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| FORECAST (000 tons) |
| U.S. |
1997r |
1998p |
1999e |
| Production (1) |
13,687 |
13,652 |
14,374 |
| Capacity |
14,701 |
14,946 |
15,163 |
| Utilization rate (%) |
93.1 |
91.3 |
94.7 |
| Average price ($/ton)* |
768 |
777 |
723 |
| % change |
-7.7 |
0.1 |
-6.9 |
| Imports |
1,145 |
1,284 |
1,363 |
| Exports |
662 |
614 |
665 |
| Consumption |
14,170 |
14,322 |
15,072 |
| lb/capita |
105.4 |
105.6 |
110.1 |
| 000 tons/$billion |
2 |
1.9 |
2.04 |
| real GDP |
|
|
|
| Canada |
|
|
|
| Production (2) |
1,497 |
1,482 |
1,467 |
| Capacity |
1,556 |
1,556 |
n.a. |
| Utilization rate (%) |
96.2 |
94.6 |
n.a. |
| Exports |
951 |
930 |
940 |
| Consumption |
967 |
1,017e |
1,027 |
| e=estimate; n.a.= not available;GDP= gross domestic product. 1. Shipments from American Forest & Paper Assn. 2. Canadian Pulp and Paper Assn. *No.4, 20-lb repographic bond |
| TOP N. AMERICAN PRODUCERS |
| Company |
Annual capacity (000 short tons) |
Market share (%) |
| 1. International Paper1 |
2,165 |
13.1 |
| 2. Georgia-Pacific Corp. |
2,163 |
13.0 |
| 3. Boise Cascade Corp. |
1,480 |
8.9 |
| 4. Weyerhaeuser Co. |
1,306 |
7.9 |
| 5. Champion International |
1,281 |
7.7 |
| 6. Union Camp Corp. |
1,241 |
7.5 |
| 7. Willamette Industries |
1,221 |
7.3 |
| 8. Domtar Inc.2 |
921 |
5.5 |
| 9. Fort James Corp.3 |
520 |
3.1 |
| 10. Mead Corp.4 |
460 |
2.7 |
| Market share of top five companies: 50.8% Market share of top 10 companies: 77.2% Total N. American capacity 1998: 16,513,000 U.S.: 14,947,000 Canada: 1,556,000
1. Pre-merger. 2. Includes E.B.Eddy. 3. Includes 25,000 tpy specialty. 4. Includes carbonless and specialty.
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Grade structure. Chemical pulps (sulfate, sulfite, soda, cotton linters, or vegetable fiber) are used to make uncoated free-sheet (or woodfree) papers, with occasional additions of up to 10% mechanical fiber or bleached chemi-thermomechanical (BCTMP) pulps and recycled fibers. BCTMP furnishes lower the cost of manufacture while providing a better grade of paper than stone groundwood or other mechanical pulps. Many of the major producers have converted some or all of their machines to alkaline-based paper, and most new installations are alkaline.
Uncoated free-sheet papers are used for office and business printing (copiers, computer printers, etc.), business forms and envelopes, publishing (mostly text and adult trade books), commercial printing, and writing (stationery). There has been somewhat of an upheaval in the segment as cut-size demand is expected to grow two to three times faster than overall uncoated free-sheet demand, thanks to the rise of digital on-demand printing and sales of ink jet and laser printers.
Bond and writing paper shipments grew more than 3% in 1998, while many types of uncoated free-sheet—especially grades used in converting such as tablet, envelope, and forms bond—fell compared with 1997. Uncoated free-sheet used in office reprographics including in-plant printers grew 6.6%, according to the American Forest & Paper Assn. (AF&PA), and accounts for almost a third of the overall market. Paper used in commercial printing only edged up a mere 1.4% in 1998 and its share of the market dropped to 24% from 25% in 1997. Total U.S. shipments last year were 13.65 million tons, 0.3% less than 1997. Canadian shipments were 1.34 million metric tons (1.48 million short tons).
Capacity. According to the American Forest & Paper Assn.’s latest survey, capacity to make uncoated free-sheet is forecast to rise by a 0.7% average annual rate in the 1999-2001 period, for a three-year gain of 330,000 tons, well below the 10-year average annual growth of 2.1%. The survey includes tonnage from the 300,000 tpy Willamette Industries Inc. machine that started up a year ago in Hawesville, Ky; there are no other North American machines planned and growth will come from incremental shifts and grade closures. The association survey did not count the shutdown of about 50,000 tons from two Fraser Papers Inc. machines. There is considerable growth in uncoated free-sheet overseas: at least five new machines in China this year.
There was considerable reshuffling among uncoated free-sheet producers and their capacity rankings last year due to mergers and acquisitions. The biggest—which was not complete at press time—is the acquisition of Union Camp Corp. (formerly the first-largest) by International Paper Co. Weyerhaeuser Co. acquired a large mill in Dryden, Ont., from Avenor Corp., and Domtar Inc. acquired E.B. Eddy Forest Products Ltd.
Current market conditions: The uncoated free-sheet market ended 1998 lower than it began. While a series of price increases in 1997 helped push prices higher at the start of the year, by the end prices were back to or below those of a year ago. Cut-size (20-lb bond) was transacting about $710/ton, not far above the levels reached in prior troughs (early 1993, $680). Offset printing rolls (50-lb) were around $580/ton, the lowest in more than seven years. High inventories and a weakness in shipments largely attributable to a deteriorating trade balance kept the market soft through January, although manufacturers are hoping Feb. 1 price increases.
Outlook. Imports from Asia and brazil are likely to post further gains this year, as are imports from Canada, which has been suffering from a weak dollar. Operating rates are not expected to be high and paper readily available in international markets, along with low fiber costs, should keep price hikes at a minimum.
By Joyce K. Routson
Executive News Editor
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