Some Paper Mills are Sold Out
RISI reports that the CFS and CM markets on a supply and demand basis are tight, mills are running at full, and customers are not receiving all the paper they need. Lead times are reaching 3.5 to 4 months for some grades. North American CFS mills operated at 106% of their capacity in September, and held 10% less inventory than in August and significantly. lower inventories, down by 66%, than a year ago. The CM mill operating rate in September was also high, at 100%, while inventories declined 58% year-over-year. While demand for CFS through September increased 4.4% when compared with demand in September 2020, CM demand fell 5.9%. Printing and writing (paper demand) is dropping in terms of capacity and consumption. As prices move higher, the drop in demand will accelerate. For now, shortages are a main part of the market and driving prices higher.
Surcharges Continue to be Implemented
Sappi Europe declared energy surcharges of up to $120/tonne ($108.86/ton) across all products manufactured by Sappi Europe from Oct. 25 and sold into the North American market due to "unprecedented increases in energy prices.” Sappi said the surcharges will help avoid production stops and ensure that the various supply chains will continue to function. The company said the surcharge "will apply until further notice and is in addition to any current and future price increases.” Several other mills are
also implementing surcharges, including Heinzel, Navigator, Feldmuehle, Norske Skog, Leipa and Burgo, among others. And some manufacturers are instituting surcharges to cover higher freight and/or general input costs due to the drastic price inflation that has impacted everything from pulp to chemicals to labor over the past year.
More Coated Paper Price Increases Announced
On Oct. 15, Sappi North America announced a transactional and list price increase of up to 8% for CFS web rolls, sheets and sheeter rolls, "on new and unconfirmed orders that book with confirmed delivery dates on or after Nov. 15.” Sappi’s price increase is more likely to occur in January of 2022, as new orders are not likely to have confirmed delivery dates this year due to backlogs and machine allocation. Verso on Oct. 20 announced that it will increase prices of all its coated web rolls, sheets and sheeter rolls, as well as CM web rolls and specialty grades by 8%, effective with all new and existing orders with confirmed delivery dates of Nov. 20 or later.
Demand and Operating Rate Forecasts (RISI)
U.S. Economy and Paper End-Use Indicators
N.A. Coated Paper Operating Rates
N.A. P&W Paper Producer Inventories