According to recent figures from the American Forest & Paper Association, domestic paper and paperboard capacity declined by 0.6 percent last year.
Figures, from the AFPA’s Annual Survey of Paper, Paperboard, and Pulp Capacity, show that paper and paperboard capacity previously declined 1.6 percent in 2006 and at an average annual rate of 0.7 percent for the period from 2000 through 2007.
The capacity declines of recent years reflect weak demand for some paper and paperboard grades. However, domestic exports of paper and paperboard have increased briskly during the past year or so, while imports have eased, helping to support domestic production.
The Survey shows paper and paperboard capacity declining 0.7 percent this year and subsequently rebounding 0.2 percent in 2009 and 0.3 percent in 2010. For the entire three-year period, capacity is projected to contract at an average annual rate of 0.1 percent.
U.S. newsprint capacity, which reached a record 7.46 million tons in 2000, has recorded steady declines since then, falling a cumulative 28.7 percent to 5.32 million tons in 2007. This marked the lowest point for U.S. newsprint capacity since 1980.
Recent annual declines measured 13.1 percent in 2005, 4.0 percent in 2006, and 3.7 percent in 2007.
Two newsprint mills – one of which had been closed for some time – were removed from the Survey base in 2007, which contributed to that year’s reduction in newsprint capacity as well as to the projected 7.4 percent decline scheduled to take place in 2008. The residual impact on 2008 capacity reflects the fact that the mills were taken out of the Survey base for only part of 2007. The Survey shows subsequent newsprint capacity declines moderating to 1.0 percent in 2009 and 0.2 percent in 2010.
These declines reflect projected capacity shifts to other grades, primarily uncoated mechanical paper.
Total capacity to produce the four major printing-writing paper grades contracted 1.2 percent in 2007 to 25.30 million tons.
Printing-writing paper capacity declined 1.2 percent in 2006 and at an average annual rate of 1.0 percent for the period from 2000 through 2007. The longer-term declines have been concentrated in the uncoated free sheet and coated mechanical papers grades. Survey responses indicate that printing-writing paper capacity will decline by 3.7 percent in 2008, 1.4 percent in 2009, and will level off in 2010.
After rising by 8.2 percent in 2005 and 0.8 percent in 2006, uncoated mechanical paper inched up 0.4 percent in 2007 to 2.27 million tons. The 2007 increase partly reflects the carryover impact from the shifting of some newsprint capacity to uncoated mechanical in second quarter of 2006. Uncoated mechanical capacity is slated to decline 9.4 percent in 2008, reflecting among other things the permanent closure of a machine - which had been indefinitely idle since late 2003 - in the fourth quarter of 2007. It is then expected to increase 3.5 percent and 0.5 percent respectively in 2009 and 2010, primarily due to capacity shifts from newsprint.
Coated mechanical paper capacity expanded 2.3 percent in 2007 to 4.78 million tons, reflecting swings from coated free sheet. Three machines producing coated mechanical paper have been removed from the Survey base during 2008 – one in the first quarter and two others in the third quarter.
However capacity swings from coated free sheet and other paper grades more than compensate for the removed capacity; hence, capacity is slated to increase 1.3 percent in 2008. Capacity is projected to decline 3.2 percent in 2009, due to residual effect of the 2008 closures. Capacity to produce this grade is projected to edge up 0.2 percent in 2010.
Following increases of 2.3 percent in 2005 and 3.4 percent in 2006, coated free sheet capacity edged down 0.2 percent in 2007, to 5.30 million tons. In 2007, capacity reductions due to a shut paper machine and swings to coated mechanical paper were mostly compensated by additions from the restart of a previously shut mill and swings from other paper grades.
The survey projects coated free sheet capacity to decline another 0.3 percent in 2008 and 2.1 percent in 2009, reflecting the full effect of the restarted paper machine, shutdown of a paper machine in second quarter of 2008, and capacity swings to coated mechanical and specialty grades. Coated free sheet capacity is expected to hold steady in 2010, rising just 0.1 percent.
Uncoated free sheet capacity continued to contract in 2007, declining 3.1 percent to 12.95 million tons. Capacity to produce this grade previously declined at an average annual rate of 2.0 percent from 2000 through 2007. The 2007 decline reflects the removal of several machines from the survey base and the shifting of uncoated free sheet capacity to other grades at one location during the second half of 2007. Additional capacity is slated to be shifted out of uncoated free sheet to other products during 2008 and five machines are slated to be closed in the first half of the year. The survey indicates that uncoated free sheet capacity will decline 6.0 percent in 2008, 1.2 percent in 2009, and then edge down just 0.2 percent in 2010.
Unbleached Kraft paper capacity rose 2.3 percent in 2007 to 1.60 million tons following a 5.3 percent decline in 2006. The increase is mainly due to the reclassification of capacity from specialty papers to unbleached kraft paper. U.S. capacity to produce this grade of paper is projected to rise a fractional 0.1 percent in 2008 and 0.6 percent in 2009. No change is projected for 2010.
Bleached packaging and industrial converting paper capacity rose 4.4 percent in 2007, but is slated to contract 22.1 percent this year and 3.6 percent in 2009. No change is indicated for 2010. Two paper machines producing both bleached and unbleached Kraft paper were permanently closed – one in December 2007 and another in January 2008. Bleached kraft paper is mostly made on machines that also produce other paper and paperboard grades; hence its capacity is subject to swings based on mix of grades for any given year.
After edging down 0.4 percent in 2006, tissue paper capacity declined an additional 1.5 percent in 2007 to 8.11 million tons. These declines partly reflected the removal of ten tissue machines from the Survey base during various points in 2006 and the removal of six additional machines during 2007. At the same time, six new tissue paper machines commenced operations during 2007 but the full impact of these machines will not be reflected in capacity until 2008.
Tissue paper capacity is slated to rise 2.4 percent in 2008, reflecting the residual impact of the six new machines that started up in 2007 and the partial-year impact of one new machine scheduled to begin operating in 2008. The Survey shows tissue paper capacity rising 1.7 percent in 2009, when three new machines are scheduled to begin operating, and 1.8 percent in 2010, when two new machines are expected to come on-line.
Tissue paper capacity is projected to rise at an average annual rate of 2.0 percent a year for the projection period (2008-10). That compares with 1.6 percent average annual growth from 2000 through 2007, and 2.1 percent average annual growth during the 1990s.
(Part two of the report, this one on paperboard production) will appear on April 1, 2008.)