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| FORECAST (000) |
| US (000 tons) |
1999 |
2000e |
2001e |
| Production1 |
25,139 |
24,028 |
24,600 |
| Capacity2 |
25,715 |
25,874 |
26,031 |
| Kraft3 |
20,890 |
20,000 |
20,300 |
| Recycled |
4,109 |
3,873 |
1,000 |
| Utilization rate |
97.7 |
92.8 |
94.5 |
| Exports1 |
3,147 |
2,859 |
3,000 |
| Imports4 |
522 |
521 |
500 |
| U.S. consumption |
22,514 |
21,690 |
22,100 |
| lb/capita |
158.4 |
157.0 |
158.5 |
| 000 tons/billion $ |
3.00 |
2.82 |
2.81 |
| e = estimate. 1. AF&PA monthly statistics. 2. AF&PA capacity survey. 3. Includes export kraft linerboard and mottled white linerboard.4. Almost exclusively from Canada. |
| TOP N. AMERICAN PRODUCERS |
|
| Rank Company |
Annual
capacity*
(000 tons) |
Market
share
(%) |
| 1. Smurfit-Stone Container1 |
5,085 |
33.5 |
| 2. International Paper2 |
4,461 |
15.8 |
| 3. Weyerhaeuser |
2,990 |
10.6 |
| 4. Georiga-Pacific |
2,631 |
9.3 |
| 5. Inland Paperboard |
2,155 |
7.6 |
| 6. Willamette |
1,404 |
5.0 |
| 7. Packaging Corp America |
1,325 |
4.7 |
| 8. Gaylord Container |
1,320 |
4.7 |
| 9. Green Bay Packaging |
700 |
2.5 |
| 10. Norampac Inc. |
674 |
2.4 |
Total N.A. capacity (2000): 28,209
Capacity share of top five companies: 61.7%
Capacity share of top 10 companies: 81.0%
U.S.: 5,893 Canada: 10,491
1. Includes capacity from St. Laurent Paperboard Inc., acquired in 2000.
2. Includes capacity from Champion Intl. Corp., acquired in 2000.
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U.S. kraft linerboard market prices hold up despite sluggish box market, weak exports
GRADE STRUCTURE. Linerboard is used as the inner and outer portion of domestic corrugated containers. The board is made in a range of basis weights. Standard is 42-lb/1000 ft2. Other important weights are 33 lb, 34 to 37 lb, 55 to 61 lb, and 69 lb. Production of recycled linerboard has grown rapidly in the last 10 years. In 1990, it represented 2.4% of total linerboard capacity. In 2000, it represented an estimated 18%. U.S. linerboard production in 2000 was on track to total 24.0 million tons, including 15.7 million tons of unbleached kraft linerboard, 3.9 million tons of recycled linerboard, and 2.8 million tons of exported linerboard.
CURRENT MARKET CONDITIONS. U.S. linerboard exhibited a staying power not ever seen before on pricing in the market in 2000. Market prices for the benchmark 42-lb unbleached kraft linerboard grade remained unchanged for nine months in a row through November-its longest ever price-unchanged run. Producers held up linerboard prices by aggressively taking machine downtime. An estimated 2.5 million tons of market-related containerboard downtime was scheduled during the year, with the vast majority taken at linerboard mills. The downtime started following a $50/ton increase on kraft linerboard that was implemented in February and March 2000. With corrugated demand sluggish and export volume weak, U.S. producers expected taking more downtime through February 2001 to try to balance supply and demand, and hold up linerboard prices. The other key aspect of the linerboard market that affected supply was a weak export market, where U.S. producers were hurt by the strong U.S. dollar in Europe and Asia. Another unusual factor at year-end was the unusually-high $20-$40/ton differential between kraft linerboard and recycled linerboard prices. The high differential was caused by plummeting prices for old corrugated containers in the U.S. in the second half of 2000.
U.S. kraft linerboard prices increased for the third time in 12 months in February 2000, rising $15/ton to $435-$445/ton in the East. In March, producers completed the $50/ton increase that raised market pricing to $470-$480/ton. From January 1999 to March 2000, U.S. kraft linerboard prices increased 40% and by $140/ton.
Consolidation continued to reshape the containerboard/corrugated industry in North America. In 2000, Smurfit-Stone Container Corp. acquired St. Laurent Paperboard Inc. and its large mottled white production assets; International Paper Co. acquired Champion Intl. Corp. and its one linerboard mill; and Weyerhaeuser Co. started a hostile takeover of Willamette Industries Inc. in late November.
SUPPLY/DEMAND. The growing U.S. trade deficit was on track to hit a record in 2000 and that drove up imports of consumer products that were put in boxes made outside North America. A cooling U.S. economy also affected the nondurables sector output, and overall U.S. corrugated volume in 2000 was on track to declining 0.7%.
Despite the large amount of linerboard downtime, producers struggled with managing inventory. Through October, five of the months had total box plant and mill inventory of more than 3 million tons. The inventory dropped to its lowest level of the year in October: 2.84 million tons. From November 2000 through February 2001, U.S. producers face a typically lean box volume period and struggle to avoid building linerboard inventory.
PRICES. U.S. linerboard prices were expected to remain flat in 2001 because of a cooling U.S. economy with gross domestic product growth estimated at 3%. Still, some national account box buyers as well as Wall Street analysts didn't rule out the possibility of a price increase proposal in second half 2001. In 2000, the average price for U.S. unbleached kraft linerboard in the East rose to about $475/ton, up from $400/ton in 1999 and $372/ton in 1998. Historical yearend transaction prices for 42-lb kraft linerboard in the eastern U.S. follow: 2000, $475/ton; 1999, $425; 1998, $340; 1997, $390; 1996, $355; 1995, $485; 1994, $430.
GREG RUDDER, Associate Editor
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