<b>Paper Stock Markets Weakening in March</B>

Bad news seems to be accelerating in the paper stock market. March prices for many high end grades are expected to drop, with some sources feeling some pulp substitute and polycoated grades are in for drops of between $20-$30 a ton.

The ugliness in the market continues, with more mills looking to work off inventory. This could be a harbinger of further price erosion of some higher end grades of fiber through March.

A number of paper stock dealers note that some pulp from Asia is being dumped on the West Coast, causing prices for the substitutes to trade downward. Vendors on both the East and West Coast are seeing steep price declines.

Vendors throughout the country cite prices falling by anywhere between $20-$30 a ton for some pulp substitute and deinking grades.

The problems are being exacerbated by a slew of Asian buyers looking to back out of the market altogether for recovered fiber. Several exporters note that South Korea and Indonesia are both sharply reducing their orders. As these two countries are larger buyers of many paper stock grades, the move is creating some sharp drops across the board for many grades.

There doesn’t appear to be much in the way of any improvement for these grades. At the same time, while pulp substitutes and deinking grades are declining, other grades such as sorted office pack are showing further signs of softening.

With grades such as SWL falling in prices, some vendors are opting to inventory greater amounts of material. A number of recyclers say that they are warehousing more material as an attempt to hold out for better prices.

Although there doesn’t seem to be any signs of an improvement in March, hope is being extended that April will see a return to better prices.

Domestic mills, which had been buying regular amounts of material, are reportedly sitting on high inventories and may not be buying much material in the next month.

With little in the way of any upward strength for many of the grades, most paper stock dealers are expecting to see difficulties moving material through March at the earliest.

On the bulk grade side there are mixed signals on where markets are heading. While most everyone seems to feel that board mill demand is declining, the question being mentioned is if prices will drop.

Most everyone notes that OCC prices have fallen precipitously over the past several months. While there are no indicators of any turnaround in March, some handlers feel that prices are at such a low level that they can’t fall much further.

While some feel OCC prices will probably hold at their present level, less optimistic sources look at the dwindling short-term prospects on the offshore market. With reports that China may be pulling out of the market in March, there could be a flood of material displaced.

Following the slumping price for OCC, old news and mixed paper also have been moving down over the past several months. There doesn’t appear to be much positive momentum for these grades. Prices are reflecting this softening, with some sources seeing an additional $10 a ton drop in prices.

One of the few grades that seems to be holding up has been double-lined kraft cuttings.

With box shops running sharply reduced schedules, the generation of the grade has declined, This has allowed prices to hold up better than other brown grades over the past several months.