Grade Profile

MARKETS. Bleached paperboard is primarily used for folding cartons, milk cartons, and other packaging products that require superior folding, scoring, and printing characteristics. SBS is also used for disposable cups and plates, food containers, and preprint linerboard for high-graphic corrugated boxes and displays.

Some mills that produce SBS packaging board also manufacture lightweight bleached bristols used by commercial printers for paperback covers, telephone directory covers, and greeting cards. For 1997, total bleached packaging paperboard capacity is approximately 5.65 million tons and bleached bristols account for an additional 1.58 million tons. In the packaging segment, folding carton board represents 47.1% of the total; milk carton and food service products, 44.9%; linerboard, 3.3%; and other miscellaneous, 4.7%.

PRODUCTION/CAPACITY. Production of packaging grades picked up in the second half of 1996 after falling about 5% during the first half of the year. Production ended the year down only 1.3% at 5.24 million tons. Demand for folding cartons was up about 1.0% and milk carton and food service products were the weakest segment, declining by about 5%. Demand for printing bristols showed no growth for the year at 1.36 million tons.

Between 1990 and 1996, bleached board mills added 1.1 million tons of additional production capacity. About half of the capacity additions came from rebuilds of existing paper machines and incremental productivity gains, and the remainder came from the startup of two new paper machines by Westvaco Corp. and Temple-Inland Inc. Capacity for bleached board is forecast to grow slowly over the next few years, rising only 1.0% this year and 1.5% next year. Limited capacity growth will allow for strong operating rates at bleached board mills. Through the first seven months of 1997, bleached board mills had an average operating rate of 99%, the highest in the paper industry.

OUTLOOK. Bleached board markets are in very good shape! Production is up about 7% this year and is forecast to grow about 2.5% next year. Importantly, exports represent a meaningful part of this growth. Exports account for about 20% of industry production and have been growing faster than domestic shipments.

Strong underlying demand and high operating rates have allowed producers to restore a firm pricing environment. Bleached board pricing fell about 15% during 1996, but producers have restored prices. Some additional upward movement in pricing is expected in late 1997 or early 1998. The next major upswing will probably coincide with the next pulp cycle. Capacity and demand for bleached bristols are expected to remain stable in the near term.

PRICES. Historical average selling prices for 16-pt. SBS folding carton board (rolls, $/short ton, year-end prices): 1985, $520; 1986, $590; 1987, $635; 1988, $730; 1989-91, $830; 1992, $800; 1993, $720; 1994, $800; 1995, $900; 1996, $780. Coated one-side (C1S) 10-pt bristol (Rolls, $/short ton, year-end prices): 1985, $760; 1986-87, $800; 1988, $885; 1989-90, $980; 1991, $950; 1992, $$895; 1993, $910; 1994, $1,030; 1995, $1,000; 1996, $850. n

BY NOEL DeKING

News Editor

FORECAST (000 tons)

Total U.S. capacity (1997): 7,235
Capacity Share of top five companies: 71.2%
Capacity Share of top 10 companies: 87.9%
* Capacity includes bleached packaging board and bleached bristols.