The market for recyclables has declined modestly during September. Both paper and plastics pricing declined with the most significant drop in the plastics grades.
We attribute this broad based decline in pricing to the normal seasonal changes in demand for paper and plastic products. For paper, most of the extra demand from the Harvest and Christmas seasons has been satisfied by now which undoubtedly, softens demand, especially at domestic mills. With plastic, sales of irrigation and construction products are slowing with the coming change in the weather. Unfortunately, if history is any guide, we can expect this drop in demand to influence pricing for recyclables for the balance of this year.
The good news this month is, once again, we learned of two new significant mill announcements. First, Nine Dragons, the largest paper company in China, announced their purchase of Resolute Forest Products and their mill in West Virginia. While this is not new capacity per se, it is a demonstration of a continuing commitment by Chinese paper companies to expand their production in countries other than China.
Secondly, Cascades, a large Canadian paper company, announced their purchase of an idle White Birch mill in Virginia. They indicated they plan to convert the mill to production of light weight linerboard and medium and will use both OCC, and most importantly, MIX as feedstock for their production.
These announcements are good news indeed and part of the larger trend we predicted for paper companies to respond to the lack of production in China. Over time these new mills and well as the conversions are likely to significantly improve pricing for recycled paper.
On the local front, I want to share the action Pioneer has taken to deal with the complete lack of orders for #3-7 and MRP plastics mentioned in our August market letter. To cope with this rapid change, we have changed our sorting practices to capture #5 polypropylene tubs separately.
Additionally, we are now packing a new grade called HDPE Injection where we are capturing the buckets and flower pots we receive in ResMix. These changes will allow us to meet our obligations to continue recycling all of the program materials we receive. Said differently, we do not expect to landfill any of the program items listed for recycling in your communities.
Rest assured that Pioneer is working harder than ever to, not only find movement of recyclables, but find the best pricing available throughout the turbulent market we have faced all year. We appreciate your business.