Major Changes In Coated Groundwood Capacity, Costs
SAN FRANCISCO, Feb. 21, 2003 - Paperloop's Benchmarking Services group (previously a division of Jacob's Consultancy) recently published a study that compares manufacturing costs for coated groundwood in North America. The study covers all major manufacturers (23 mills) and a total of 5.69 million short tons of coated groundwood capacity. Coated groundwood grades are broken down into 36lb and below - primarily used in business magazines and catalogs, 38-45lb - traditionally found in the inserts and flyers markets in addition to being used for magazines and catalogs, and above 45lb - a higher quality alternative. 2002 Coated Groundwood Competitive Cost Study attributes 33.8%, 43.1% and 23.1% capacity shares to these respectively.
The study shows that the North American Coated Groundwood grade segment has seen an acceleration of merger and acquisition activity since the previous (2000) study and that has effected major changes in capacity share among producers. In 2002 the top five producers accounted for over 76% of North American coated groundwood capacity. By comparison, the top five producers accounted for only 61% in 2000. International Paper currently leads the pack with approximately 22% of the total capacity, up from 9% in 2000 (thanks largely to its Champion acquisition.) UPM-Kymmene is in second place at 18% - up from 9% in 2000 due to its purchase of Recap. Of the top five in 2000, two companies no longer exist and another merged.
Overall North American coated groundwood capacity has increased about 1.3% from 2000 to 2002. For the 36lb and below grade, capacity decreased slightly, by less than 1%. For the 38lb-45lb grade, capacity decreased about 5% and for 45lb and above, capacity increased about 20%, partially due to capacity realignment.
2002 Coated Groundwood Competitive Cost Study also provides cost of supply statistics by region. Here a strengthening of the US dollar versus the Canadian dollar of around 6% is seen to have further enhanced the competitiveness of Canadian mills. Mills in this region represent 18.3% of total North American capacity. The US Northeast region accounting for 24.1% of capacity and the US Midwest region accounting for 38.7% average relatively high delivered cash costs due to older, narrower machines and semi-integrated mills. The US South and Southwest regions perform better in terms of average delivered cash costs, reflecting the benefits of solely integrated mills.
UPM-Kymmene - Miramichi, NB tops the lowest cost of supply by manufacturer tables in the study for all three grades with SENA - Whiting, WI at highest cost for the lighter grades and International Paper - Cornith, NY highest cost for the heavier grades. When it comes to comparing cost of North American supply to European, the study employs estimates of delivered cash costs for North American CGW and European woodcontaining coated mills to the Chicago IL market to reveal that some European producers of LWC woodcontaining papers are very competitive. However, most of the lower cost positions are held by North American producers.
For more information on this and other Paperloop Benchmarking Services studies or on the Analytical Cornerstone(tm) database, visit www.paperloop.com/benchmarking or call 770-373-3020 or e-mail dtemple@paperloop.com.
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