SAN FRANCISCO, Jan. 25, 2010 (RISI) - Major North American uncoated freesheet (UFS) producers Domtar, International Paper, Boise, Glatfelter and Finch Paper last week lined up behind a $40/ton ($2/cwt) price increase on cutsize copy paper, effective next month, with slower but broadening support for a similar hike on offset rolls.

Industry sources said leading producer Domtar initiated the new increase with a Jan. 18 announcement on cutsize only effective Feb. 15, which was followed by third-largest producer Boise. International Paper, the second largest supplier, on Jan. 19 said it would raise prices 4% on its range of cutsize and imaging papers, offset rolls and postcard grades, all effective Feb. 15.

Glatfelter set a $40/ton increase across its roll and cutsize products effective March 1, and Finch Paper set a similar increase effective Feb. 22.

Market contacts said it was widely expected for Domtar and Boise to add increases on offset rolls, with support likely from key producer Georgia-Pacific as well as smaller mills such as Flambeau River Paper.

"They will all be in line," said an East Coast merchant.

The new increase appears to not include forms, envelopes or MOCR paper, contacts said. Envelope prices went up in the fourth quarter.

Also, Wausau Paper set a $60/ton increase on its text and cover grades effective March 1.

The new, supply-driven price hike mirrors an increase on cutsize and rolls in February 2008 driven by high energy costs despite less-than-robust shipments. While current activity remains weak, recent comparisons have greatly improved with year-earlier comparisons.

"Our discussions with merchants, importers, and other players in the trade suggest a healthier tone to the business," said an industry analyst. "At the same time, global pulp prices continue to surge, pushing up UFS production costs on a global basis."

"These are unusual fundamentals," added another analyst, who also noted the weaker US dollar and its impact on imports.

Total UFS shipments in December of 813,100 tons were up 1.9% from a year earlier and through 12 months of 2009 at 9.735 million tons were 11.1% lower than 2008, according to the latest US statistics from the American Forest & Paper Assn. The sector operated at 85% in 2009 compared with 90% in 2008.

Inventories of 941,100 tons in December were 0.5% lower than November and 218,700 tons or 18.9% below year earlier levels. Stocks are at multi-year lows, an analyst noted.

US imports in November of 84,000 tons were 4.7% above year earlier levels and through 11 months of 2009 at 855,600 tons were 16.2% lower. US exports of UFS through November at 779,300 tons were 5.9% lower than a year earlier, with volumes to Canada off 18.4% to 268,800 tons and to Mexico up 3.0% to 191,500 tons.