Friday, August 15, 2008
Paper Economics
With demand declining for both Coated and Uncoated Papers, one would logically conclude that price is also declining (Economics 101). However, after years of disappointing financials, new operators owning and managing manufacturing sites, and strict adherence to capacity rationalization – paper is steadily increasing in price. Manufacturers are producing to demand. That being said, producers are still struggling with raw material increases for important components such as fiber, energy, transpiration, and chemicals and can not raise prices fast enough to keep up with cost. Look for more paper price increases.
Uncoated Free Sheet Market
Shipments for June were down slightly- 0.8% . Virtually all trade sources reported that pricing is relatively healthy. Approximately $40/ton of the proposed $60/ton mid-June price hike on cut-size business paper has gone through, with $15-20/ton of the late June offset increase showing in July. Note, a number of major producers and importers have hinted of yet another hike attempt in September. The key issue will be demand.
Coated Groundwood Market
Prices increased $20-40/ton in July for publication papers. However, with mill & printer inventories up sharply and consumption falling, the full $50/ton price hike was not successful. Shipment data for June was down: -12.9% from 2007, and the balance of this year appears worse. To maintain some measure of pricing stability, the new market leader, NewPage, is curtailing equipment and Verso announced that it will take two weeks of downtime (13K/tons) in September at its Bucksport Mill in Maine
Appleton to open expanded thermal-paper plant
-- Converting Magazine, 8/4/2008
Substrate provider Appleton will dedicate its $125-million expansion of the company's thermal-paper mill in West Carrollton, OH, tomorrow.
Capital investments include a new proprietary coater to produce thermal paper and construction of related facilities as well as enhancements to the mill's No. 92 paper machine. The expansion program will add 35 new jobs, the company says.
“The expansion will improve our capability to meet customer needs for enhanced product design and quality as well as increase capacity to satisfy projected demand for thermal products from our domestic and international customers," says Appleton CEO Mark Richards.
Paper.com has all the Appleton grades on site and ready for immediate shipments.
Substrate provider Appleton will dedicate its $125-million expansion of the company's thermal-paper mill in West Carrollton, OH, tomorrow.
Capital investments include a new proprietary coater to produce thermal paper and construction of related facilities as well as enhancements to the mill's No. 92 paper machine. The expansion program will add 35 new jobs, the company says.
“The expansion will improve our capability to meet customer needs for enhanced product design and quality as well as increase capacity to satisfy projected demand for thermal products from our domestic and international customers," says Appleton CEO Mark Richards.
Paper.com has all the Appleton grades on site and ready for immediate shipments.
North American Label Market
America is the largest pressure sensitive label market in the world.
Current trends outline both the pressure sensitive as well as the wet glue labels are being cannibalized by competition from direct printing, in mold, and glue applied wrap around labels. Traditional label demand from around the world continues to grow at nearly 5% - but the mature markets of North America and Europe are only growing at 2.5%. Market demand breaks down as follows – Pressure Sensitive enjoys 45% of the market share; glue applied is 43%; and Sleeving and in mold are 8.6% and 2%. We are happy to report that paper is still the leading choice for sub straight, at 75% of total demand. One big hurdle for Pressure sensitive labels remains difficult environmental factors and ability to recycle the release liner. Also, RFID and digital printing remain formidable competition.
Current trends outline both the pressure sensitive as well as the wet glue labels are being cannibalized by competition from direct printing, in mold, and glue applied wrap around labels. Traditional label demand from around the world continues to grow at nearly 5% - but the mature markets of North America and Europe are only growing at 2.5%. Market demand breaks down as follows – Pressure Sensitive enjoys 45% of the market share; glue applied is 43%; and Sleeving and in mold are 8.6% and 2%. We are happy to report that paper is still the leading choice for sub straight, at 75% of total demand. One big hurdle for Pressure sensitive labels remains difficult environmental factors and ability to recycle the release liner. Also, RFID and digital printing remain formidable competition.
