GLG News by Mr. Dave Hillman, Independent Consultant
GLG News is now G+ Insights
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Newsprint Capacity Shrinks As Demand Declines
January 28, 2010
Catalyst Paper To Idle PM#1 At Crofton Paper Mill | www.paperage.com
Newsprint is a rapidly declining paper grade with no signs of reversal. Capacity is now at 10.2 million mt/year but demand is only half that.Shutting PM1 will take an additional 140,000 mt/year off the market - this will include some 27.7# directory paper as well as newsprint.Although the mill is ideally located for export business (west coast of Vancouver Isl.), this market has also dried up
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APP DESIRES TO BE A GLOBAL PLAYER
January 21, 2010
APP Said To Be Eyeing Paper Mills in Finland | www.paperage.com
APP wants to purchase two or more shuttered mills....probably at a rock bottom price.This will give APP a nearby manufacturing base to sell the European market.APP had been actively involved in the bidding when M-Real sold its mills in Germany, Finland and Switzerland to SAPPI. Having lost out on that opportunity they are now looking at the alternative of buying several shut down mills at a much lower price then it would have paid for 4 operating mills.
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China May Have Slowed But Is Still Breaking Records
January 15, 2010
Pulp Imports To China Slowed In November | www.paperage.com
China is purchasing market pulp at a record breaking annual rate of 10.67mmt. This far exceeds even the most optimistic predictions of just a few years ago.New papermachines are still being installed and domestic UFS paper demand is increasing. India is now beginning to also install these new high production machines - will there be enough pulp to go around?
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Containerboard: A Leading Indicator-Good News For Recovery
January 13, 2010
Prices Heading Up for UFS, Containerboard and Paperboard Grades | www.paperage.com
It is widely recognized that containerboard is a leading indicator since it is used in corrugated containers for packaging manufactured goods. Order backlogs are strong and OCC prices have soared which means producers must increase 1Q prices. Also, elimination of the black liquor tax credit means profits must come from operations.UFS - another leading indicator - also has strong order backlogs which indicates a strengthening economy. Prices will be going up in 1Q as will URB and CRB.
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Newsprint Capacity Must Shrink If Prices Are to Rise
December 18, 2009
Newsprint, Containerboard Makers All Pushing Prices for 2010 | www.paperage.com
The Canadian pulp and paper industry has lost money 20 quarters in a row. Their largest newsprint producer Abitibi-Bowaters is deep in bankruptcy. The other major producers, White Birch, Kruger,Catalyst and Tembec are all looking to AbiBow to make further reductions so that their announced price increases can gain traction. They've announced $25/mt increases for both January and February.Advertizing and Classified have moved to the Internet and newspaper circulation continues to decline.
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America's Container Industry Is Shrinking
December 18, 2009
Smurfit-Stone Container Permanently Closing Two Mills | www.paperage.com
As domestic manufacturing moves to lower wage areas the need for corrugated shipping containers continues to decline. Fewer boxplants are needed and fewer tons of linerboard, corrugating medium and testliner.Plants need to operate at 93/94% capacity in order to raise prices and also to make a decent profit. No longer can companies afford the luxury of keeping plants open simply to offer all major customers "j.i.t." service.This contraction will likely continue throughout the decade.
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APRIL Proposes Solution to Massive Carbon Dioxide Release
December 1, 2009
Tree Harvester Offers To Save Indonesian Forest | www.nytimes.com
One of Indonesian's major pulp and paper producers has developed a solution to a massive release of carbon dioxide and that is to ring a peat swamp forest with eucalyiptus and acacia plantations.Indonesia is the world's third biggest emitter of greenhouse gases, after Chna and the US. Draining and drying the peat land will increase this amount.Deforestation already accounts for 20% of the world's greenhouse gas emissions.
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India's Paper Market Poised To Expand
November 22, 2009
Cheap paper imports from China hurting Indian agro-forestry sector | www.financialexpress.com
India has the world's largest middle class - 250+ million. This group is the major consumers of UFS and grades.Their paper industry is ancient - some machines 100 years old - small and slow.These machines are tolerant of the soft/week wheat straw and rice straw pulps.Huge new world-class size paper machines are already on order - 438" wide running 4500 fpm. These very demanding machines cannot run with rice and wheat straw pulps. India must import quality market pulps -BEK, Acacia, etc.
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Tasmanian BEK Market Pulp Mill Back On Track
November 17, 2009
GUNNS SAYS IN TALKS WITH SODRA ABOUT BELL BAY PULP MILL PROJECT | www.paperage.com
Four years after the initial announcement this mill is finally showing signs of becoming a reality. Financial markets have improved and now underwriting the US$1.7 billion project is no longer such a challenge.Having Sodra as a joint-venture partner proved to be the catalyst.This mill will produce 1.1 million mt of Bleached Eucalytpus market pulp for India, China and other SE Asia countries. This is most welcome in light of the new paper machines being installed.
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Domtar Follows IP Lead In Reducing UCF Overcapacity
October 25, 2009
Domtar To Convert Plymouth, NC Mill To 100% Fluff Pulp | www.paperage.com
Domtar has made a positive strategic move to reduce its UCF (uncoated freesheet) capacity at a time when this paper grade is shrinking. At the same time it is increasing its position as a Fluff Pulp producer - a market that many estimate is growing 6-7%/year.The Plymouth mill will, by the 4Q of 2010 be producing 444,000mt/year of Fluff PulpThey will reduce UCF production by 210,000. This follows IP announced shut down of their Franklin, VA mill which produces 600,000st/year.
