Downtime, lower inventory keep prices relatively flat for U.S.

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paperloop.com
SAN FRANCISCO, July 30, 2001 (paperloop.com) - While coated paper prices declined in July because of cheaper imports and flooded domestic inventories, uncoated papers, including free-sheet, have been spared a dramatic turn by industry-wide downtime efforts and inventory management.
Even considering the increase in South Korean uncoated free-sheet and European uncoated mechanical imports, prices managed to remain relatively stable, dipping only slightly in what many producers and merchants are calling the most depressed market in over two decades. One forms bond manufacturer and one merchant both stated that, while business was "lousy," prices were holding.
However, spot market deals dramatically impacted rolls of uncoated 50-lb offset. Another trend in publishing spheres is downgrading from uncoated free-sheet to cheaper, uncoated white groundwood. Sources said that, although these groundwood alternatives do not meet all the specifications for permanence, they are being sold in increasing volumes by Abitibi-Consolidated Inc. and Alliance Forest Products Inc., which Bowater Inc. plans to acquire.
The largest grade of uncoated free-sheet in production, demand, and sales is repro bond, yet reprographic paper takes an annual downturn in the summer months due to lowered office demand and school closures. End uses for the paper are in personal printers and/or photocopiers. Most merchants expect a swell in demand in August, when schools will actively bid. Another factor in the expected increase of repro usage is the decrease in heavier trade book and offset uncoated papers.
Some paper manufacturers, praising North American mills in their choice to take downtime rather than discount across-the-board, felt that continental production has more of an impact on the domestic market than imports. From January to March of this year, the Confederation of European Paper Industries (CEPI) released figures that put uncoated mechanical exports 3.7 percent higher in the first quarter than year-to-date figures.
Indeed, extensive downtime has been the saving grace of uncoated papers over the last six months, sources said. Beginning in the first quarter with exorbitant energy costs in the U.S. West, and continuing through the lack of demand in the second and third quarters, lost tonnage has saved manufacturers the costs of energy, freight, surplus inventory, and labor.