Industry News Paper Market

LSC Communications Monthly Paper Market Update December 2017

Industry News

World Trade Organization Upholds Existing Antidumping and Countervailing Duties Against Imports of Certain Coated Paper from Indonesia

 

SAPPI Invests in Paper Machine at Cloquet, MN mill

 

Appleton Coated Restarts on Limited Basis

 

Norske Scog Enters into Structured Auction Process

 

Forest Stewardship Council Publishes Revised Trademark Standard

  • Revised standard specifies requirements for use of FSC trademarks, for promotion of FSC certified products and for promotion of organization’s status as an FSC certificate holder
  • New standard effective 3/1/2018
  • https://us.fsc.org/en-us/newsroom/newsletter/id/1010

 

Uncoated Freesheet and Groundwood Focus

  • Capacity reductions on uncoated freesheet as a result of closure of West Linn and Appleton Coated plus announced paper machine closure by Georgia Pacific and conversion by PCA both in Q1 2018 will have removed approximately 8% of North American uncoated freesheet capacity.
  • Trade case against Canadian producers of newsprint and high bright groundwood grades could result in price increases and possibly even capacity reductions as a result of duties placed on paper coming to US.
  • Both circumstances combined could result in longer lead times and/or higher prices for both product segments (SC papers excluded). Grade substitution could be possible and add to lead times to one product segment or the other.
  • A new round of price increases in early stages in both segments have been announced since December 1 (Verso, Twin Rivers, Resolute).
  • Forecasting and early planning of print projects key to reduce impact.

 

Mill Operating Rates

(shipments to capacity – not seasonally adjusted)

 

Product Segment Commentary

 

Coated Freesheet

  • Lead times 6 – 10 weeks; Q4 operating rates in high 90’s due to seasonal demand and loss of West Linn, Appleton Coated
  • Near to mid-term forecast is for mills to operate at or close to full capacity which will make it hard to replenish inventory
  • SAPPI conversion project at Skowhegan mill will remove 30 days of production from 1 of 3 paper machines in Q1 2018
  • 2 nd $2.00/cwt price increase of 2017 announced for November 1 will be fully implemented by January 1.

 

Coated Groundwood

  • Lead times 4 – 8 weeks; Q4 operating rates in high 90’s to over 100 due to seasonal demand and July capacity loss
  • $1.00/cwt increase announced for October 1 will be fully implemented by January 1
  • UPM PM5 closure at end of Q1 2018 will keep remaining capacity busier in H1 2018 than historical averages

 

Uncoated Freesheet

  • Lead times 3 – 6 weeks; operating rates near 90%
  • Outlook for Q1 2018 is that capacity reductions could result in longer lead times and possible price increases
  • Decreased supply to West Coast coming in 2018 could require longer lead times and/or freight considerations

 

Uncoated Groundwood

  • High bright ground grades lead times 6 – 10 weeks; newsprint lead times 6 – 8 weeks; SC lead times 4 – 6 weeks
  • High brights impacted by earlier capacity reductions; NorPac trade case rulings expected 1/8/18 and 1/16/18, could result in significant duties against Canadian producers
  • Newsprint capacity closures resulting in high operating rates and higher prices for near to mid-term
  • Demand for SC grades falls off after holiday advertising season.