some perspectives on the paper industry's use of waste paper

S O M E P E R S P E C T I V E S O N T H E P A P E R

I N D U S T R Y ' S U S E O F W A S T E P A P E R

W I L L I A M E. F R A N K L I N

Manager, Resource and Environmental Economics, Midwest Research Institute, 425 Volker Boulevard, Kansas City, Mo. 64110, U.S.A.*

Abstract. The paper industry has traditionally sought fibrous resources from trees, wood residues and waste paper. Emphasis is shifting back to waste paper after 30 yr of relative decline in recycling. Management of fiber resources by major timber holding companies is being expanded to include waste paper. In the next decade the structure of the paper industry will reflect a residuals based process technology relating to both city and forest.

Recovery of waste paper can be feasible with source separation or dry separation technology. The outlook for recycling more old newspapers, old corrugated containers and mixed papers from office buildings is very good. Waste paper use in the U.S.A. will double between 1972 and 1985 from 13 million tons to 26 million tons. In addition, a world fiber supply shortage will stimulate further recovery and export of waste fibers.

The energy content of paper is about 7500 Btu lb -1, not much below that of Wyoming coal. Recovery of the energy content of paper is an integral part of current efforts to convert mixed wastes to fuel or steam. By 1990 about 50% of the waste paper generated will be usefully recovered - about 30 % will be recycled, or exported and 20 % will be burned for its energy content.

1. Introduction

A revolut ion may have s tar ted in the paper indust ry in the last 2 yr. Paper recycling

is on the upswing again after near ly 3 decades o f relative decline. This change is

t ak ing place under the impetus of several forces at work t oday :

(1) A relative scarci ty and rising cost o f virgin raw mater ia ls (worldwide and

domest ic) ;

(2) Env i ronmenta l pressure on the indus t ry to recycle waste paper to conserve

resources; and

~3) The improved economics and technology waste paper recycling vis-a-vis virgin

fiber.

There are three pr incipal sources of fiber for paper mak ing : p u l p w o o d logs (trees),

lumber mill residues, and waste paper .

Since the end o f W o r l d W a r I I the paper indus t ry has gone th rough two significant

(15 yr) cycles in its fiber supply sources and ut i l iza t ion - and a t t i tude t oward residual

sources of fibers. The th i rd ma jo r cycle is now under way tha t appears dest ined to

car ry the indus t ry into the 21st century.

Dur ing 1945 to 1960, the paper indus t ry expanded vigorously to tap an a b u n d a n t

supply of virgin fiber der ived f rom trees ( roundwood) . Basically, this was a post-

W o r l d W a r H b o o m tha t t apped the vast forests of the South.

By 1960 a b o u t 60% of the paper indust ry ' s to ta l fiber was der ived f rom p u l p w o o d

* Now President, Franklin Associates, Ltd., 4000 Somerset Drive, Prairie Village, Kansas 66208, U.S.A.

Water, Air, and Soil Pollution 4 (1975) 175-189. All Rights Reserved Copyright © 1975 by D. Reidel Publishing Company, Dordrecht-Holland

176 WILLIAM E. FRANKLIN

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Fig. 1. Percentage of fibrous raw materials used in paper and paperboard manufacture.

trees. In the meantime, recycling was declining in rate as rapidly as virgin fiber was rising (Figure 1).

Then, just before 1960 another cycle started. The value of lumber industry 'residual' fiber sources was tapped for paper making - first in the Pacific Northwest and then in the South and other regions. The use of residues from lumber, plywood and other forest products rose from about 12% of total fiber used in paper making in 1960 to what we estimate will be a peak of about 28% in 1975. Pulpwood trees began to decline in percentage of total fiber along with the rise in use of residues. In other words, the industry's growth in output from 1960 to present went largely to a 'new' source of virgin fiber (residues).

In 1973 just when it appeared that recycled waste paper would go to gradual extinction the direction of recycling turned upward again. From a low of around 20% of total paper industry fiber requirements recycling will be approaching 30% in 1990 (the same status it held in 1950, 5 yr after its historic high).

