Slow Growth Forecast for U.S. Paper Production

The U.S. paper and paperboard capacity will increase at a 0.4 percent rate between next year and 2004, according to the 42nd Annual Capacity Survey of the American Forest and Paper Association.

The expansion is expected to reverse a 1.3 percent decline this year, the first decline ever recorded in aggregate domestic capacity.

Paper and paperboard capacity in 2000 reached 103.9 million tons, virtually unchanged from the level estimated by last year’s survey. However, the level of capacity this year has been revised downward by 2 million tons to 102.6 million tons – primarily due to the large amount of capacity that has been closed for at least one year or is in the process of being dismantled.

Newsprint – Newsprint capacity declined by 5.6 percent this year from 2000 figures. Most of the decline is attributed to the conversion of newsprint capacity to groundwood capacity, although machine shutdowns were also a factor. Industry capacity is expected to decline another 4.5 percent to 6.7 million tons by 2004, putting it at its lowest level since 1989.

Printing and Writing Paper – Printing and writing paper capacity this year has been revised downward by 4 percent. The decline was expected as much of the capacity was shut down last year but was retained in last year’s survey.

Uncoated groundwood capacity this year is estimated to be almost 20 percent below that projected in last year’s survey. The capacity growth of 10 percent that had projected for this year never materialized. Instead, capacity declined almost 8 percent. Uncoated groundwood capacity is projected to rise by 14 percent next year to 2.1 million tons.

Coated groundwood capacity this year is estimated to be more than 2 percent greater than anticipated in last year’s survey. Beyond this year, total capacity is expected to grow more than 12 percent during the 2002-2004 period, around 4 percent a year.

Coated free sheet capacity dropped slightly this year from the prior year. Anticipated growth in the 2002-2004 period is 0.4 percent a year. This compared with a 5 percent annual average capacity gain that occurred during the 10-year period ending in 1997.

Uncoated free sheet capacity dropped 4.7 percent this year from the prior year. These reductions were anticipated in last year’s survey.

Tissue paper capacity increased rapidly in the last three years, but its growth will slow during this survey’s projection period. With just one new machine slated to cone on line next year, tissue paper capacity is expected to grow by 2 percent next year, 0.7 percent in 2003 and remain flat in 2004.

Kraft paper capacity suffered large declines this year, with unbleached kraft paper declining 7.6 percent and bleached kraft paper dropping 9 percent. The reductions reflected mill closures and swings between kraft papers and containerboard. No major changes are expected after this year, leaving unbleached and bleached kraft paper capacity stable at 1.9 million tons and 341,000 tons, respectively.

Linerboard capacity held stable this year. There is little sign of any new linerboard capacity after this year, with growth averaging 0.1 percent a year through the 2002-2004 period. Medium capacity was essentially stable this year. It is expected to increase 1.6 percent next year and an additional 0.7 percent in 2003, due to the start of a new machine the middle of next year and the rebuild of another machine. Medium capacity is expected to remain nearly unchanged in 2004.

Folding boxboard capacity, including recycled, bleached, and unbleached, will show only modest change during the survey period. In particular, folding boxboard capacity is estimated to have decreased by 0.9 percent in 2001; it is expected to rise just 0.2 percent in 2002; 0.1 percent in 2003; and hold steady in 2004.

Total market pulp capacity is estimated to remain essentially unchanged through 2004 at about 10.4 million tons a year, with no major changes in the sub-grades being projected. This compared with total market pulp capacity of 9.7 million tons in 1999 and 11.1 million tons during the peak capacity year of 1995.

Recovered paper consumption is expected to decline by 3.5 percent in 2000 and by 1.4 percent this year, the survey shows. It is slated to grow at an average annual rate of 3.1 percent during the 2002-2004 period. Consumption of mixed paper, old newspaper and old corrugated containers are expected to grow moderately during the three-year period covered by the survey, while pulp substitutes and high grade deinking papers will remain stable during the same period.