<b>Low Grades – Nowhere to Go but Up</b>

The lackluster old corrugated market seems to be hitting a bottom. Prices look to be holding at their present level. Although mill prices are sharply down from late last year, reports from throughout the country have it that the grade has been moving at the level. Inventories at packing plants aren’t an issue. This balance could set the table for a slightly better market moving through the second half of this year.

The amount of downtime taken throughout the United States continues in full force. This has created some difficult market conditions over the first quarter of the year.

Reflecting the difficult market conditions for the paper industry, most of the paperboard producers are reporting quarterly figures down sharply from last year. While downtime continues to plague the OCC market, more handlers of OCC expect to see some firming of prices by the end of the summer. No one is forecasting soaring prices, seen during the end of the 1990s. However, there could be some increases as board mills start to rebuild some inventory levels.

The old news market is in better shape. Deinked news prices have been one of the more stellar grades over the past quarter. There had been some slippage over the past month, although demand remains strong for the grade. The differences between ONP and OCC could keep some news grades from climbing too high. But, with ONP and mixed paper showing some modest strength the paper stock industry has seen some stabilizing in the market.

The OCC market continues to be hammered by significant downtime at domestic mills and reduced offshore orders. Paper stock dealers on the West Coast are also seeing some acute difficulties with soaring energy costs which have forced some board mills to take machines off line for extended periods of time. The uncertain future of the power problems over the next several months will likely keep some board mills on the West Coast from running full out.