Looking at 'residuals' (i.e., wood residues plus waste paper), we forecast that the paper industry will go from a low of 40% 'residuals' use for raw materials in 1960 to 57% residuals use by 1990. (This is measured on the basis of domestic production, not total U.S.A. demand.)

All of this is shown in Figures 1 and 2. Of course the total tonnage of each source of raw material has risen steadily but at quite different rates.

SOME PERSPECTIVES ON THE PAPER INDUSTRY'S USE OF WASTE PAPER 177

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Fig. 2. T o n n a g e o f fibrous raw materials used in paper and paperboard manufacture.

From 1945 to 1973, waste paper contributed a proportionately greater burden to

solid waste systems than even the demand increases would suggest as proportionately more fiber was removed from the forests, used once and discarded in the urban areas

of our nation. Now the emerging residuals use practices of the paper industry that emphasizes

recycling will lead to a relative reduction of the burden of paper in solid waste manage-

ment systems. This is an important fact - both from the viewpoint of the waste paper

recycler and the solid waste disposer.

2. Waste Paper Recycling, the Future in Brief

Conventional wisdom of the paper industry says that waste paper is readily available, that prices will be low with occasional wild swings, and that waste paper is not a

preferred fiber source except for boxboard (for boxes), corrugating medium and construction products. In addition residues of the forest products industry are a 'preferred' source of fiber over waste paper from discarded paper products. However things are changing in the paper industry. We observe that:

(1) The outlook for waste paper demand is good and is expected to outpace overall paper demand for some time; in fact, waste paper is going to be a necessary fiber source for the paper industry to at least 1990.

(2) The potential supply of waste paper is adequate to meet the forecast demand. Postconsumer waste grades from urban areas will contribute the most - especially old newspapers, old corrugated containers and office papers.


(3) Waste paper supply, demand and price characteristics are unfamiliar to a wood pulp consumer in the paper industry.

(4) The days of 'cheap' waste paper will return periodically for key grades such as news, corrugated and mixed, but the long term value trend is up. The days of absurdly high prices for waste paper are fading too.

(5) Providing the waste paper supply needed to meet our nation's fiber require-

ments will present both the novice and expert recycler with occasional periods of real excitement and anxiety in the years ahead.

(6) The days of readily available new waste paper supplies are disappearing; recyclers will have to work at recovery in periods of increasing demand.

(7) Forest residues and lumber products residues will continue to increase in importance for both primary manufacturing and energy recovery.

(8) Waste paper will make the key contribution to energy recovery processes expected to sweep the nation in the future, as mixed urban wastes are processed in the urban areas as an alternative energy supplement to fossil fuel.

3. An Overview of Paper Demand to 1990

Fiber demand is derived directly f rom demand for finished products. In turn, the type and quantity of products determine the potential supply of one of the principal fiber

sources of this nation - waste paper - in a direct ratio to demand. Industry demand

tells us two things: (1) how much fiber as raw materials will be needed, and (2) how much waste paper is potentially available. We, thus, determine basic waste paper

supply by looking at paper product demand.

Table I forecasts product demand from 1972 to 1990. Total demand for paper products will increase from 64.2 million tons in 1972 to 113.4 million tons in 1990.

Of this, 56.8 million tons will be paper and 47.2 million tons paperboard. Further, the two grades of principal interest in recycling are: news at 16.9 million tons in 1990 and corrugated containers at 33.5 million tons in 1990. Almost all of this paper

becomes available immediately for potential recovery. After an adjustment for fiber that 'disappears' i.e., is used in a construction or

industrial products, is sewered, or is burned in use, the total discard of waste paper will rise from 54.4 million tons in 1972 to 97.3 million tons in 1990.