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IP Leads In Capacity Reduction
October 23, 2009
International Paper to Shut Down Three Mills | www.paperage.com
IP has said there is excess capacity in both containerboard and uncoated freesheet (UFS). Now they've made a significant move to correct this situation by shutting down 3 papermills. plus one large machine in Oklahoma.Containerboard capacity was reduced by 2.1 million mt. Uncoated Freesheet by 600,000tpy. Coated paperboard (SBS) by 140,000 typy.The mills are located in Franklin, VA, Albany,Oregon, Pineville, LA and the one paper machine in Valliant, OK
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Woodchips: a global commodity with a bright future.
October 9, 2009
Global Trade of Wood Chips Down 26% in 2009 | www.paperage.com
WRI has published an excellent overview of the global aspect of wood chips as a strategic benefit to those pulp mills in countries where forest resources are limited.Even though tonnage shipped is down 28% in 2009 the benefits assure this business of growing substantially as economies get back to normal.As market pulp prices increase and energy becomes more expensive, it will prove beneficial for all pulp mills to maximize production-in many cases from purchased chips, especially softwood.
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Newsprint's a Problem Even in China!
October 2, 2009
Norske SKog to Sell Hebei Mill in China for RMB 925 Million | www.paperage.com
If newsprint was to be a growth paper grade anywhere in the world it was thought to be China with its 1.3 billion people. However, Norske Skog could not make either of its mills profitable during the last 4+ years.. They are now exiting the Chinese market.Hebei had a production capacity of 330,000mt/year of newsprint. Shandong Huatai will take over the Zhaoxian mill which will make them China's largest producer of newsprint. The deal will be finalized by the end of 2009
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CMPC To Increase Brazilian BEK Capacity
October 2, 2009
CMPC in Talks to Buy Aracruz Guaiba Unit for $1.4 Billion | www.paperage.com
CMPC - one of Chile's two major market pulp producers will take over the former Riocell market pulp mill in Guaiba in the southern state of Rio Grande do Sul. Paying US$1.4 billion.This mill already produces 450,000mt/year of BEK as well as 50,000mt of printing and writing paper. Their intention is to move ahead with the stalled expansion project to raise the mill to the 1 million mt/year level.CMPC will become the world's #2 market pulp producer with 3.8 million mt capacity.
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Domestic UFS Producers Battered From Both Sides
September 4, 2009
UPM Inks US, Canada Supply Deal with XpedX | www.paperage.com
UPM says all paper imported from Europe will also carry the European Union's Eco-Label, the office EU markk awarded to greener products. Their European market is shrinking and therefore they feel the US market is the best way to take up the slack But...the US market is also shrinking...down 21% for the year to date as of 2008. The Chinese have announced plans to ship 80,000mt/month (1 million mt/year) to the US West Coast and the Texas SE cities.
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More UFS for Europe's Declining Market
September 1, 2009
Portucel Soporcel's New Mill Begins Production in Portugal | www.papereage.com
The Sopocel mill, located in Setubal, Portugal, is coming on stream with lower cost (because it's a fully integrated mill) Uncoated FreeSheet at a time when the market is projected to decline by roughly 5%/year. How many older, smaller paper machines now located in non-integrated mills will this big new machine make obsolete/ uncompetitive? And how many of them will have to shut down? Taking 500,000mt/year of Bleached Eucalyptus off the market will tighten supply.
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#1 + #2 Eucalyptus Producers = World's Biggest
September 1, 2009
Merger of Aracruz and Votorantim Creates FIBRIA | www.paperage.com
Two of the biggest and most successful Bleached Eucalyptus producers have merged producing a company with a capacity of over 6 million mt of top quality pulp. Will this merger create a company who can, in effect, strongly effect if not control pricing? They certainly should be the leader. Will the economies of scale and reduced costs make these two low cost producers enjoy even significantly lower costs? This is certain to have an effect on profitability.
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Muskegon - another casualty of declining CFS market
August 28, 2009
SAPPI To Permanently Close Muskegon, MI Coated Paper Mill | www.risiinfo.com
Coated Free Sheet production is down 21% for the first six months of 2009 compared to 2008. To maintain a balance in the market and preserve the pricing structure it will be necessary for additional mills to close or paper machines to be shut down.With the Chinese announcing the importation of 80,000 mt/month of CFS the future doesn't look too bright.
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All Newsprint Grades Are Suffering
August 26, 2009
EUROPEAN DEMAND FOR NEWSPRINT DOWN IN JULY | www.paperage.com
While is it generally recognized that newsprint tonnage is falling because readership is down it was hoped that the other segments - SC (super calendared), coated and uncoated mechanical would be able to hold their own. Unfortunately this is not the case and all grades declined in July. SC-magazine saw demand fall by only 6.2% - the least amount whereas the other grades fell by 17-19%. Regular newsprint tonnage in July declined by 96,000 tons
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China's Enormous Appetite For Recovered Paper
August 20, 2009
RISI ECONOMISTS: The China Factor In World Recovered Paper Markets | www.risiinfo.com
China's paper industry, in just the last few months, has begun to run full out. Their domestic market has increased its consumption which has added to the traditional export market for container packaging grades. China, in 2009, is expected to purchase 25% of all of the US's recovered paper. This has significantly increased the prices which US mills must pay for OCC and ONP. Is this an abberation or will it continue into 2010?
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