Domtar just announced a $40/ton price increase on their business paper cut size grades, effective February 15. So far, this is the only grade line to be increased. We can only assume that all Domtar’s competitors will follow; especially in that demand is improving including December 2009 vs 08 shows shipments +1.2% ( this is the first positive comparable since April of 2007).
Certainly raw material costs including pulp prices and energy continue to surge. Also,inventories at both the mills and the merchants are down 20% down from this time last year. Lastly, recall International Paper and Domtar will close 800,000TPA of capacity by mid-2010, representing 7% of North America’s Uncoated Free Sheet capacity; furthermore, the artificial support from the black liquor credits are gone (that was $8Billion in 2009!!). All indicators that the price increase will most likely stick.
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Have others joined yet? One can only assume the balance of producers will soon follow and support one another .
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