<B>Deinking Grades Face Near Term Uncertainty</B>

It appears that the sorted white ledger market is starting to soften in many regions of the country. The biggest problem area appears to be in export dependent regions, especially off the West Coast. Prices have been moving for around the $210-$220 a ton level at the dock, although many vendors feel these prices could dip another $10-$20 this month. Part of the rationale for the concern is the move by Korean buyers, long a significant buyer of the grade on the East and West Coast, to either cancel or withdraw order.

The result of this move has been less material moving offshore.

This trend is causing some larger exporters to see only minimal exports of recovered fiber through the rest of the month and year. While this shift has caused some apprehension for handlers of deinking grades, it appears that Asian mills are looking to cut orders for most every grade of recovered fiber.

The ability to shift material to domestic sources is helping some vendors, although the downtime cropping up through out the country is making domestic shipment from some regions more difficult.

While the Pacific Rim has been reducing its intake of some of these deinking grades, several sources note that South America, which has been more active for many of these grades over the past several months, also is reducing its purchases of many deinking grades.

There also have been some indications that other consumers of recovered fiber in South America are starting to pull increased tonnage from Canadian sources. This swing is having a negative impact on those vendors who have been taking advantage of steady Latin American markets.

The pendulum swing that is taking place is also being partly attributed to the move by some consumers to take advantage of sharply lower pulp and pulp substitute prices to drive down prices for other materials, notably SWL and MWL.

Despite some vendors expressing concern that SWL and Manifold White Ledger is slowing for offshore orders, a number of other paper stock dealers are seeing strong demand for that same material. Both domestic and Latin American consumers have been very aggressive with their buying, according to one handler of high grades in the eastern U.S.

The packer notes that the strength in deinking grades has yet to help firm prices for pulp substitutes, a grade that appears to be dropping sharply through most parts of the country.