Wednesday, July 30, 2008
More Paper Price Increases
Several major paper mills recently made announcements for price increase of 5-7% . Notably, the Xerox 4200 and Digital paper families will advance; as well as Smart Paper's Kromekote grades; Nekoosa Carbonless; all SBS Board C1S and C2S; and all continuous stock computer papers - all will increase. Paper.com still has some inventory for immediate shipment at the old price.
Friday, July 25, 2008
Uncoated Free Sheet Update
Although shipments of uncoated woodfree papers are down 7.3% through June, the producers have been successful with the proposed price increase. We understand $40/ton of the proposed $60/ton mid-June price hike on cut-size (copy paper) paper has gone through, with $15-20/ton of the late June offset increase showing in July. The major producers and
importers have suggested t another hike attempt in September...
importers have suggested t another hike attempt in September...
Coated Groundwood Market Update
Prices for publication papers increased $20-40/ton in July. Note: both mill & printer inventories are up sharply and consumption is falling, accordingly, the full $50/ton price hike has not passed through. USA shipments for June was unfavorable: -14.3% and July does not appear much better.
More trouble ahead for Paper Buyers
Problems continue to lie ahead for larger paper buyers for both price and availability. Several paper mills have recently announced permanent closure and others are taking ‘market’ downtime to control supply. In fact North America coated capacity has been reduced by approximately 20%. A different type of operator, the venture capitalist, is now managing the ‘new economics’.
AND, with the reduction of supply – with economics 101 – curtained supply generally generates increased revenue if demand exceeds supply.
AND, with the reduction of supply – with economics 101 – curtained supply generally generates increased revenue if demand exceeds supply.
Added Capacity by Brazil Producer
Brazilian pulp and paper producer, Suzano, is considering building an uncoated white paper machine outside of Brazil. The objective would be to forward integrate some of its
market pulp into paper, but do it closer to the final customer. One location reportedly under consideration is on/near the Texas gulf coast. Suzano would export pulp to the US for conversion into Paper. Suzano currently exports about 60K/tpy of various uncoated free sheet products into the US and has a near-term goal of moving to over 100,000/tons. Within Brazil, Suzano's estimated 2008 capacity is 1.64MM/mtons of market pulp and 1.1MM/mtons of paper.
market pulp into paper, but do it closer to the final customer. One location reportedly under consideration is on/near the Texas gulf coast. Suzano would export pulp to the US for conversion into Paper. Suzano currently exports about 60K/tpy of various uncoated free sheet products into the US and has a near-term goal of moving to over 100,000/tons. Within Brazil, Suzano's estimated 2008 capacity is 1.64MM/mtons of market pulp and 1.1MM/mtons of paper.
More Sustainable Fast Facts
-56% of paper consumed in USA was recovered and recycled in 2007.
- The 54.3 million tons of paper recovered in 2007 would add up to 360 pounds for every USA citizen.
-The paper industry has a goal of recovering over 60% of paper by 2012
- The 54.3 million tons of paper recovered in 2007 would add up to 360 pounds for every USA citizen.
-The paper industry has a goal of recovering over 60% of paper by 2012
Smart Papers Constructing Biomass Co-Gen Plant
Smart Papers recently announced they would start a new $30million co-generation plant, which will use 100% biomass fuel. This will assist the mill in producing more environmentally friendly papers by reducing greenhouse gas emissions.
International Paper purchases Weyerhaeuser’s Packaging division
International Paper purchased the packaging division of Weyerhaeuser, which included 9 container plants (6.3Million tons); 72 packaging plants (99.4billion sq. ft); 10 specialty packaging plants, 4 bag Kraft plants, and 19 recycling plants. This affected 14,300 employees.
Paper, Packaging Companies Struggle To Make Profit
By Mike Obel,
Manufacturing.Net - July 25, 2008
NEW YORK (AP) -- Profits at paper, packaging and building supply companies are getting squeezed by raw material costs and falling demand for their goods as the U.S. economy and housing market languish.
Even as these companies cut costs by shuttering mills and raise customer prices, it's not fast enough to offset inflation. And if they raise what they charge too quickly, they could see a greater falloff in demand.
With the exception of newsprint and the price of land with timber on it, product prices are struggling to keep up, says RBC Capital Markets analyst Paul Quinn.
