Notes from Deutsche Bank - Equity Research
Weak economy causing low demand and high producer inventory have yielded a decline in shipments of 6.4% year to date (down 20.1% Nov07 vs. NOV 08). January and February are traditionally slow months - so not much hope forecasted for next several months.
Virtually all the major uncoated free sheet (UFS) producers are cutting production to manage inventory. International Paper's announced target is 60K tons of uncoated downtime in 4Q. Domtar (#1 player) announced 4Q downtime of 173K tons and Boise (#3 player) is idling 2 machines at International Falls and significantly downsizing its St Helens, OR mill. More
recently, Glatfelter and Mohawk Fine Papers have also announced downtime.
Coated groundwood (LWC) shipments took the sharpest hit --- down 34.2% y/y in November. However, mill inventories have jumped from 110K tons to 252K tons over the past 12 months. Verso Paper recently announced 100K tons of downtime in 09H1. Earlier, Newpage, announced 40K tons of downtime in 4Q08 in addition to the earlier announced closures of Niagara, WI and Rumford, ME mills.
The groundwood coated publication price decline accelerated in December --- down $35-70/ton.
Meanwhile, list prices for Uncoated Freeshhet have held up better --- down between $5-15/ton.
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