the recycled product—combination board—is technically and economically
preferable to SBS board; in low-caliper board applications, the converse
is true. It is only in the caliper range between 14 and 18 points that
these products compete. In recycled fiber products, virgin fiber is sel-
dom blended with secondary fiber to make combination board; conversely,
in SBS board, secondary fiber is seldom blended with virgin fiber. Hence,
product substitution rather than fiber substitution influences the use of
secondary fiber in this product category. The critical question therefore
is: to what extent are the finished products interchanged, one for the
other?
The industry has already demonstrated technological improvements in combi-
nation board machinery that will increase product quality. Also, alter-
X-29
Arthur D Little, Inc
-------
native and higher-value applications for the bleached virgin kraft pulp used
in SBS board are likely to increase the cost differential between these
products. Hence, in the long term, recycled board products may capture
a larger percentage of this total market. Through 1983, however, product
substitution is expected to be nominal; therefore, the use of secondary
fiber will be tied to the growth of traditional applications served by
recycled board products. The apparent increased penetration of recycled
board in the 1977-1983 period will reflect the declining growth of SBS,
not product substitution.
OCC represents less than 20% of the total fiber furnish for combination
board; thus, we anticipate no difficulties in obtaining sufficient supply
to meet the fiber requirements of this application.
3. Industrial Packaging
OCC comprises about 50% of the total waste paper used in industrial pack-
aging. Because of the high cost and scarcity of unbleached kraft market
pulp, fully 80% of the total 0.6 million tons of production scheduled to
come on stream between 1973 and 1977 will be tied to secondary fiber. We
believe that much of the fiber substitution possible will be accomplished
by 1977; hence, the increased usage between 1977 and 1983 will primarily
result from market growth of original products rather than substantial
additional penetration of secondary fiber into areas traditionally served
by virgin fiber.
4. Construction Paper and Board
OCC usage in this group represents its third largest application. In 1973,
about 750,000 tons (30% of the total 2.4 million tons of waste paper used
in this application) was OCC.
Two dissimilar products are included in this functional group. The first,
construction paper, is almost always made entirely of secondary fiber;
hence, additional growth of OCC here is tied to the market demand for the
original products. The second product, construction board, now contains
virtually no secondary fiber, so OCC might find increased use as a replace-
ment for virgin fiber. The partial substitution of OCC for virgin fiber
in medium-density hardboard has been proved technically feasible, but we
know of no company that now does this or plans to do so. Thus, the likely
impact of such substitution is likely to be nominal through 1983, as
reflected in our projections. However, in the longer term, construction
board application could be a major use for additional waste paper.
E. REUSE OF OLD NEWS
Old news can be reused in groundwood papers and, to some extent, in
virtually all other functional groups. Many of the opportunities for
and constraints on its use are the same as for OCC; here we shall
discuss only those uses that are uniquely applicable to news—specifi-
cally groundwood papers.
X-30
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
Newsprint represents the greatest single potential for increased use of
old news because (a) it represents the largest segment of this category,
and (b) old news can be used as either a 100% substitute or a partial
replacement for virgin fiber. A third factor influencing the reuse of
old news, not only in newsprint but also in other specific grades within
and outside this functional group, is the large amount of imported news-
print; these imports cause the available supply to be substantially more
than can potentially be reused in groundwood papers.
Production of 100% recycled newsprint is an accepted industry practice
and is economically attractive. The major factor in considering reuse
of news beyond 1977 is the availability of a sufficient quantity in a
given area. As discussed in Section IX a recycled newsprint mill should
produce at least 100,000 tons per year to be economically attractive.
Because of fiber losses and moisture differences, this would require
120,000 tpy of old news.
Candidate sites can be screened in the same way as earlier described for
OCC. Projections for 1977 indicate an apparent consumption of newsprint
of 100 pounds per capita and an average recovery rate of 26%. Figure
X-7 shows the theoretical amount of old news obtainable from a given
population at various recovery rates. Suppose that the candidate site
has a population of eight million within its 90-minute market. Of the
120,000 tpy of old news needed, 60% (72,000 tpy) should be recoverable
from this area. A vertical line is drawn through the 8-million point
on the population scale and extended upward past its intersection with
the 26% recovery line a distance equivalent to 72,000 on the vertical
scale. The line is found to terminate about half way between the 40%
and 50% recovery lines, indicating that the necessary supply would be
obtainable.
Further examination of Figure X-7 shows that it should be possible to
obtain the desired amount of old news from a population as small as six
million without exceeding the assumed maximum recovery rate of 50%.