TABLE I Demand for paper products (in million tons)

Category 1972 1975 1985 1990

Total demand 64.2 70.2 97.4 113.3 Newsprint 10.4 11.4 14.9 16.9 Total paper 32.2 35.7 49.3 56.8 Container board 16.0 18.0 27.6 33.5 Total paperboard 26.3 28.6 40.1 47.2 Other 5.7 5.9 8.0 9.3 Discarded as waste 54.4 59.9 82.5 97.3

SOME P E R S P E C T I V E S O N T H E P A P E R I N D U S T R Y ~ S USE OF W A S T E P A P E R 179

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Paper consumption in pounds per capita and 1000 tons per billion dollars GNP.

On a per capita basis, demand for paper products will rise from 600 lb per person in 1972 to 870 lb per person in 1990 (Figure 3). The ra te for growth will be slowing

considerably during this period as the demand for paper products reaches full maturity.

4. Current Waste Paper Recovery and Recycling

From this discard quantity, the paper industry captured for recycling purposes about 14.3 million tons in 1973 and exported another 0.7 million tons, for a total recovery of 15.0 million tons. Of this total recovery, about 2.5 million tons were old news-

papers, and 5.3 million tons were corrugated containers and box plant cuttings (excluding export of these same grades).

The 1973 recovery of waste paper was up 2.3 million tons over 1971 waste paper

recovery, or a 17% increase in a 2 yr period. It appears that 1973 was the ' turnaround' year for recycling. The end products that received waste paper have reflected this; more old newspapers have been recycled into newsprint, and more old corrugated boxes have been utilized in linerboard and corrugating medium than at anytime since 1945.

5. The Nature of Posteonsumer Waste Paper Supply

The last 18 months have provided all of the excitement and anxiety that waste paper- consuming mills care to endure. Not only did domestic demand surge ahead of supply,

but exports shot up by 70% in 1973 and even more rapidly in 1974. This situation led to rethinking by many of the paper mill owners who were using or considered using waste paper as a fiber source. In 1973, most mills were in a precarious inventory


situation (some had to shut down because they simply ran out of waste paper), and prices skyrocketed in mid-1973. Now the cycle is reversed and supplies of most grades

are plentiful again, a factor that has led to concern in cities and by others that have recently initiated paper recovery programs. Yet recycling will continue to increase in the future in the paper industry.

This leads to two very logical questions: (1) What is the nature of waste paper supply?

(2) What are the limits of waste paper recovery? The first question is relevant because few 'novice' consumers or sellers of waste

paper seem to understand the dynamics of supply, and even some veteran recyclers are short on understanding the dynamics of waste paper markets.

The explanation is rather simple. No waste paper grade is consciously produced

as a raw material; the generation of waste paper is a consequence of use, not a result of an intrinsic value as a raw material. In addition, waste paper supply is inelastic in the short term - an increase in demand does not automatically lead to an increase

in supply, just as increase in supply does not automatically lead to an increase in demand. There is a time delay while the system 'tools up' to respond. In a sense, waste paper is a commodity with the characteristics of an agricultural product - it takes time to increase output, and surpluses must sometimes be 'dumped ' to be re-

duced. A change in demand is therefore likely to produce dramatic and sudden price swings. This is exactly what happened in 1973, when prices skyrocketed; and now in 1974 as they plummet toward historic lower levels.

Demand in 1973 was up by 1.2 million tons over 1972 or nearly 10~o; the 'normal '

supply increased about 4~o. As a consequence, prices shot up dramatically - for example, old corrugated containers purchased by paper mills for recycling went from about $ 23.00 per ton to over $ 65.00 per ton in a few months. Mill inventories of waste paper dropped drastically.

In the longer time frame, however, supplies are still elastic - they will respond to the increased demand. Often this is a matter of paper mills and waste paper dealers ' turning on' the supply, as in the case of news, which responds directly to price changes. Or it is a matter of equipping waste generators to recover - as in the case of installing balers in stores, warehouses, and so on, to recover old corrugated containers at attractive prices for the recovered materials.

