FutureMark counts on single-price recovered paper contracts to sidestep export, domestic market highs

With record recovered paper prices (unadjusted for inflation) at US mills the last two years, FutureMark Paper announced that it signed three long-term supply agreements for recovered paper that set a single price for the term of each contract based on historical averages rather than on monthly moving price terms.

FutureMark CEO Steve Silver said Tuesday that the two- and three-year agreements should iron out recovered paper price highs, which don’t benefi t FutureMark, and lows, which don’t benefi t recovered paper suppliers. The agreements cover about 40% of the 125,000 tons of recovered paper that FutureMark purchases annually. Of the 125,000, FutureMark consumes 70% old magazines (OMG) and coated groundwood sections (CGS), and 30% old newspapers (ONP) and coated book stock.

One of the agreements is with RockTenn, the third largest recovered paper processor in North America last year at about 1.75 million tonnes, the second largest consumer at about 4 million tonnes, and the 11th largest exporter.

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April 6, 2012