Reference to population figures for the various 90-minute markets
(Table X-l) then shows that six have populations of at least six mil-
lion and should therefore be able to support additional recycled
newsprint mills. (The ability of the surrounding S-M-S markets to
supply the remaining 40% of the fiber requirements would, of course,
have to be verified.)
We must again emphasize that this technique permits a preliminary screen-
ing of candidate mill locations but is very imprecise. A detailed survey
of collectable tonnage and existing consumption and reuse patterns in
a prospective location is necessary. As indicated in Figure X-7, it is
possible that areas with smaller populations but lower existing recovery
rates could be attractive sites, while larger centers with high existing
recovery might not provide sufficient additional fiber to support a mill.
Supplementary secondary fiber is economically attractive and technically
practical at any fraction of total product, with the economic limitation
X-31
Arthur I) Little, Inc
-------
500
400
300
Q)
o
o
o
33
O
a. 200
Q.
to
•M
c
0)
CD
Q.
Q.
100
J_
Recovery Rate
50%
40%
26%*
20%
1977 Per Capita
Consumption of
Newsprint = 100 Ib
4 8 12 16
Population (Millions)
"National Average Projected for 1977.
FIGURE X-7 RELATIONSHIP OF POPULATION TO APPARENT SUPPLY
OF OLD NEWS AT VARIOUS RECOVERY RATES
20
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
X-32
Arthur D Little, Inc
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
that viable pulp mill capacity would not be idled to accommodate supple-
mentary news. Thus, the use of supplementary secondary fiber for news-
print manufacture is applicable to those mills where: (a) obsolete pulping
capacity would be retired without reducing machine capacity, (b) there
is an alternate use or market for diverted virgin pulp, or (c) it is
economically attractive to incrementally increase machine capacity inde-
pendent of pulp mill capacity. We have not attempted to determine how many
mills would meet these conditions.
The extent to which news will be used as a fiber supplement in virgin
groundwood pulp is difficult to predict. We have assumed that it would be
well exploited by 1977, and thus we have not projected further growth
beyond that time. However, the production of virgin groundwood pulp
requires much energy, and increases in the cost of energy could improve
the relative economics of using secondary fiber. A lower concentration
of the residual collectable tonnage of news could become available at
existing economic levels simply through increased demand. Alternatively,
higher concentrations could be obtained by drawing from a larger area
or increasing prices paid within a given area, if rising energy costs
made it attractive to use supplementary news even at higher than existing
costs. Quantitative speculation in this area is outside the scope of
this analysis.
The changing economics of groundwood pulping are particularly important
in groundwood printing papers and groundwood specialties. These grades
are integrated to a large extent to old and small groundwood mills, which
are presently only marginally economical and would be the most badly
hurt by rising energy costs. Replacing groundwood with news in these
mills would decrease energy consumption. It would also provide an oppor-
tunity to obtain both mechanical and chemical fiber and thus reduce
dependence upon purchased chemical fiber. The potential use of news in
this application would depend on mill size and accessibility of fiber as
determined by mill location. A potential market of 0.3 to 0.5 million
tons of news consumption is reasonable.
We have projected an increased consumption of 0.6 million tons of news
in 100% recycled newsprint from 1977 to 1983 and 0.3 million tons in
other products due to their natural growth, making a total increase in
annual consumption of 0.9 million tons. (See Tables X-3 and -4.) Any
increase in supplementary news after 1977 would be in addition to this.
Increased penetration would require a change in the relative economics
of supplementary news, as noted above, or an increase in fiber supply to
support 100% recycled newsprint without decreasing present profitability
levels. Under existing conditions, fiber supply for a given site could
be increased only by drawing from a larger area, which would increase
transportation costs, or by stimulating a higher recovery rate within a
given area, which implies increased news prices.
Marginal increases in concentration of available news to support a 100%
recycled newsprint mill might be possible by substituting mixed waste
X-33
Arthur I) Little, Inc
-------
I
I
for news in recycled product grades that use both. This would not _
directly increase overall waste paper usage, but it could indirectly I
affect penetration if it made a sufficient concentration of news availa-
ble to support a recycled newsprint mill that otherwise would not be
feasible. ft
F. REUSE OF PULP SUBSTITUTES AND HIGH-GRADE DEINKING
Pulp substitutes and high-grade deinking grades find a ready market in I
two areas: (1) as a replacement for, or supplement to, market pulp in
nonintegrated mills that make products in the Tissue or Printing and ^
Writing functional groups, and (2) to a lesser extent, as a partial •
fiber supply for recycled products in the Folding Boxboard, Industrial ft
Packaging, and Construction Paper and Board functional groups.
