Uncoated Price Increase .... again

Most of the industry is bracing for yet another price increase in June for Uncoated Woodfree papers. Many believe the copy papers will increase $60/ton ($3.00/cwt) and the roll and folio sheets will increase $40.00/ton ($2.00/cwt). The market demand appears to maintain a strong backlog and producer’s inventories have declined. The Weyerhaeuser announcement has created some fear; however, continued consolidation in the industry is needed

Market Pulp

Following from Deutsche Bank Market Research on Pulp-
MARKET PULP
Domestic pulp producers have announced $30-40/tonne price hikes for
May and June on NBSK; if implemented, list prices would go to
$720/tonne, the highest level in 10 years. Hardwood producers, led
by Lat. Am eucalyptus producers, are separately pursuing $20/tonne
hikes this month. BSK and BHK days/supply inventory both fell one
day in March to 28 and 35 days respectively. World shipments were
up 3.6% y/y in March, led by a surge in shipments outside of North
America, particularly on hardwood grades. GP has reportedly run-
down its NBHK inventories at Old Town, Maine, and Fraser Papers is
scheduled to close its NBHK mill May 6th. Tembec is the latest NBSK
producer to announce a mill closure; its 200K tpy Smooth Rock Falls
mill will close at the end of July.

Coated Board continues to Shrink

MeadWestvaco was the latest to announce removing production of 310,000 tpy of SBS capacity. Between Tembec, MeadWestvaco, and Domtar, almost 500,000 tons of capacity for this grade have been removed. Industry experts predict this grade will be in tight supply as a result and prices will increase.

Paper Industry continues to Plant Trees

The Paper Industry has planted more than three times the amount of trees it had harvested for the pulp and paper manufacture. Forests are growing - not disappearing. Today, there are more than 10 million more acres of forests is the USA than there were 15 years ago. Since 1965, the number of trees growing in USA has increased 39%.

Weyerhaeuser Reports alternatives to Fine Paper Business

The management team at Weyerhaeuser has announced it is considering alternatives to its fine paper business segment. The choices include a complete divesture of the uncoated paper assets. This is big news considering the dominant market position of this paper company.

Smart still operating as Chapter 11

Smart Paper continues to operate under the protection of chapter 11. The company closed the Wisconsin plant but continues to make paper in Hamilton, Ohio. Wachovia Capital Finance and CIT are assisting with the financing. Paper.com has all of Smart's paper products including cast coat / Kromekote, matte coated, and uncoated text and cover - in stock and ready for immediate delivery.

Pulp Prices contiue to Increase

The pulp producers have once again announced a price increase for market pulp. The recent announcement of $30/ton will advance the list price of NBSK to $690/ton. The markets are expected to stay tight with the announced closure of the pulp mills at Bowater and Weyerhaeuser and also the recent closure at Georgia Pacific and Fraser.

Internationa Paper shutters another machine

International Paper announced it will shut down a coated paper mill in Courtland, AL. The facility produced 922,000 tons per year of coated free sheet.

Paper Industry Experts Forecast US Paper Capacity Decline

Although many sectors within the paper industry appear to be doing very well in today’s climate, must agree that long-term trends will continue a downward capacity.
-Downward capacity trend begin in 2001 with many mills announcing manufacturing equipment curtailments
-2005 overall capacity reductions estimated at a negative 760,000tons - representing 45 machines permanently removed.
note, almost 7million tons was taken out of production at some point during year.
-2005 capacity 99.5million tons
-2005 US Newsprint (used in newspapers) declined by 865,000 tons - 13% - total of 5.76million tons
-2005 US printing and writing gained 0.7% to nearly 26million tons
-Capacity forecast to decline nearly 600,000tons over next 2 years
-2005 mechanical (groundwood) capacity grew 8% to 2.25million tons - most of increase came from conversion from newsprint machines
-2005 Coated Mechanical (magazine paper) capacity rose to over 5million tons or 2.3% increase.
Capacity will decline with the recent announcement of 2 machines shutting own.
-2005 uncoated free sheet declined to 13.5million tons. This sector is predicted to continue declining capacity.
-Tissue paper and Kraft paper continue to witness declining capacity

