China Fuels Waste-Paper Boom - WSJ.com

Who says we don't trade anything with China between our debt and old cardboard we are way ahead. Right?

By JENNIFER LEVITZ

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

Cap and Trade Will Destroy the Middle Class and the Small Business Person

As I am sure you are aware the House will be voting on the Cap and Trade bill tomorrow. This bill will not decrease pollution or solve climate change( if there is such a thing, check out this study on the accuracy of our temperature records http://www.surfacestations.org/ ) but rather is simply another tax on hardworking Americans.

As James Pethokoukis noted in this March 2009 blog on U.S News & World Report:

"The 1% decrease in emissions is projected to cost the average taxpayer an additional $1437 a year by 2015 alone with significant increases projected from that point forward. electricity costs will increase by between 5 -15%natural gas will increase by between 12- 50%gasoline will increase by between 9-145%"http://tiny.cc/HOVZa

As if higher costs for energy weren't bad enough the whole scam behind this bill is carbon trading. A recent study by Duke University's Nicholas Institute for Environmental Policy Solutions ( http://tiny.cc/UVe92 ) anticipates that the law will result in derivatives trades that will exceed the market for allowances. Some of the same big players that brought us the mortgage backed securities market, JP Morgan, Morgan Stanley and Goldman, already have active carbon trading desks and are salivating over this legislation (by the way ENRON was a huge supporter of Cap and Trade and we all remember how honest they were). If this market careens out of control because of Wall Street greed, which based on past examples how can we expect it not to, this will result in another huge financial bubble. The Cap and Trade derivatives marketplace has the potential to make the mortgage backed securities mess look like a simple market correction. The current plan is to buy carbon credits from Third World nations so industrialized nations can continue to pollute. Yes, that's right the same Third World countries that steal their own countries wealth are going to be dealing with Wall Street, who steals our country's wealth (sounds like a match made in Hell).

It appears that most of the Republicans are going to be voting against this legislation if for no other reason then its Obama's pet project. While I wish they weren't supporting it on principal, rather than being contraries, I will have to live with the result. There are still many Democrats are on the fence right now and I urge you to call you Representative and let them know your feelings on the matter. My wife and I have already called our Representative.

If this bill passes businesses like my father-in-law's, plastic manufacturers, will lose out big time. Currently small businesses like his have to compete with both larger U.S manufacturers and the Asian tigers for market share. If this legislation passes his cost for both raw materials and the electricity he needs to run his machines will increase substantially thereby driving up the costs for his goods. He currently employs over 100 hard working Americans. We have already lost most of our manufactoring in this country because of cheaper labor can we really stand to lose anymore. The last thing we need right now is higher unemployment take action before its too late.