Most paper stock grades are strengthening as the year comes to an end.

Most paper stock grades are strengthening as the year comes to an end. Sorted white ledger continues to post impressive numbers. The grade is expected to continue to moving into next year, especially with indications that market pulp prices will see a $50-a-metric ton price increase in January. Several exporters report offshore, SWL is moving for $260 a ton or more at the dock. Domestically, several vendors report prices to the mill at levels around $220 a ton.

Offshore movement is still good, though it appears domestic buying is the main driver. Some deinking mills are running better schedules.

The deinking mill in Auburn, Maine. which had been running only a few days a month due to slow pulp markets only a few quarters ago, now is running at much closer to full capacity.

Old corrugated continues to be uncertain. However, even it shows indications of stability. Several mills are looking to build up their inventories, steadying the flow of material. Prices are holding firm, with signals that point to modest price increases in the near future.

Old news continues to hold up fairly well, in spite of sluggish buying by newsprint mills in Canada. Insulators, building products companies and board mills continue to buy the material, keeping the price of the grade at a steady level.

Working to keep the ONP price level at a reasonable price are some offshore orders, with several vendors reporting mixed paper moving for as much as $75 a ton.

One of the few concerns moving into the holiday season is the lack of available trucks to ship material. While the Thanksgiving weekend was a difficult time for shippers of the material, the demand for finished products has made some loads more difficult to ship.

Along with the issue of trucking availability, fuel surcharges have eaten into the price some brokers are receiving, reducing the overall profitability of the material.

The Latin American market poses opportunities, although sizable problems still loom, according to James Maher, principal of Morgan Price & Co. Maher, giving a presentation on the Latin American paper stock market at the recent PSI Fall Meeting, noted the following: “In our sector of special intereset, secondary fibers, Latin America was a disaster this year. Only two Latin American countries are major buyers – Mexico and Venezuela. Mexico, the second largest customer for U.S. secondary fibers, will import about 900,000 tons this year, a 25 percent decrease from 1998. Venezuela, the other large importer, will import about 105,000 tons, a decrease of around 35 percent. The rest of Latin America, which was never a big buyer is performing anemically in 1999.

The sustained growth of liner and packaging imports in Latin America will help our industry. The increased export demand will help the secondary fiber industry when Latin American economies are forced to produce testliner. As recycling rates for OCC in Latin America are in the 60-70 percent level, considerable demands will be made on U.S. OCC per year, doubling that figure in the first decade of the new millenium.

Secondary fiber for tissue production, Maher says, is a bright spot for the paper stock industry. Tissue paper consumption is growing in double digits throughout Latin America. From 1998 to 1999 Argentina, Brazil, Chile, Colombia, Mexico, Peru and Uruguay started-up tissue mills. Some mills are reaching down to the depths of the U.S. waste stream, taking even sorted office paper, when last year only ledger grades would work. As long as good U.S. alternatives can arrive at a cost advantage to local eucalyptus pulp, presently $550 per metric ton, demand for deink and pulp subs will be steady.

This is the year of great transition in Latin America, symbolized by the turnover of the Panama Canal on Dec. 31. Will Latin America continue on a course of guerilla ridden demagogic instability or will it enjoy a long-awaited era of achieved expectations? Much depends on the neighbor to the north. If we can create conditionsfor bi-lateral tade, as we did in Mexico with NAFTA, Latin America could become the world’s most dynamic engine for growth and consumption.