On the domestic front there continues to be good movement with very little backlog of material at packer locations. With an impending price increase for finished newsprint it looks as if the North American newsprint industry has been able to eliminate excess supply from the market.
Despite a recent cooling off in new housing starts, the building products industry continues to move at a strong clip. This continues to be another avenue for various grades of old news.
For corrugated there doesn't appear to be too much optimism about short-term markets. There continues to be reports of sizable shutdowns of many paperboard mills as they look to adjust inventories. There have been some reports of mills scheduling downtime throughout the rest of this year. In one case, a board mill is considering taking several weeks of downtime each month for the rest of the year.
As for other mills in different parts of the country there have been indications that some mills are looking to switch their fiber usage to take advantage of lower prices.
Double-lined kraft cuttings have come down in price, making it a more widely sought-after grade. With the competitive price for the grade some paperboard mills are opting to use a greater amount of this fiber. One broker notes that one Southeastern board mill is opting to use greater amounts of DLK as a way to reduce their energy costs significantly.
The sharp decline in OCC is creating some further strain between the paper stock industry and the paper industry. A number of dealers have expressed frustration with the mindset by some mill buyers to continually push prices downward to levels that make it difficult to operate. At the same time there are reports that some mills are rejecting loads as a way to further drive down prices.
On the other side, some mill buyers have expressed the opinion that in an up market some paper stock dealers take advantage of the price swing to shop tonnage, leaving customers short of supply. This animosity, some feel, is part of the reason for the sharp swings in price over the past several years. With a sense that OCC prices are nearing a bottom price, and offshore orders waiting in the wings, the second half of the fall could create more turmoil for the market.
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