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
- Duties (38% total) originally imposed on Oct. 2010 will remain in effect; applies to coated paper in sheet form
- http://investor.versoco.com/2017-12-07-WTO-Panel-Upholds-the-Imposition-of-Antidumping-and-Countervailing-Duties-on-Imports-of-Certain-Coated-Paper-from-Indonesia
SAPPI Invests in Paper Machine at Cloquet, MN mill
- $5.94MM investment to rebuild headbox on PM 12
- Dilution profiled headbox will improve product quality on graphic papers and packaging products
- https://www.sappi.com/sappi-north-america-invests-594-million-cloquet-minn-mill
Appleton Coated Restarts on Limited Basis
- Recently idled mill starts up one of three paper machines
- Production limited to brown medium and inkjet book only
- http://www.wbay.com/content/news/Appleton-Coated-restarting-machine-calling-back-50-workers-462374913.html
Norske Scog Enters into Structured Auction Process
- Largest creditor forces action as best path forward
- 7 paper mills will continue to operate as new ownership is sought
- https://www.reuters.com/article/norske-skogsind-ma-aker/update-2-end-of-road-looms-for-norske-skog-as-aker-seeks-to-buy-paper-mills-idUSL8N1NT1F3
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.