High Grades in Decline,

Panel Says

PSI Chapter members played a leading role in the “Commodity Focus: High Grades” panel discussion at the Paper and Plastics Recycling Conference in Chicago last week. In particular, moderator Kari Talvola of Fibre Trade Inc.—a PSI member company—and PSI Secretary/Treasurer Kathy DeLano of Texas Recycling—who served as a speaker—joined Ysabelle Dupuis of Kruger Recycling and Ron Gable of PROSHRED Security/Redishred Capital Corp. to discuss a variety of market-related topics, including supply challenges during the pandemic, fiber-quality issues, the effects of inflation on their businesses, and the future of high grades, among other subjects.

According to Dupuis, high grades are “dying grades” that are slowly but steadily becoming less available. “It’s not when the generation will be down, it’s happening now, and that change has an impact,” she said. “The decline won’t stop.”

Moderator Kari Talvola (far left) led the "Commodity Focus: High Grades" panel, with (beginning second from left) Ysabelle Dupuis, Kathy DeLano, and Ron Gable.

The pandemic—and the shift of employees working from home rather than in an office—“drastically” reduced the supply of high grades, Dupuis said. That material instead either stayed at home or went into the municipal recycling stream, Gable noted. To counter that trend, his mobile paper-shredding company is emphasizing to customers the importance of document security, whether the paper is generated at home or in the office. His company also encouraged office customers to continue doing “the annual purging of paper even during COVID,” he said. “We chased that rather aggressively.”

During the pandemic, food packaging took off as people increasingly ate at home, which translated to a “big increase” in the generation of thermo-mechanical grades of recovered fiber, DeLano said. “TMP can go into a tissue grade,” she noted, “but you have to know the mills that can handle it.”

The pandemic also affected the quality of high grades available to mills. “There’s more color and more mixed in sorted office paper now,” Dupuis said, noting that her mills had to explore using additional grades. “We’re looking for substitute grades so we aren’t surprised again when the next disruption happens.” On the downside, different grades can require more chemical treatment to be usable, which adds cost. Gable, in contrast, said the office paper stream is cleaner these days because there are fewer newspapers and magazines in offices, so “we don’t have many rejects or discarded bales anymore.”

In terms of current business concerns, “labor is probably our biggest challenge,” DeLano said. “It’s hard to find and retain employees. A lot of people didn’t come back to the workforce after the pandemic.” Dupuis said it has been more difficult to “build the group dynamic” with employees during the pandemic, which makes it harder to retain workers. There’s also an ongoing shortage of supplies in general, and trailers are particularly hard to find, DeLano noted. For Gable, the higher fuel costs are making it tough for his mobile shredding business to maintain margins. Plus, rising interest rates are making it more expensive for his company to finance the purchase of new trucks.

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