Paper Department

Wait and See

Not up, not down. Steady demand, but a decline in generation. Steady prices, reduced inventory levels, more downtime, acquisitions scheduled, high-profile bankruptcies filed. As the year draws to a close, there are many factors that are causing some murkiness to be cast upon the paper stock industry.

Prices are holding at their present level, although there doesn’t appear to be much strength in the market. After falling sharply during most of this year, there has been some firming up of prices, although most are still far off from levels reached last year.

The sorted white ledger and office pack markets showed a modest rally this fall, although much of that was attributed to a constrained supply of new material on the market. The modest improvement in these grades can be more attributed to the lack of new supply, rather than any strong buying by mills, either in North America or overseas.

The short-term market for other grades looks murky at best. The much publicized problems with Enron could pose significant problems for a host of grades. There are claims that Enron has perhaps 100,000 tons of pulp that it may sell at low prices. This could have a significant effect for many of the high-end pulp substitute grades. If the company ends up selling off a large block of this tonnage to raise cash, the slowly recovering pulp and pulp substitute market could be knocked back down.