"While forest product prices are increasing, these gains are largely the result of capacity curtailments and closures rather than rising demand," he wrote in a July 22 client note.
Meanwhile, companies are still paying for the surging cost of materials like fiber, energy, chemicals and transportation. Take natural gas, both a fuel and a component for plastic packaging makers: In the last 52 weeks its price has shot up about 54 percent, even after the effect of a dramatic sell-off over the past three weeks.
Earnings also are staggering under the worst U.S. housing construction in decades and -- for companies with significant assets north of the U.S. -- a sharp rise in the value of the Canadian dollar against the greenback. Those conditions are freezing up demand for lumber and other goods used in buildings.
"We expect the industry to report aggregate net income of just $37 million for the second quarter of 2008, down 93 percent from the second quarter 2007, despite higher product prices," wrote Citi Investment Research analyst Chip Dillon in a July 21 note.
Among building products, paper and packaging companies that will release second-quarter earnings are Louisiana-Pacific Corp., reporting July 29, and Memphis-based International Paper, reporting July 31.
Analysts polled by Thomson Financial expect, on average, that Louisiana-Pacific will report a wider loss of 38 cents per share, while International Paper will report a smaller profit of 39 cents. Analysts' estimates typically exclude one-time items.
Share prices have declined with the sector's weakened results. In the last 52 weeks, the S&P 500 Paper and Forest Products index has tumbled 34 percent.
"The sector is a long way from a sustained recovery ... significant cost inflation remains the industry's main concern," says Quinn. "On the top line, we see little sustained momentum in commodity pricing, with the exception of newsprint and groundwood paper, offering limited ability to offset higher fibre, chemical, energy and transportation costs," Quinn wrote.
Quinn also said the average estimate of 11 cents per share loss is down from the 10 cents per share average profit seen in the second quarter of 2007, but narrower than the 17 cents per share loss seen in the first quarter of 2008.
Although there is evidence of sequential price increases and sequential improvements in earnings, new threats are looming.
Deutsche Bank-North America analyst Mark Wilde said in a July 21 client note that "reliable trade sources" report Brazilian pulp and white paper producer Suzano Papel e Celulose is considering building a plant on or near the Texas Gulf Coast.
He said as the industry scrambles to close mills and plants in the face of declining demand, "the specter of new capacity coming into the market is troubling
Manufacturing.Net - July 25, 2008
NEW YORK (AP) -- Profits at paper, packaging and building supply companies are getting squeezed by raw material costs and falling demand for their goods as the U.S. economy and housing market languish.
Even as these companies cut costs by shuttering mills and raise customer prices, it's not fast enough to offset inflation. And if they raise what they charge too quickly, they could see a greater falloff in demand.
With the exception of newsprint and the price of land with timber on it, product prices are struggling to keep up, says RBC Capital Markets analyst Paul Quinn.
"While forest product prices are increasing, these gains are largely the result of capacity curtailments and closures rather than rising demand," he wrote in a July 22 client note.
Meanwhile, companies are still paying for the surging cost of materials like fiber, energy, chemicals and transportation. Take natural gas, both a fuel and a component for plastic packaging makers: In the last 52 weeks its price has shot up about 54 percent, even after the effect of a dramatic sell-off over the past three weeks.
Earnings also are staggering under the worst U.S. housing construction in decades and -- for companies with significant assets north of the U.S. -- a sharp rise in the value of the Canadian dollar against the greenback. Those conditions are freezing up demand for lumber and other goods used in buildings.
"We expect the industry to report aggregate net income of just $37 million for the second quarter of 2008, down 93 percent from the second quarter 2007, despite higher product prices," wrote Citi Investment Research analyst Chip Dillon in a July 21 note.
Among building products, paper and packaging companies that will release second-quarter earnings are Louisiana-Pacific Corp., reporting July 29, and Memphis-based International Paper, reporting July 31.
Analysts polled by Thomson Financial expect, on average, that Louisiana-Pacific will report a wider loss of 38 cents per share, while International Paper will report a smaller profit of 39 cents. Analysts' estimates typically exclude one-time items.
Share prices have declined with the sector's weakened results. In the last 52 weeks, the S&P 500 Paper and Forest Products index has tumbled 34 percent.
