HOLDING PATTERN
As of late June, paper markets were in a bit of a holding pattern. Offshore demand was fairly strong for some bulk grades, and domestic mills were steady buyers at the current prices. However, generation was still down, so this was not a full-blown recovery.
Early summer is typically when some mills start to see a pickup in orders as customers prepare for Christmas shipments. With the economy only starting to show signs of a modest uptick (or maybe just bottoming out), the pickup in orders will likely be meek. Opinion appears to be growing that paper markets will continue to improve, albeit modestly, through the rest of this year, culminating with a Christmas season that is better than last year’s, though still fairly modest.
On the export side, many of the problems that cropped up late last year, notably the sudden cancellation of orders, have abated, though there are still some lingering concerns over credit markets.
More recently there are indications that China, after buying aggressively during the first half of this year, is starting to ease back on its purchases. However, it appears that many North American board mills are jumping into the fray with more aggressive buys. According to some sources, domestic board mills are increasing production in an attempt to maximize their profits through the use of the black liquor tax credit.
Deinking grades are displaying a modest strengthening. Tissue mills have been more active in purchasing this grade. Domestically, the tissue industry, which is a large consumer of office grades, has been one of the few sectors of the paper industry that has not sustained the huge drop that has been seen in other paper grades. Even with the recent decline in the economy, a speaker at the Paper Recycling Conference, hosted by the Recycling Today Media Group in early June, noted that tissue production was down less than 2 percent during the first part of this year. This compares favorably to the sharp drop in printing and writing paper, another sector that uses office pack as well as pulp substitutes.
(Additional news on paper recycling markets, including pricing information, is available from SDB’s sister publication Recycling Today at www.RecyclingToday.com.)