For small business owners reliant on recycled cardboard, understanding why the prices of old corrugated containers (OCC) fluctuate globally can provide insights to help manage costs effectively. OCC is a key material in the production of recycled cardboard, and its price changes are influenced by several global factors:

1. Global Demand for Recycled Materials

The demand for OCC is driven by the global need for recycled cardboard, especially in the packaging industry. E-commerce, for example, has drastically increased the demand for cardboard boxes. When global industries like shipping, consumer goods, and logistics see increased demand, they push OCC prices up. Conversely, during periods of economic downturn or slower manufacturing activity, demand drops, lowering prices.

2. China’s Role and Import Policies

China was historically one of the largest importers of OCC, processing the material for its manufacturing needs. However, the 2018 National Sword Policy restricted the import of contaminated recyclable materials, reducing China’s imports of OCC by over 90%. This created a global surplus, driving prices down initially. Now, China’s tighter import restrictions mean that exporters need to find alternative markets or invest in cleaner recycling processes, which has kept the market unstable.

3. Regional Disparities in Recycling Infrastructure

The quality and efficiency of recycling infrastructure differ around the world. Countries with advanced recycling systems can supply higher quality OCC, while those with weaker systems may produce lower-grade materials. When there are regional shortages of high-quality OCC, businesses in regions with less-developed infrastructure may face rising prices to secure the needed supply, impacting the global market.

4. Logistics and Transportation Costs

Global transportation costs play a huge role in OCC pricing. Since OCC is bulky and low in value per unit, transportation costs have a significant impact on overall price. Disruptions in global shipping, rising fuel prices, or port bottlenecks, such as those seen during the COVID-19 pandemic, can drive transportation costs up, making OCC more expensive on the global market.

5. Exchange Rates and Trade Tariffs

OCC is traded globally, so shifts in exchange rates and trade tariffs between countries can also influence prices. For example, if the U.S. dollar strengthens, OCC exported from the U.S. becomes more expensive for foreign buyers, potentially driving prices down due to reduced demand. Similarly, tariffs or trade restrictions between key trading partners can add costs and create market instability.

6. Energy and Production Costs

Recycling OCC into new cardboard products requires energy. When global energy prices rise, such as during oil price surges or energy shortages, the costs of processing OCC also increase. This additional cost is often passed down to buyers, raising prices.

7. Environmental Regulations

Stricter environmental regulations, particularly in major OCC-producing countries, can affect supply and pricing. For instance, regulations aimed at reducing landfill waste, promoting sustainability, or minimizing pollution may restrict the availability of OCC, leading to supply shortages that push prices up.

The price of OCC fluctuates globally due to a complex mix of factors including demand shifts, import policies, transportation costs, and energy prices. By staying aware of these global trends, small business owners can better anticipate changes in cardboard costs and plan accordingly, potentially exploring alternative materials or sourcing strategies to remain competitive.