Financial Problems Plaguing Paper Companies

The much publicized financial problems for American Tissue is forcing the mill to idle a number of its facilities. A number of sources say that the mill has been unable to work out its financing that is causing some suppliers to question the fiscal strength of the company. According to various reports the company already has defaulted on loans, making any further loans to the company difficult.

While the mill has closed a number of locations to balance inventory levels, a number of paper stock dealers express concern that if the mill defaults and ends up closing more of its operations the domino affect could be significant.

One problem is that the mill is a fairly large consumer of recovered fiber. The move by another large consumer to drop out of the market would put significant pressure on grades, from pulp substitutes to many of the deinking grades.

While many of these grades have enjoyed a modest run as of late, any problem with the American Tissue operations could put a negative on the market.

On the other side, there are reports that the mill also owes a significant amount of money to a number of paper stock dealers in the East Coast. With the company’s financial health shaky, the inability of the company to pay its vendors could put an even greater financial pressure on some of the paper stock dealers who have been shipping the mill.

Another problem that has cropped up is the shutdown of the Blue Water mill in Port Huron, Mich. The deinking mill had been struggling with sluggish orders for quite a while. The mill reportedly closed down very recently. While there is no official word on whether the mill will be down for an extended period of time or down for good, several sources note that with the still uncertain market for its finished product, it is less likely to come back on line and would probably be mothballed.

The failure of the Blue Water mill follows the crash of a host of deinking operations over the past several years.

Despite these problems, prices and demand for the available high grade material has been firming up. The concern many people have is that the improvement is happening without any true pickup in demand. Generation of new material has fallen sharply. The result has been less supply available.