SAN FRANCISCO, May 22, 2009 (PPI Pulp & Paper Week) - US uncoated freesheet (UFS) paper prices softened again in May for roughly the seventh straight month, with lower prices for commodity offset rolls, cutsize, and MOCR, and lesser erosion in converting grades. While describing a somewhat more stable month than April, contacts said business remains slow, orders are hard to find, and "everyone is price sensitive," as one merchant said.
"Sales volumes are miserable," summed up a distributor this week.
"It's quiet," added another merchant who was more upbeat two months earlier. "Our business is off significantly now."
Sources indicated an ongoing schism in prices between the largest domestic producers against smaller competitors, importers, and coated producers selling into the uncoated market.
Prices for 50-lb offset rolls notched down more than $10/ton for another month, to $820-865/ton in May, with spot offers and imports running below $800/ton, participants said. Prices on average are down 6.4% from May 2008..
The range in cutsize levels widened, with prices down $5-15 for 20-lb repro bond to $1,025-$1,085/ton, reflecting some supply-side discipline and contract tonnage with the largest suppliers vs competitive prices from mid-tier producers, and cheap imports and spots. Some reported levels were under $1,000/ton.
Producer contacts argued that the lowest prices were for small, spot volumes, and a large part of the market was more stable.
Average cutsize prices were still slightly above year ago levels.
No cutsize pricing 'bloodbath.' "It's stronger than we give credit for," said one producer about prices. "Clients think they are seeing a bloodbath, but it's not."
The contact said Asian import prices for uncoated paper in the US were correlated to even cheaper coated paper imports, which he believed were near a bottom. Yet even as UFS imports declined this year, low import prices have had an exaggerated impact on the US market.
The contact added that he had "a sense people are ready to buy."
Another producer source said "panic" still reigned in the sales offices, and for every bid "there was someone to go lower."
"Hungry mills are making deals," said a merchant. "They want an order at any price. Some contracts are holding -- I don't know how."
A producer said prices were holding up because mills "can't get back into the hole," especially as input costs start to rise. The contact said significant capacity was shut since last year, market shares consolidated, and inventories were kept in check, all signs of a more disciplined supply-side market.
Several contacts noted the benefit of lower pulp prices for non-integrated mills, which have allowed them to be more competitive and probably have spared a few from shutting down. New pulp price increases are slated for North America next month (see related story, p. 2).
"Customers have been seeing that costs are lower," said another producer. "This may change that."
April shipments slide. April UFS shipments were off 3.4% from March in the USA and down 12.7% from a year ago, worse than the 8.7% year-to-year decline in March, according to American Forest & Paper Assn (AF&PA). Year-to-date shipments were 15.2% lower. Volumes to the commercial printing sector in April were down 17.2% year-to-year to 181,149 tons, and shipments to the office reprographics sector of 339,686 tons in April were down 10.3% from a year ago, again indicating the contrast in roll and sheet markets.
Affirming what industry contacts have said, a small but dramatically higher volume of UFS was moving through job lots and seconds, with shipments through four months of this year of 14,926 tons, 83.3% higher than the same period of 2008. UFS accounts for 13.8% of job lot volumes so far this year compared with 8.5% last year.
Average gross value of UFS in the first quarter at $0.55 per lb was 7.1% higher than a year earlier.
Total UFS inventories at the end of April at 1.067 million tons were down 58,000 tons or 5.2% from January. Year ago data is under review, AF&PA said.
US volumes for exports in April were down 22.9% from a year ago to 39,144 tons, and through four months of 2009 at 155,577 tons were 27.1% lower, the AF&PA showed. Exports of sheets through four months of 64,638 tons were down 42.6% and rolls at 90,939 tons were 9.7% below last year.
UFS imports through March of 216,300 tons were 27.5% lower than 2008 with volumes from Canada down 33.7%, Asia down 42.8%, Europe down 18.2% and Brazil down 15.1%. Relatively small volumes from Mexico were 85.7% higher and from other countries surged 96.4%, data showed.
National Envelope ended envelope production at its Long Island City, NY, plant, effective Monday. "The company will continue to use this centrally located 170,000 [ft2] facility as a finished goods warehouse and distribution center. The company cites the action as part of an ongoing process to coordinate manufacturing capacity and technology "with the ever changing needs of the market," the company said. National Envelope also operates four regional converting plants in Scottdale and Exton, PA, and Westfield and Worcester, MA. The four plants include 875,000 ft2 of manufacturing and distribution space, the company said. In April, National Envelope shut its manufacturing operations in West Houston. COO John Grymes said the West Houston closure was part of a plan to consolidate Southwest operations at its Ennis, TX, plant about 35 miles south of Dallas, which opened in 2007. National Envelope acquired the Houston plant from Atlantic Envelope in 2006. National Envelope operates about 16 plants across the US and manufactures about 50 billion envelopes a year.
Ticketmaster Entertainment plans to eventually move from paper tickets to electronic ones for concerts in North America. "This is a solution we're going to be pushing aggressively," said Ticketmaster sr VP and general counsel Joe Freeman in a (Toronto) Globe & Mail story May 5. "Consumers very soon will look back on the days of paper tickets as very old fashioned as they almost do with airline tickets now." Ticketmaster has tested a credit card-swiping system for concert-ticket buying at recent events by AC/DC and Metallica. Thermal paper, a specially coated paper made from UFS paper base stock, is a main concert ticket grade. Ticketmaster in 2008 sold 141.9 million tickets, up slightly from 141.8 million in 2007, and generated $1.45 billion in revenue in 20 markets globally.
American Express last month said it will stop sending paper statements to employees of its large corporate clients effective in June, Reuters reported. The mandatory change will save paper and postage, and applies to companies with more than 50 employees with corporate cards who will pay bills online. Smaller companies and single customers will be able to receive statements by mail. American Express ended 2008 with 7.1 million corporate cards. The company last week said a new "reengineering initiative" will provide cost benefits of $800 million, including $175 million from elimination of 4,000 jobs, on top of 7,000 job cuts announced earlier this year.
A study by print vendor LexMark International found US government employees identified $440.4 million in unnecessary office printing or about 34% of an annual federal employee print budget of $1.3 billion. The survey found that 89% of respondents said their agencies do not have formal printing policies in place. Out of a total 18.78 billion printed pages, 6.57 billion are unnecessary. Based on a typical ream of copy paper, government employees consume about 94,000 tons per year, with about 33,000 tons deemed wasteful. The estimates do not include paper demand from the Government Printing Office. LexMark calculates the average price per printed page is $.067 for government employees, including all related costs such as copier machine maintenance, paper, energy, and ink. Federal agencies are lax in efforts to prevent wasteful printing, with 20% of agencies restricting color printing and just 11% dictating when to or when not to print. Government employees are ready to embrace digital documents, with 64% of respondents saying they could print less and 69% believing "paper trails" could be converted to digital, according to the study, the 2009 Government Printing Report.
With Europapier now selling Mohawk Fine Papers products throughout Central and Eastern Europe, Mohawk opened a new warehouse in the Netherlands and shipped its first papers from it in the first week of this month, the company said. The warehouse is operated by Rhenus Logistics. Mohawk's warehouse supports its paper distribution into Europe especially to Russia, Germany, Italy and Spain.
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