New RISI study assesses 'new reality' for southern pulpwood markets

SAN FRANCISCO, Jan. 28, 2004 - RISI, Paperloop's economic forecasting division, today announced publication of a new study, "Southern Pulpwood Markets: A New Reality."

The report, prompted by the deepest and most protracted decline in southern pulp production in 30 years, includes a risk assessment of 83 integrated and market pulp mills in the U.S. South, softwood and hardwood fiber consumption by mill, a 5-year forecast of pulpwood, chip supply and pulp log demand for six sub-regions in the U.S. South, and a 5-year forecast of pulpwood prices for the same areas.

Keith Balter, vice president, Timber at RISI described the intended uses of the new study. "This study is very pertinent to decisions regarding investment in and management of timberlands in the U.S. South, wood fiber procurement strategies for pulp and OSB producers, upgrading mill technology or mill capacity closures and locating new OSB mills."

The study evaluates the relative contribution of factors such as the competitive outlook for the pulp and paper grades produced, mill capacity by grade and age of machine, relative cost position versus other similar mills and regional wood supply. This analysis provides a scoring system for operating pulp mills that describes "risk of closure." The study identifies 14 mills in the South that contain at-risk capacity, which totals 3.8 million tons, 7% of the total capacity at the 83 southern mills considered in the study. For the South as a whole, the at-risk operations utilize 16 million tons of pulpwood per year, representing 10% of the South's total pulpwood demand.

"Southern Pulpwood Markets: A New Reality" is the first major Paperloop publication to have been produced as a result of collaboration between RISI and Paperloop Benchmarking Services. Paperloop's Benchmarking Services group and its "Analytical Cornerstone" database was acquired just over a year ago by Paperloop from Jacobs Consultancy (previously Jacobs Sirrine). The group publishes over 20 reports and is recognized as the preeminent manufacturing cost benchmarking information source to the pulp and paper industry, supplying the industry with a unique methodology that estimates manufacturing costs for nearly 1000 global mills.