<B>High Grades Continue Skid</B>

A real mixed bag for many of the deinking grades right now. Prices in a number of regions are sliding down sharply, although many other vendors are reporting steady buying by domestic mills.

The tissue industry appears to be one of the few segments of the forest products industry that has been able to flourish over the past several months. The biggest beneficiaries of the tissue industry has been the deinking grades, including sorted and manifold white ledger. While these grades have been holding up fairly well in many regions, it is not a guarantee. Several regions, especially the hard hit coastal regions, have been suffering from a sharp drop in many of the high end grades.

Deinking grades have been sliding, with some regions on the West Coast reporting a decline of around $20 a ton at the dock. The biggest factor for the sharp sell off is the lack of any substantial orders into South Korea.

For pulp substitutes the decline is even more acute. Prices have been on a major slide, with orders becoming more difficult to obtain, regardless of the price.

One West Coast exporter sees prices at the dock falling well below $300 a ton for hard whites, helping push total demand for the grade down even further.

“Price isn’t even an issue anymore,” one paper stock dealer notes. “We can’t even move our material at any price.”

This decline is being caused by the oversupply of market pulp available. While pulp producers grapple with high inventories of product, the number of consumers has declined, forcing substitutes down along with pulp itself.

While this bleak observation is not universally accepted, most paper stock dealers are sketching out a short-term market for pulp substitutes that is not the most robust. Limited offshore activity is helping curtail any upward move in many of these grades. At the same time, the amount of downtime throughout North America is creating more difficult markets.

This situation is unlikely to improve over the next month. The rest of this year is already a write off for most paper stock dealers. Many mills will be looking to scale back their orders through January, reducing any new flow of material.