Paper Market Update
Paper markets have become increasingly difficult to navigate since last month. All paper markets are still very tight with many mill machines on allocation and not taking new business beyond current commitments. Order lead times have increased out to as much as 16 weeks for some grades. There are a number of factors playing out at the same time in the paper and transportation industries creating a supply and demand imbalance and chronic shortages and late paper for most grades Paper prices continue to escalate…we’ve included the updated summary in the report.
Parts of the paper industry in North America are experiencing supply shortages and delivery issues, as well as across the board price increases. Additionally, capacity shortages in U.S. trucking / transportation, along with high mill operating rates, are creating significantly longer lead times and challenges with meeting existing paper delivery schedules. The entire industry is experiencing reduced flexibility and growing lead times on paper orders, up to 14 weeks for some grades.
After a flurry of activity over the past few months, including the loss of Appleton and West Linn, the coated freesheet (CFS) paper market has stabilized and remains strong. The market for coated groundwood (CGW) #4 grades is strong, benefiting from three #4 grade machine shuts in the past year and from grade #3 downgrades. The CGW #5 market is showing signs of softening after seeing big demand declines in all customer segments and downgrades to supercalendered (SC) grades. Uncoated freesheet (UFS) capacity reductions will strengthen this market in 2018. The uncoated groundwood (UGW) grades market is stable. The newsprint market remains tight in 2018. Directory producers implemented a $50/ton price increase Jan 1. New CVDs were announced for UGW grades.