Paper Stock Markets Continue Strong Upward Move

Paper stock market continue to hold up quite nicely. The continued improvement follows market pulp price improvements on the top end, with a move to increase finished products for linerboard, corrugated medium and newsprint in early spring on the bottom end. For the third time in the past 12 months, linerboard and medium prices may rise as several more manufacturers, including International Paper and Georgia-Pacific, announced a hike of $50-60 per metric ton effective February 1st. Smurfit-Stone and Gaylord Container both announced similar intentions last month. The steady market for old corrugated reflects confidence that paperboard mills will continue to move their finished product, which, in turn, allows for better demand for the recovered fiber. While prices seem to be holding up, several vendors are commenting about minor retrenching of prices. While there are no external indicators that prices have "maxed out," some brokers feel that some mills are attempting to bring down prices. Despite prices inching downward in some regions, no one is reporting of any difficulty moving material. In fact, most say they could move more material if they had access to more material. The old news market seems slightly more sluggish, although offshore demand and movement into Mexico is compensating for any slowdown in North American demand. Several roofing mills have slowed their intake of some lower grades, including both ONP and mixed paper. However, similar to OCC, there is very little concern about an overall downward trend for the grade. In fact, more handlers of the grade feel prices could start strengthening in the near future. This in spite of the Y2K scare which resulted in some paper mills buying heavier to ensure ample supply of raw material. Higher grades, however, are in a much better situation. Price and demand remains strong. This steady improvement continues to strengthen paper stock markets. Sorted white ledger continues its strong upward swing. The improvement in the grade follows the strong pulp market, which has helped drive markets to much higher levels over the past several quarters. Prices are far greater than the $220 a ton level at the mill. Orders are filtering in to Asia and Mexico, as well as a host of domestic sources. Tissue mills are becoming more active in the grade. Over the recent past Fort James has become a much larger player in the market for this grade. In the past the company had been more involved in purchasing much lower grades of fiber. But, with the merger of Fort Howard and James River, many brokers feel that the emphasis has been greater on improving the quality of the fiber. As SWL continues to show good price improvement, various types of office pack are finding much better demand. Depending on the region of the country, a clean office pack grade could move for as much as $200 a ton at the mill. This strength has been attributed to across the board increased buying, as well as stronger run schedules by some stand-alone deinking facilities. Coated book stock also is enjoying a rekindling of markets. Some strong orders out of the Midwest has helped push up prices on the East Coast. The Northeast has a host of smaller mill which buy coated book on a steady basis. However, occasionally, larger tissue mills from the Midwest will enter the East Coast market and snap up a significant amount of fiber to build up for a "white run." The result of this surge is coated book moves like a roller coaster, with large buyers coming in to buy up all the coated book they can before dropping back out of the market. Mill prices are more than $100 a ton at the mill, with signs that this price may be strong for still some time.