Annual Paper Meeting Held in New York City

The American Forest and paper Association (AF&PA) held their annual meeting April 9-13; following observations-
-First time in since 1995 that total paper and pulp production has dipped below 100million tons of capacity.
Basic concerns of industry continue to be
-Global competition; limited capacity spending on equipment (aging technology); high energy and labor (benefit) costs; capacity rationalization; and demands for short-term results for shareholders.
-Coated and uncoated free sheet markets continue to be strong ..... for now.
-Many older mills have 'shut down' equipment and thus capacity has been reduced
-Many of the off shore producers have curtailed shipments to USA
-Demand appears good - although the long-term trend is declining 2% per year.
-The Premium Text and Cover markets continue to suffer
-Market demand has continued to decline 10% per year
-No forecast for demand to shift to neutral nor increase
-High manufacturing costs continue to plague this sector
-Newsprint suppliers are doing well
-Demand has NOT increased, however, large trend to converting equipment over to high bright or coated; accordingly,
Newsprint capacity is decreased
-Board capacity continues to decline
-Linerboard will continue to decline, as well as recycled linerboard with several closures
-Containerboard capacity is stable due to capacity outages AND efficiencies on operating machines
-Corrugating Medium capacity will continue decline (forecast is down 2% 2006)

Paper Industry remains Strong

Pulp & paper prices have rebounded very strongly in past several months. The biggest surprises have been in market pulp and uncoated white paper. Supply issues have driven market pulp prices up. The result has been stronger-than-expected
prices. Uncoated free sheet paper has been the real winner this year. After a miserable 2005, uncoated white paper
volumes have strengthened. Add in nearly 1.5MM tons of North American capacity reductions and the market has tightened sharply.

Coated Free Papers will Increase in Price

The major producers of coated free sheets have announced a price increase for the #3 level grades. The price will increase by $50.00 per ton ($2.50/cwt). The manufactures of these papers have enjoyed strong operating rates and industry experts believe this increase will go through.
Paper.com has several coated grades and dozens of items in stock and available for immediate shipment.

Choosing the Right Paper for Digital Printers

Paper manufacturers have allocated a lot of recent R&D to developing the very best papers for digital printers because of the growing demand. The right paper is critical for optimum performance. Growth in digital printing since 2003 is over 20% compounded annually. Almost every mill now offers several grades specifically designed with digital and laser printing in mind.
Xerox has always insisted that choosing the right paper for a digital job is not only directly related to the quality of the printed piece, but also to the productivity of the overall printing system.
Paper.com has hundreds of digital papers available from uncoated to cast coated, from lightweight to card stock, and from smooth to texture. The products are available for immediate shipment from a ream package to multitruck loads.

Smart Paper closes Wisconsin Mill

SMART Papers announced that it is permanently closing its Park Falls, Wisconsin, pulp and papermaking facilities, citing the high costs of energy, wood fiber, transportation and logistics together with market pricing for its commercial "opaque" printing papers. This mill was included when they purchased the printing and writing mills of Fraser.
Paper.com has all the Smart Paper products, in stock and ready for immediate shipment.

Meriturn and Dunn Purchase Valentine Mill

Meriturn Partners and Dunn Paper acquired the assets of the Valentine Paper Company in Louisiana. Valentine specializes in Machine Finished (MF) Papers and latex saturated papers. The two machines produce wallpaper base, diazo, masking and thermal base sheets. The acquisition compliments Dunn’s current manufacturing base of Machine Glazed (MG) papers such as flexible packaging, wet strength, grease resistant, and metalize base. Together Valentine and Dunn will produce over 140,000 of paper

White Birch to buy Masson Paper

White Birch Paper Company agreed to buy the 235,000tpy Masson Paper producer of newsprint in Canada. The acquisition will make White Birch the third largest newsprint producer in North America with 1.135 million tons of capacity. Other White Birch mills include Stadacona Mill, Soucy Mill, and Bear Island Mill.

North American Paper Market

The deepest restructuring in 25 years has been occurring in the North American Paper market. In 2005 an estimated 9% of capacity was permanently shut down. Paper companies announced permanent closure of 6.7million tons of pulp and paper out of a capacity of nearly 90million. Primary reasons cited included high energy and chemical cost as well as increase shipping fees.

Paperloop now called RISI

Paperloop has officially changed its name to RISI. The rebranding is part of their effort to become an information data base. RISI stands for Resource Information Systems, Inc. and will serve as a source for independent economic analysis.

Quebecor World sells last asset

Quebecor World - once one of the largest North American printers - has completed the sale of its non core assets. Quebecor World has divested of all non publication printing plants.

Ennis Acquires TBF Operation

Ennis announced its plans to acquire the assets of Tennessee Business Forms based in Tullahoma, TN. This purchase allows Ennis to enter the short run print business and market labels.