The system also has inertia. What waste paper dealer wants to rush out and commit capital and effort to bring out new supply, especially if he thinks that prices and demand will return to 'normal ' soon? Thus he waits, enjoys the high price for a time, and then acts to protect and increase his flow of waste paper. Exactly the same thing is now happening in reverse as demand drops and as supplies flow to a glutted market more rapidly than they can be absorbed. The paper mills begin buying distress tonnage or eliminating purchases for inventory, thus creating greater excess supply followed by a price decline. When demand for recycled paper products also drops, the situation can create large surplus supplies which is exactly what was happening in the third

quarter of 1974.


The whole situation turns on the short-term inelasticity of supply and the dynamics of changing demand - magnitude and rate. Obviously, a well-planned and well- executed market entry by a paper mill can, over time, give a very smooth transition to a new level of demand without disrupting the delicate supply-demand short-term equilibrium.

The dramatic nature of the current price situation is illustrated in price indexes for waste paper. Figure 4 shows the composite price for waste paper with 1957-1959-- 100. The index rose to 340 at the end of 1973. An interesting trend is noted, too, starting in mid-1971. From then to the end of 1972 the trend may have been signaling the dramatic price increases to come. But few mills were prepared - from an inventory or supply standpoint - to cope with the demand increases of 1973. This is by far the most dramatic price swing in a 20 yr price history on waste paper.

The price indexes for the three major waste paper grades (news, corrugated, and mixed) show a similar pattern (Figure 5). In particular, corrugated went up to an index value of 340, or over three times the baseyear average price. The actual price history for news and corrugated is plotted for the Chicago market in Figure 6, in dollars per ton. This shows the relative stability of the price until about mid-1973. Then the price rose from about $ 22 per ton to a peak of $ 65 per ton by the end of the year. After that, the supply of waste paper increased faster than consumption, and

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Composi te , price index for w o o d pulp and waste paper, 1965-1974, (1957-1959=100).


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Fig. 5. Price index for three major waste paper grades, 1965-1974 (1957-1959=100).

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Fig. 6. Selected waste paper prices - Chicago market.


mill inventories built up again. The price in 1974 dropped to about $ 45 per ton, and is now $ 25 to $ 30 per ton. Mill inventories are fully replenished and demand is

easing as the effects of an economic slowdown are felt. Early in 1974 American Paper Institute (API) figures showed that the old news mill receipts were up over 12% over 1973, while consumption was up only 3%; completely depleted inventories are now more than built back up to pre-1973 levels at the waste paper consuming mills.

6. Recoverability of Waste Paper - Supply Potential

In 1974 paper mills were using well under the practical recovery limits for most postconsumer waste paper grades. Thus the supply can be expanded considerably.

Old newspapers and old corrugated boxes illustrate the situation. We have judged that population concentrations of 50000 people or more are

required to sustain waste paper recovery over time. The most common geographic

unit is the Standard Metropolitan Statistical Area (SMSA). About 70% of the people live in SMSA's, and about 80% of the waste news and corrugated is generated in

SMSA's because per capita consumption is higher as a result of the concentration of commercial activity and density of population. About 50% of the waste news and corrugated available in a location could be recovered on a sustained basis.

Thus we have a rule of thumb to work by: 0.8 of total tonnage is available times

0.5 potential recovery, then there is a 40% recovery potential overall. The supply potential for 1975 is shown in Table II. Over 2 million tons of each grade could be recovered for recycling uses, given the demand and recovery mechanism. The supply

is potentially available, although obviously under very intensive recovery procedures. Nonetheless, this potential represents the possibility of supporting on a national basis 10 recycling mills of 300 tons per day each or 100000 ton year., e.g.,10 news deinking

TABLE II Potential supply of old newsprint and containerboard, 1975

(in million tons)

Newsprint Containerboard

Total demand 11400 18000 Conversion scrap, etc. i 000 1980

Net final discard 10400 16020

Available in SMSA's (0.80) 8320 Recoverable from SMSA's (0.50) 4160

12816 6410

Actual Recovery 2650 6300 Conversion scrap, etc. 850 1980 Post-consumer 1800 4320 Available additional 2360 2090

Source: MRI estimates.


and 10 recycled corrugating medium mills. Obviously, the logistics and limitations imposed by current situations would have to be considered.

