Paper

During the first quarter of this year, increased interest by mills outside North America have driven paper stock markets.

Reflecting this trend, the consumption of recovered fiber at domestic mills declined by 3.5 percent for January, compared to figures for the same time last year. According to the most recent report from the American Forest and Paper Association (AF&PA), Washington, paper stock consumption checked in at 2.84 million tons, compared to last January’s figure of 2.95 million tons.

Significant downtime by domestic paperboard mills was one of the biggest culprits for the sharp drop in demand. A host of the largest paper companies are now taking the opportunity to slash production time to bring supply and demand back into balance. The ample amount of downtime hit the old corrugated container (OCC) and old newspaper (ONP) markets harder than most.

The move by Abitibi-Consolidated to permanently idle its Sheldon, Texas, mill has been a tough hit for ONP, especially in the Southwest. Other newsprint mills have been scheduling plenty of downtime, which has lessened domestic demand.

While mills have reduced their production, the decline in generation of new material on the domestic side has helped balance prices. While demand has lessened for many of the bulk grades, paper stock dealers are also seeing less material.

As for OCC, many of the largest paperboard companies, including Smurfit-Stone and Weyerhaeuser, have taken sizable downtime throughout their network of mills. While consumption dropped for the month, inventory levels have improved lately. The inventory of recovered fiber at the end of January stands at 1.13 million tons, a 2.2 percent increase from figures for the same time last year. At the same time, the inventory level is a modest 0.9 percent increase from figures for the previous month.