FIBER CONSUMPTION
GALLOPS ONWARD
Paper stock markets are moving into March with prices up sharply from earlier in the year. Prices for most paper stock grades are up anywhere from $20-$40 a ton higher than the first month of the year. Several factors are causing the improvement. On the upper end of the paper spectrum, continued hikes in prices for pulp are strengthening pulp substitute and de-inking grades. The announcement that Fletcher Challenge and Weyerhaeuser plan to hike the price of one grade of pulp indicates further strengthening in pulp prices, which, in turn, will likely boost the price of many higher grades of recovered fiber. According to a report by Reuters, Fletcher Challenge Paper, Auckland, N.Z., expects to raise its average pulp price by $50 per metric ton during the coming quarter. The rise to $680 per metric ton, which a company official says would be for the benchmark NBSK grade and apply from April 1, extends a series of price increases achieved over the past year. Stronger pulp prices are not the only factor for better pricing of many of the de-inked grades. Tissue mills and other large consumers of sorted white ledger and coated book are running much better schedules. This has helped boost prices for the grade. SWL prices are around the $300 a ton level in many locations, while coated book stock and office pack grades are moving to more than $200 a ton at the mill. Lower grades also are seeing sharp appreciation in price and demand. West Coast activity remains strong, with several sources reporting significant orders for old corrugated moving into China. The demand remains strong, with signals that this strength could carry into the summer. While demand continues to be favorable, there are indications that supply has been stretched to a level that makes it more difficult to maintain enough adequate supply. Some vendors speculate that some waste management firms are scaling back their recyclables collection and instead concentrating on the collection of solid waste. Any pullback in the collection of bulk grades is coming while demand is increasing. The result has been that some domestic mills are paying premiums to ensure that a steady flow of material comes through their door. Old news, one of the laggards in the market, also is seeing some modest improvements. Prices have stabilized, with several areas reporting better pricing. Part of the reason has been the steady buying offshore, as well as significant purchases by Mexican mills.FibreMarketNews.com is an electronic publication covering the paper stock markets and paper recycling industry.)
ABITIBI TO BUY DONOHUE
Abitibi-Consolidated Inc., Montreal, has agreed to buy Donohue Inc., Montreal, for $4.9 billion. The company created would produce about a third of North America’s newsprint. A news release states that the companies are combining to control production as the strength of the U.S. dollar erodes profitability. While most paper grades, such as magazine paper, have seen prices rise as economies expand worldwide, newsprint prices have slipped to five-year lows because of overcapacity in the U.S. The new company will be the fifth-largest lumber producer in North America, with 19 sawmills and stakes in five others with a combined capacity of 2.2 billion board feet. It will have 25 paper mills in Canada, the U.S. and the U.K. as well as a one-third interest in four mills in South Korea, Thailand and China, providing the company with a newsprint production capacity of 6.3 million tons. Groundwood capacity will be 1.7 million tons and the company will have 444,000 tons of what it calls high-quality, low-cost market pulpPELTZ GROUP MAKES A BUY
The Peltz Group, Milwaukee, has acquired Security Shredding Inc., a Milwaukee-based document destruction company. The new business will keep the Security Shredding name and will be a division of The Peltz Group. According to Peltz, the acquisition of Security Shredding allows the company to offer its customers "on-site documents destruction services with the use of a mobile shredder." The Peltz Group handles more than 145,000 tons of recovered fiber a month. It owns and operates processing facilities in Cleveland and in Milwaukee, Janesville, Madison, Menasha, and Superior, Wis. Additionally, the company has sales offices in Milwaukee, Atlanta, Chicago, Los Angeles, Minneapolis and Toronto.PAPER DIRECTORY GOES ONLINE
The annual Paper Recycling Markets Directory is now available on line in a fully searchable format. Registered users of theFibreMarketNews.com site can use the directory to conduct searches repeatedly.
With the revamped paper directory format, users can access the directory in a number of different ways. Searching by a company name allows viewers to get to the information they are looking for without having to start at the beginning and working their way through the full list. A second way to search the directory is through a geographical approach, which can be effective for web visitors looking to target companies in a certain region. Those looking for companies in a particular state can do that with one of the search buttons. Finally, the directory can be searched by the commodity handled. This search is ideal for website visitors looking to find suppliers of a particular commodity. This commodity search section is grouped in a number of categories, including low grades, office grades, and high grades. Finally, the on-line version of the directory has been designed to be as up-to-date as possible. GIE Media Inc., Cleveland, publishers of the Paper Recycling Markets Directory, will be updating the on-line directory every week. To view the directory log onto www.FibreMarketNews.com.SLOW GROWTH SEEN FOR PAPER CAPACITY
The American Forest & Paper Association (AF&PA), Washington, foresees 0.7% average annual growth in U.S. capacity to produce paper and paperboard. Despite the discouraging news regarding paper production capacity, recovered paper is expected to bolster its position as a feedstock. "Mills are expected to increase their use of recovered paper at an average annual rate of 1.8% in the 2000 to 2002 period," the AF&PA report notes. "As a result, recovered paper’s share of total fiber consumption is expected to grow from 36.1% in 1998 to 37.1% in 2002. By grade, mixed paper is forecast to have the strongest growth, with an average annual growth rate of 4.1% during the 2000 to 2002 timeframe. Old newspapers will expand at a 2.8% annual pace and will account for about 25% of total secondary fiber consumption. The association cites several factors for what it calls "ultra slow" growth in paper making capacity, including "a highly competitive trade environment for some grades, competing demands for the industry’s capital, and mill and machine shutdowns."The sharp slowdown in growth was first observed in the 1998 AF&PA Capacity Survey, when capacity increased just 0.6%. The trend worsened for 1999, as capacity actually declined 0.5%.
Shutdowns had a dramatic impact in the 1999 survey, which determined that 2.5 million tons of paper and paperboard capacity were removed from the capacity base in 1999, compared to just 577,000 tons in 1998.