Old corrugated and news require completely different recovery systems, too. News comes f rom homes and can be stimulated by (moderate) price increases and voluntary

(or mandatory) separation-collection or curbside pickup with the trash. The corrugated

coming f rom commercial establishments requires small or large in-store balers, stor-

age space, and a collection system to deliver the corrugated to a warehouse, dealer, or mill.

7. Waste Paper Demand Outlook

Waste paper demand tends to increase in spurts as mills bring onstream incremental

expansions or whole new mills. This means that the nature o f demand must be re-

cognized. The type of waste paper demand increases installed so far in the paper

industry is permanent and not cyclical. In other words, they add a new increment to

demand that is permanent.* As demand increases and the rate of recycling rises, a new

basic price level is established.

The out look for increasing demand for waste paper is good. News will be used in

news deinking mills; corrugated will be used increasingly in l inerboard and corrugat-

ing medium. In fact, these three applications are the backbone of future recycling

increases.

Midwest Research Institute (MRI) has forecast that waste paper demand will in-

crease f rom 13.1 million tons in 1972 to 31 million tons in 1990, or f rom about 21%

recycling to 29% recycling (Table I I I ; Figure 7). Most o f the increase is in the two

TABLE III

Estimated usage of waste paper for recycling in the paper industry by major grade category, 1972-1990 (in thousand tons)

Grade category 1972 1975 1980 1985 1990

Mixed grades 3 054 3 450 4 000 4365 5 000

Old newspapers 2 037 2340 2 850 4120 4 650 News - (converting) 280 3 t 0 350 400 450

Old corrugated containers 3 072 4315 6 500 8855 11925 Corrugated cuttings 1650 1985 2300 2 860 3 475

Deinking grades and pulp substitutes 3 037 3 340 3 900 4800 5 500

Total 13132 a 15740 a 19900 25400 31000

a Includes molded pulp products and other nonpaper industry uses. Source: 'Capacity 1972-1975, Paper, Paperboard, Wood Pulp', American Paper Institute, 1973. Midwest Research Institute.

* The declining demand recently has come principally from cutbacks in building construction and boxboard demand although a general slowdown in paper demand is occurring.


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Fig. 7. Summary of resource recovery forecasts for paper, 1972-1990.

bulk grades - news and corrugated. For example, M R I forecasts are that the demand for old news will rise from 2.3 million tons in 1972 to 4.5 million tons in 1985 (Table III). At the same time, the demand for corrugated will go from 4.7 million tons to

11.7 million tons. In this same period total waste paper demand will rise from 13.1 million tons to 25.4 million tons. By 1990, the recycling rate will be back to the level

it was in 1950. Old corrugated is expected to carry the brunt of the recycling. According to M R I

forecasts (Table IV), demand for old corrugated will account for half the waste paper tonnage by 1990, compared with 40% today. Also, the recovery rate will go above 40% on a national basis after 1980.

8. Recovery Profile for Waste Paper

In addition to recycling, the energy content of waste paper will be sought and re-

covered. Figure 7 shows how recycling will be the preferential use for waste paper, reaching over 32 million tons in 1990. In addition, the energy content of 13 million tons will be recovered in 1990.

9. Recovery Mechanisms for Waste Paper

The paper industry has shown a definite preference for 'conventional ' recovery mechanisms, that is, source separation and separate collection through a dealer to the mill. However, as recovery rates increase and postconsumer waste paper grades must

186 W I L L I A M E. F R A N K L I N

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be 'ferreted out' of the urban area the more involved the solid waste management

system will become. This means two activities will increase in importance: (1) source

separation by waste generators and collection by solid waste management system operators; this applies to old newspapers, old corrugated containers and office waste, and (2) mechanical separation at waste processing sites. The industry's aversion to recovery of waste paper from mixed wastes will gradually diminish if dry separation technology develops and economics of recovery dictate that mixed waste sources be processed.

