CARSON, Calif.—Unemployed and short on cash, Jerry Leonhardt pulled into a recycling center here in Los Angeles County, his white Chevy pickup packed with used cardboard boxes he had salvaged from behind supermarkets and mini-malls.
Mr. Leonhardt regularly sells worn cardboard to the recycling center, which bales it, packs it into containers, and trucks it 10 minutes to the Port of Long Beach, where it is loaded on ships bound for China. "I make out pretty decent," said Mr. Leonhardt, who fetches about $85 per truckload.
Exports of waste paper, the term given to the market for second-hand boxes and other scrap paper, are taking off. The U.S. has long shipped its discarded paper—cardboard, newspapers, catalogues, phone books and other scraps—to emerging markets like China, which doesn't yet have enough imports, hearty trees, or a strong enough recycling habit to generate ample raw materials to make boxes for its own booming export market.
But now, with a revival in U.S. consumer spending underway, China needs the U.S.'s old boxes in order to make new boxes to ship stuff back to the U.S. China is also scrambling for American waste paper to box consumer goods sold to its own growing middle class, according to analysts, who say it is far cheaper for China to make boxes locally from waste paper rather than import new boxes directly.
"They simply don't have enough boxes," said Bill Moore, a paper industry consultant in Atlanta.
The U.S., meanwhile, has plenty. With more people shopping online, U.S. houses are inundated with boxes, which now represent 15% of the residential waste stream, up from 5% in 1995, according to Mr. Moore.After falling sharply in 2009, U.S. export prices for old cardboard boxes—the bellwether for the scrap paper market—have been steadily climbing and are passing pre-recession prices. Chinese paper mills are paying $228 for a baled ton of old corrugated containers—industry jargon for used cardboard boxes—leaving ports around Los Angeles, up 5% from March 2010, and well past the going rate of $160 per ton in March 2007, according to Official Board Markets, a weekly report for the packaging and paper recycling industry.
In a sign of growing demand, combined total waste-paper exports out of the two busiest U.S. container ports of Long Beach and Los Angeles rose nearly 25% in 2010, surpassing the overall increase of 15% for all exports from those ports, according to the Port of Long Beach.
The rebound in export prices of waste paper, or "recovered paper," was a strong earnings contributor in 2010, Sonoco Products Co., a Hartsville, S.C., packaging and recycling company said in February, reporting record sales for 2010.
The company said it is significantly expanding its sale of old cardboard boxes to export markets, although with collection in the U.S. peaking, Sonoco is having to come up with increasingly ingenious ways to get its hands on old boxes—including collecting them from cruise ships.
Read more here: China Fuels Waste-Paper Boom - WSJ.com