"The sector is a long way from a sustained recovery ... significant cost inflation remains the industry's main concern," says Quinn. "On the top line, we see little sustained momentum in commodity pricing, with the exception of newsprint and groundwood paper, offering limited ability to offset higher fibre, chemical, energy and transportation costs," Quinn wrote.
Quinn also said the average estimate of 11 cents per share loss is down from the 10 cents per share average profit seen in the second quarter of 2007, but narrower than the 17 cents per share loss seen in the first quarter of 2008.
Although there is evidence of sequential price increases and sequential improvements in earnings, new threats are looming.
Deutsche Bank-North America analyst Mark Wilde said in a July 21 client note that "reliable trade sources" report Brazilian pulp and white paper producer Suzano Papel e Celulose is considering building a plant on or near the Texas Gulf Coast.
He said as the industry scrambles to close mills and plants in the face of declining demand, "the specter of new capacity coming into the market is troubling
Tuesday, July 15, 2008
Mohawk Paper wins HP Award
Mohawk Fine Papers was named a Hewlett Packard Indigo Preferred Partner. Mohawk’s Digital products all have the proprietary i-tone finish for superior reproduction.
Digitally printed page counts are exploding 40+% and the quality of papers improves every year. Websites such as Paper.com have focused on marketing all the popular digital papers including Mohawk Fine Paper.
Digitally printed page counts are exploding 40+% and the quality of papers improves every year. Websites such as Paper.com have focused on marketing all the popular digital papers including Mohawk Fine Paper.
Uncoated Free Sheet
Although the uncoated woodfree shipments are down over the past few months, the $60/ton mid-June price hike on cut-size business paper as well as a late June offset increase seems to have been implemented with 100% success.
A number of major producers and importers have hinted about the prospect of yet another hike attempt – look for Fall announcement.
A number of major producers and importers have hinted about the prospect of yet another hike attempt – look for Fall announcement.
Digital Producer Expands Line
Wausau Paper now offers its new line of improved Exact Digital papers. The new line, marketed by Paper.com, includes a wide range of finishes, sizes, and basis weights. All 44 Digital items are FSC certified
Baltimore becomes Largest Paper Port
When the paper mill M-Real of Finland opened its new warehouse in Baltimore, and increased its shipments into USA, the seaport effectively became the largest port for paper imports. US Forest product imports have grown from 185,000tons a year six years ago to 1.4million tons a year today. M-Real reports it now ships between 1000 – 1400 truck loads of paper every year from Baltimore.
Market Pulp
DB Research Paper
Pulp appears to have reached a near-term top and prices are under modest pressure in some regional markets. The trade papers have yet to reflect this easing. The July price hike initiative on NBSK achieved only partial success, with the list price increasing by $10/mton to $890/mton. Other grades showing higher prices: SBSK (+$10 to $850), SBHK (+$15 to $820), and fluff (+$15 to $915). Trade reports suggest that the softwood market in Europe remains still over-supplied. In the European market, NBSK slipped by $5/mton to $895/mton. CTMP and hardwood prices have reportedly slipped in Asia.
How much could prices ease? With the US$ and costs rising, we think it won't take much of a price decline to trigger more capacity closures in CN & Europe.
Pulp appears to have reached a near-term top and prices are under modest pressure in some regional markets. The trade papers have yet to reflect this easing. The July price hike initiative on NBSK achieved only partial success, with the list price increasing by $10/mton to $890/mton. Other grades showing higher prices: SBSK (+$10 to $850), SBHK (+$15 to $820), and fluff (+$15 to $915). Trade reports suggest that the softwood market in Europe remains still over-supplied. In the European market, NBSK slipped by $5/mton to $895/mton. CTMP and hardwood prices have reportedly slipped in Asia.
How much could prices ease? With the US$ and costs rising, we think it won't take much of a price decline to trigger more capacity closures in CN & Europe.
Brookfield Investments changes Fraser Paper Name
Fraser Paper Inc.’s owner, Brookfield Investments Corp, recently announced it will change the name of the company from Fraser to Brascade Corporation.
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