Paper

A Bear Market

As the paper stock market becoming more and more like the stock market? The way both are behaving, it would seem they are moving in sync. Unfortunately for many handlers of secondary fiber, like the NASDAQ, the direction appears to be, for the most part, down.

The old corrugated container (OCC) sector continues to feel the pain of slack offshore orders, continued downtime by U.S. board mills, and a slowing economy. Prices have reflected this downward trend, with prices dipping to about $10 per ton in early December.

Despite some price concerns, there seems to be a growing sentiment that (after a little more shakeout in the price) by early 2001 prices should start to see some stability and begin climbing.

Factors cited for these expectations include the belief that downtime, playing a key role in the OCC slide, should be cleared up by the end of this year. The offshore market also is likely to dip its toe back into the U.S. market for OCC by early next year. Also, with a winter season being forecast to be colder than normal, there could be some spot shortages and sharp reductions in supply cropping up early next year.

The old newspaper (ONP) market appears to be finally slowing its ascent. The grade had been moving at a very strong clip through the second half of this year. While many other bulk grades were slipping, strong orders from newsprint mills in North America, as well as steady orders from Korea and China, among other regions, helped keep prices fairly strong.

December is expected to knock back prices for ONP, especially de-inked news, down between $10-$15 a ton, although the grade appears to be in good balance. Several large newsprint producers are scheduled to push a $50 per metric ton price increase by March. At the same time, newsprint production is one of the few strong areas in the forest products industry.

The pulp substitutes market has seen some of the sharpest percentage declines at the end of the year. Grades such as hard white shavings and solid bleach sulfate grades had posted strong numbers through the first three quarters of the year. Strong demand by end buyers and higher prices allowed many handlers of the grade to push through price increases throughout the year.

After running at close to a full clip through most of this year, many pulp producers are finding softer prices for the finished product. Similar to what newsprint producers did early in 2000, many pulp producers are taking machines off line to eliminate excess capacity. In the meantime, prices for pulp and pulp substitutes have dropped sharply. Some vendors report being unable to move some hard white grades at any price. This situation has only become more difficult as 2000 comes to an end.

Stora Enso Retires Two Machines

Finnish paper maker Stora Enso is permanently retiring two paper machines within its North America Division. One paper machine at the Division’s Wisconsin Rapids Paper Mill in Wisconsin Rapids, Wis., and another at its Whiting Paper Mill in Whiting, Wis., will be permanently closed. Neither of the company’s two machines is currently producing paper. The machine at Wisconsin Rapids has the capacity to produce 57,000 metric tons of coated groundwood-free fine papers a year. It has been closed since last June.

Conversion Complete in Indiana

The conversion of the Inland Paperboard mill in Newport, Ind., from a corrugated medium machine to one that is capable of producing gypsum paper for wallboard, as well as linerboard and corrugated medium, has been completed.

The mill, called Premier Boxboard LLC, is a 50/50 joint venture between Caraustar Industries, Austell, Ga., and Inland Paperboard and Packaging, Diboll, Texas. Caraustar will be the managing partner of the mill.

The conversion, costing around $75 million, took roughly a year to complete. The conversion is a strategy that allows Temple Inland to reduce its dependence strictly on corrugated medium, and give the one machine mill the opportunity to extend the number of products that are capable of being made at the machine.

The mill is able to produce around 285,000 tons of finished product a year, with old corrugated containers remaining the key raw material being used by the machine. However, a spokesman for Caraustar says that with the conversion the mill will be able to use a number of other grades of recovered fiber.

Most of the finished product will be sold in the Midwest, although the company will be able to ship throughout the country.

Weyerhaeuser Pursuing Willamette

Weyerhaeuser is pursuing Willamette Industries in a hostile takeover. Both companies are both involved in paperboard businesses, and have a significant timberland presence.

A preliminary offer by Weyerhaeuser was rejected by Willamette as not according the company what it perceived as a fair market value.

Willamette Industries is an integrated forest products company with 106 plants. The company owns 1.7 million acres of forestland. Willamette produces building materials, composite wood panels, fine paper, office paper products, corrugated packaging and grocery bags.