Mills run to tolerances set by the order in front of them. When a run drifts outside those tolerances, the material comes off the prime inventory and sits in a warehouse. The fibre has not changed. What has changed is that it no longer matches the contract it was made for.
What actually puts material off grade
The defects are mundane, which is the point. Almost none of them affect whether the fibre can be used — only what it can be used for.
| Defect | What it usually is | What it means for the buyer |
|---|---|---|
| Moisture | Content outside the contracted range, or uneven across the lot | Affects yield and handling. Usually workable with an allowance agreed up front. |
| Shade & brightness | Off-shade against the reference, or inconsistent between reels | Irrelevant where the end product is not colour-critical. Fatal where it is. |
| Basis weight | Deviation beyond the tolerance band | Matters for converting to a fixed format. Often acceptable as furnish. |
| Formation & defects | Holes, streaks, uneven formation, edge damage | Yield loss on converting. Acceptable for repulping. |
| Wrapper & transit damage | Torn wrapping, crushed edges, water staining on the outer layers | Usually confined to the outer wraps. The core is sound. |
| Failed QC hold | Rejected against a customer specification, not an absolute standard | Frequently prime material for a different end use. |
The last row is worth sitting with. A great deal of off-grade material was never substandard in any general sense. It failed a particular buyer's particular number, and that buyer had no second use for it.
Why it has a market at all
Because end uses are not interchangeable. A mill producing packaging board does not need the brightness consistency that a printing-paper customer rejected the lot for. A converter repulping furnish does not care about edge damage on the outer wraps. The deviation that destroyed the material's value for one buyer is simply irrelevant to another.
What the second buyer needs is not a better lot. It is an accurate description of the lot, far enough in advance to decide whether the deviation matters for what they are running.
The defect goes on the offer, not in a footnote.
A buyer who knows what they are taking can run it deliberately and plan around it. A buyer who finds out when the container is opened files a claim — and does not buy a second time. This line of trade only works on disclosure.
How off grade is priced
Not against scrap, and not against a market index of its own. It is priced against the prime grade it deviates from, discounted for the deviation.
That means two things in practice. The starting point is the prime price for the equivalent material, which both sides can check. And the discount is a function of how much the defect narrows the field of buyers: a moisture question that any repulper can absorb discounts differently from a shade question that eliminates every printing-paper customer.
A lot described vaguely gets priced as though the defect were the worst case, because that is the only prudent assumption. Precision in the description is worth money to the seller.
For the mill or converter holding the tonnage
If you are on the selling side, the instinct is to present the material in its best light. It is the wrong instinct, and not for moral reasons.
An optimistic description raises the offer, and then collapses at the discharge port when the lot does not match it. The claim comes back, the discount is taken anyway, and the relationship absorbs the cost. Quoting accurately produces a lower number on paper and a better outcome in cash.
What makes a lot quotable:
- What failed, specifically. "Off shade" is a start; the reference and the measured deviation is better.
- Mill test data or the QC report where it exists. Photographs of the defect where it does not.
- Weight, form and packing — reels, sheets, bales or units, as it actually sits.
- Location. This decides the loading port, and the freight often decides whether a marginal lot works at all.
Where it sits in a trading book
Off grade and stock lots are two of our four product lines, not a sideline to the prime business. That is a deliberate position: traders who handle only prime decline roughly half of what a mill actually needs to clear, which is why the difficult tonnage comes back to the desks that will price it.
The detail on what we accept, how it is documented and the terms we quote on is on the off grade page. Material that is surplus rather than off specification is handled as a stock lot — in practice many lots are both, and we quote them either way.