The last decade yielded only limited new domestic capacity for the paper industry and an unprecedented number of plant and equipment shut downs. The industry is entering 2010 with a slight breeze to our backs with many markets witnessing small increases in order books from end users that most likely had to restock. Unfortunately, the economy is still not improving to a point that housing starts, bank credit, nor consumer buying has returned with any sustainability. Many of the raw materials consumed in paper making have increased and the black liquor alternative fuel credit is gone. NBSK pulp may raise to almost $880/MT – a 16 month high - and come close to matching the August 2008 peak.
Newsprint continues its challenge into 2010, with both advertisers and readers down, although pricing has improved for the producers. The price has steadily risen from a recent low of $450 to nearly $530/MT. The forecast is for still more shuttering of equipment to balance, the declining demand, with supply.
Uncoated Freesheet producers have announced an increase of $40/ton on business papers and demand appears to be stabilized (although current base is low). The major producers reduced capacity in 2009 and this will balance the market.
The manufactures of Coated Freesheet and Groundwood are still experiencing challenges from the a reduction in both advertising pages and over all circulation. The manufactures have announced price increases, but printers continue to push back citing fear of alienating their customers with advanced pricing.
Virtually all products for Containerboard have increased prices, and converters are paying the new levels. Current order backlogs are OK at best, with export shipments doing well. Real challenge is if the economy does not improve, no one will consume goods that go into boxes.
Our forecast is for a gradual recovery for the paper industry, and trending up from a poor 2009.
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3 comments:
Demand is down, supply still appears ahead of consumption, the economy has not picked up momentum - and yet the conventional wisdom with the paper industry is to raise pricing. I am curious to see if this position assists in the speed of adoption for electronic communication?
I would imagine all printing sectors - coated - uncoated - free sheet - groundwood - folding carton - boxes, etc etc all will continue to be negatively effected my this awful economy. The pulp and paper industry is in a survival mood and so are most printers, publishers, converters and designers, etc. Price increases are certainly needed, but, how does the industry think this will help and already depressed demand and folks transitioning to electronic devices? however, I must say, this blog is generally very good and timely - sounds like I was shooting the messenger carrier. Please keep these releases coming.
The past decade was poor for the Pulp and paper industry. The American producers will have to learn to export more economically, the demand is growing for paper and packaging at a more robust clip in Asia. Also, Digital printing in US is forecast to continue to grow. The industry may well go by the way of our past steel companies if a plan is not created. Yes, the US companies need to learn how to transform themselves - the industry manages a renewable resource - trees - surely they can parlay this knowledge into a successful venture.
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