| |
| FORECAST (000 tons) |
| U.S. |
1998e |
1997 |
1996 |
| Shipments |
4,766 |
4708e |
4811 |
| % change |
1.2 |
-2.1 |
9.0 |
| Capacity (1) |
5,798 |
5,664 |
5380 |
| % change |
2 |
5 |
5 |
| Utilization rate, % |
82.2 |
83.1 |
89.4 |
| Average price ($/ton)* |
903 |
910 |
964 |
| % change |
-0.8 |
-5.6 |
-0.1 |
| Imports |
588 |
581e |
449 |
| Exports |
294 |
314e |
290 |
| Apparent U.S. consumption |
| 000 tons |
5,060 |
4,975 |
4970 |
| lb/capita |
36.97 |
36.68 |
36.99 |
| 000 tons/billion $ |
| real GDP (1992) |
0.68 |
0.69 |
0.7 |
| e=estimate 1. AF&PA 1997 capacity survey. *No. 3 60-lb rolls. |
| TOP N. AMERICAN PRODUCERS |
| Company* |
Annual capacity (000 metric tons) |
Market share (%) |
| 1. S.D. Warren1 |
1,225 |
21.2 |
| 2. Appleton Papers2 |
990 |
17.1 |
| 3. Consolidated Papers3 |
871 |
15.1 |
| 4. Westvaco |
725 |
12.5 |
| 5. Mead4 |
685 |
11.8 |
| 6. Champion International |
472 |
8.1 |
| 7. Potlatch |
380 |
6.5 |
| 8. International Paper |
300 |
5.2 |
| 9. Domtar5 |
232 |
4.0 |
| 10. West Linn Paper |
190 |
3.2 |
Capacity share of top five companies: 78% 1997 N. American capacity: 5,758,000 U.S.: 5,359,000; Canada: 399,000
1. Includes specialty and technical papers. 2. Includes carbonless, thermal, and specialty papers. 3. One machine swings between groundwood and free-sheet. Capacity may vary. 4. The Rumford, Maine mill can make 490,000 tpy of coated papers on four machines. Breakdown is estimated. 5. Through wholly owned subsidiary E.B. Eddy. Includes specialty grades. |
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Grade structure: Coated free-sheet papers contain less than 10% mechanical (groundwood) pulp. They comprise as many as four of the five general categories of coated papers: Nos. 1 and 2 in which there is no groundwood and No. 3 which may contain some groundwood. Nos. 4 and 5 are commonly groundwood grades but a small portion may be free-sheet. Coated free-sheet papers are used in magazines, catalogs, and commercial printing uses such as advertising brochures and inserts. More than 80% is coated two-side (C2S); coated one-side paper (C1S) paper is used for labels, with some used in books, commercial printing, business forms, envelopes, and other converted products.
Nos. 1 and 2 generally range in basis weight from 60-100 lbs, and Nos. 3 and 4 grades from 40-90 lbs. Most coated paper (about 75% to 85%) has a glossy surface; the rest is a combination of dull, matte, and embossed. Brightness ranges from 88 for high-gloss No.1s to 72 for less expensive, lower brightness No.4s with groundwood and chemical pulp and some clay filler. Bleached kraft hardwood pulp is used in making coated free-sheet, although some mills also use recovered paper. Coating solutions consist of pigments such as kaolin (clay), calcium carbonate or titanium dioxide and binders or adhesives (such as soluble starches).
Markets. The coated free-sheet market in 1998 was a difficult one, characterized by hefty inventories and rising imports. As a result of oversupply, producers failed to raise prices, which for some grades were at their lowest in more than 10 years and heavily discounted off list. The average transaction price for No. 3 60-lb last year was $910/ton, compared with $980/ton in 1997. While demand started strong at the beginning of the year, producers failed to obtain an announced price increase in the first quarter. Mill inventories all year flirted with the 500,000 ton mark—hitting 550,300 tons in May—after ending 1997 at about 455,000 tons. Imports of coated free-sheet were up more than 30% through October, compared with the previous year’s period.
While many catalogers increased page counts and circulation for the holidays, that was offset by a slowing in the rate of growth in magazine advertising pages. In addition there was substantial weakness in the commercial printing sector. While the U.S. economy is expected to continue strong this year, most forecasters do not see much improvement in the coated free-sheet market until the second half.
Industry structure and capacity. As of press time, 1998 U.S. coated free-sheet shipments were running flat-to-slightly higher than 1997 with a predicted 4.8 million tons. According to the capacity report issued in December by the American Forest & Paper Assn., 1998 capacity was up about 2% from the previous year and is expected to increase by the same amount this year and over the 1999 through 2001 period coated free-sheet capacity is scheduled to rise by a total of 282,000 tons, for an average annual rate of 1.7%. Both North American and overseas companies cut back their expansion schedules over the last year due to market conditions. Operating rates were forecast to be in the 80% to 85% range in 1998-99.
There was one notable ownership change in 1998, the purchase of B.B. Eddy Ltd. by fellow Canadian producer Domtar Inc. S.D. Warren, now part of Sappi Ltd., remains North America’s largest producer with 1.2 million tpy of capacity—about 20% of market share.
BY JOYCE ROUTSON
News Editor
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