In fact, by 1990 we forecast that 2.5 million tons will be recovered directly from solid waste collection and/or mechanical separation; this amounts to 7.7% of total waste paper recovery at that time. Already 'piggy back' newspaper collection programs have spread to about 100 communities in the U.S.A. It is likely that we are quite conservative in our estimate and that municipal collection could be 5.0 million tons by 1990.

10. Energy Recovery - the Opportunity of Last Resort

Most organic waste materials in urban areas go into mixed wastes for ultimate disposal. The hierarchy of resource values dictates that materials recovery be pursued to the ultimate. However, that paper which cannot be recovered as a recyclable residual has an energy value of 7500 Btu lb -a, not much under that of Wyoming coal.

Energy recovery of mixed organic wastes is virtually inevitable as two economic forces close in on solid waste management - the rising cost of land disposal sites and operating costs and the rising values of energy and secondary materials.

Waste paper has the greatest heat recovery potential of all combustible material, in mixed municipal waste. Midwest Research Institute has forecast that by 1990 a

total of 50 million tons of mixed municipal solid waste will be processed through major resource recovery facilities, of which 14 million tons will be paper waste. Of this amount 13 million tons will be combusted for its energy content.

We believe there will be at least 60 major resource recovery plants in operation by 1990 in 40 metropolitan areas of the U.S.A. These plants will range in size from 500 tons day -1 throughput to 5000 tons day -1 with the average being about 2500 tons day-1. For the mixed organics, energy recovery options appear to be dominant with paper residuals contributing more than 50% of the Btu to the total energy content of the waste. Once again we could be conservative. Our optimistic estimate is that 65 metropolitan areas and 90 resource recovery plants could be in operation by 1990. In fact, virtually any area with a population base of 300000 persons could possibly support one or more resource recovery plants.

Recently, a pyrolysis plant was constructed in Oregon to convert wood wastes of saw mills to a combustive fuel oil so the direct conversion of wood waste to fuel is now a reality for this kind of waste.

In 1972 a total of 13.6 million tons of waste paper was recovered for use in recycling in the paper industry here or overseas. By 1990, this recovery will have increased to 32.6 million tons or 28.7% of paper demand (Table V). The recovery of energy


TABLE V

Summary of resource recovery forecasts for paper, 1972-1990 (in million tons)

1972 1980 1990

Total paper demand 64.3 82.8 113.4

Gross waste paper generated 54.6 70.9 97.3

Waste paper recovery For recycling 12.9 19.9 31.0 Other and exports 0.7 1.2 1.6 Energy/fuel Neg 1.9 13.0

Total 13.6 23.0 45.6

Net waste disposal 41.0 47.9 51.7

Percent recovery 21.1 27.8 40.2

Percent disposed 63.8 57.8 45.6

Percent diverted/delayed 15.1 14.4 14.2 entry to solid waste

Source: Midwest Research Institute, 'Baseline Forecasts of Resource Recovery, 1972-1990', for EPA 1974.

content of another 13 million tons will bring total recovery of paper to 45.6 million

tons or 40?/0 of paper demand (Table V and Figure 7). Those wood wastes not used

for paper directly for heat content can be converted to a liquid fuel.

In order to accommodate the 140~ increase in recycled paper tonnage a number

of changes will take place in the paper industry: (1) The industry will be partially

restructured with more new mills located in or near large urban centers. (2) Waste

paper recovery will follow traditional source separation and collection, but many

municipalities will collect old newspapers, old corrugated or office papers. (3) The

greatest potential increase in recycling will be in postconsumer waste paper grades - news, corrugated, and mixed paper. (4) The paper industry will seek out three grades

for recycling: news into newsprint; corrugated into linerboard and corrugating

medium; and mixed paper into printing type papers. The vast majority of the paper

industry's increased use of waste paper will be in these postconsumer grades. Thus

with that combusted for its energy content in solid waste nearly 50~o of all waste

paper will be usefully recovered in 1990.

some perspectives on the paper industry's use of waste paper

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