Uncertainty Clouds Deinking Market in Southwest

The Southwest has escaped much of the tough markets other regions of the country have been seeing. However, according to several paper stock dealers in the Southwest a number of the deinking grades and office pack grade could take a tumble.

The reason for the concern is the word that some capacity could be coming off line in Mexico for an extended period of time. Several sources report that Kimberly-Clark Mexico will be taking some of its machines off line for an extended period of time.

The mills consume a significant amount of office pack and coated book stock from a variety of sources in the Southwest.

The question many now are wondering is how long the downtime will last. One source feels that downtime will only last a few weeks and will only have a modest impact on overall markets.

However, several other paper stock dealers see a much longer downtime taking place at several Kimberly-Clark de Mexico mills in the country.

Any slowdown in the movement of some of the higher grades into Mexico will continue the overall malaise that has been surrounding the paper stock industry over the past several quarters.

Along with a possible decline in office pack prices, several other grades are seeing some downward pressure. Old news is seeing some uncertainty due to slowing orders for finished products into Mexico.

The question a number of vendors are asking is how long the machine or machines will be down. Several people feel that the downtime could last for several months. However, not all are in agreement as to the length of any downtime. Some paper stock dealers feel that the downtime could be much shorter.

While this newest issue is cropping up, there are a slew of other office pack consuming mills that have been shutting down. Already there are reports of several of the stand-alone deinking projects that have shut their door. These are reducing the possible outlets for the grade.

Along with the closing of some of these mills, the continuing problems with America Tissue also is creating some significant concerns for a number of paper stock dealers. The mill has been struggling with slack markets over the past several months due to a decline in the overall market.

The company has been taking a number of its mills offline for an extended period of time to balance out this move. However, some vendors are concerned that the mill’s fiscal problems are creating uncertainties about payment to suppliers.

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There doesn’t appear to be much of a release valve for the export market. Although some orders have been filtering in as of late, there is a growing sense that some of these consumers will take this opportunity to curtail their purchases. Inventory levels are still very high. With an oversupply of raw material on hand there isn’t as much of a reason for some of these mills to dip back into the market in a big way.