P/S can provide the entire fiber furnish for some grades of printing and |
writing papers and is suitable for partial substitution for virgin fiber
pulp in most of the other grades in this functional group. It is primarily «
a replacement for hardwood pulp, although some P/S grade mixes can be I
substituted for softwood. The precise suitability varies with the P/S
grade mix as well as with desired product specifications and basis
weight. •
The partial substitution of P/S in sanitary tissue gives an equivalent,
or even possibly superior, product because of the softness contributed •
by reworked fiber. Complete substitution is possible but usually produces £
inadequate strength for efficient converting operations. The typical
practice in using P/S for sanitary tissue is to use just enough virgin ^
softwood fiber to impart sufficient strength for successful converting •
performance.
These waste paper grades are primarily obtained fron converters, and a •
high percentage of the total available supply is recovered. ft
Since a market exists for much higher volumes of P/S, increased penetra- •
tion is limited solely by the available supply. Transportation cost is a £
relatively minor factor in P/S reuse because of the high value of the basic
material. Geographic distribution is also of minor importance in consid- _
ering available fiber supply. We believe the high utilization rate project- •
ed for the 1973-77 period will continue through 1983. Assuming that re- *
use will grow in proportion to the increased supply from the traditional
source, additional reuse will be about 0.9 million tons higher in 1983 than ft
in 1973. (See Tables X-3 and -4.) We believe usage would increase substan- m
tially if additional supply sources could be exploited. The main constraints
are social and technical considerations of original product consumption •
and disposal. Increased supply depends on diverting P/S grades from the •
mixed waste stream; this, in turn, will require social change to initiate
source segregation (i.e., separation of P/S grades at the point of con- _
sumption, through classification of office waste, for example) or techno- •
logical developments for separating P/S grades from mixed waste. *
I
X-34
Arthur D Little, Inc ft
-------
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
I
G. REUSE OF MIXED WASTE PAPER
The existing mixed waste stream represents the opposite conditions from
P/S; it is low in value, and its applications are limited by the constraints
of fiber substitutability. Because of the low value, transportation costs
represent a large portion of the delivered cost. However, an abundant supply
is available to meet existing applications, and the geographic distribu-
tion of collectable tonnage is not a factor in its growth.
Mixed waste is used to some extent in recycled products from all functional
groups. The important uses are in folding boxboard, industrial packaging
papers, and construction papers. We have projected a growth of 0.9 million
tons from 1977 to 1983, based on the natural growth of the noncompetitive
products in which mixed waste is used. (See Tables X-3 and -4.)
There are no existing markets to directly increase reuse of mixed waste.
Increased penetration will depend on reclassification of the mixed waste
stream, either by preventing higher P/S grades from entering the mixed
waste in the first place, or through technical developments which will
allow mixed waste to be physically reclassified into higher grades that
do have existing uses. As noted previously, the most immediate use would
be as a source of P/S waste grades.
Mixed waste might also find increased use as a substitute for waste news
and OCC if some upgrading is technically feasible. This increase would
be in the Folding Boxboard, Industrial Packaging, and Construction Paper
groups, where a variety of waste paper furnishes are typically used in the
recycled grades. Some upgraded mixed waste might also be used directly
as a partial furnish for containerboard or newsprint. In any case,
greater use of mixed waste would represent an overall increase in
secondary fiber penetration only if the waste news and OCC replaced
were used to make more recycled newsprint or containerboard.
At historical prices for mixed waste paper ($3- $10 per ton, f.o.b.
dealer), its availability is threatened by its use as a replacement for
fossil fuel. Mixed waste paper has a net fuel value of about 4,000 Btu
per pound, or about 8 million Btu per ton. Therefore, at current fuel
costs of about $2.00 per million Btu, its fuel replacement value is $16
per ton—substantially more than the price paid by the paper mill. As a
result, a support price could be created for mixed waste, which would
increase the cost of papermaking and lower the profitability of recycled
products made from this material. It would be in the industry's best
interest to upgrade the utility of this material, so that it would be
too valuable to burn.
X-35
Arthur! >l ittlc Int
-------
Environmental Protection Agency
Region V, Library
230 South Dearborn Street
Chicago, Illinois 6060% ,A
I
I
I
I
------- |