U.S. uncoated free-sheet prices fall slightly in August, but

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SAN FRANCISCO, Aug. 29, 2001 (paperloop.com) - Uncoated papers production has been restricted this year, with extensive downtime and permanent mill closures reducing market tonnage and thus stabilizing prices. Even with some increased demand, uncoated papers in North America, especially free-sheet, will depend on possible flooding in a near future of greater capacity.
Overall, prices for uncoated papers fell slightly in August compared to July, with repro bond dipping on the low end. As expected, demand for repro bond, the most popular grade of uncoated free-sheet (UCFS), picked up in July, and several merchants reported greater volumes of paper per sale. But demand is still low compared with last year.
One source, crediting downtime with the uncoated float through the weak market of the last six months, felt that prices would only dip further, as mills have stopped taking downtime.
Trade book pickup? Web 50-lb trade book gained some ground on the low end. The strength of trade book transactions is due the seasonal pick up in book publishing, which takes place through September and October and targets the educational and holiday markets.
With the temporary idling of several Pulp & Paper of America (PPA) machines, owned by parent company American Tissue Inc., the already small coterie of trade book manufacturers will benefit from the lost tonnage, especially in lightweight book papers, according to one merchant. He added that if demand continues, the decrease in product might have a ripple effect and drive prices up.
Permanent tonnage cuts in a variety of uncoated grades will aid the ailing market by better reflecting lowered demand. Mill inventories have already benefited. RISI's forecast of an uncoated upturn in the fourth quarter is also based upon those capacity curtailments, and the infrequent practice of swing capacity from coated to uncoated manufacturing.
Downtime taken. Downtime taken by several companies, including Finch, Pruyn & Co. and Weyerhaeuser Co. was popularly used as a means of upgrading older, less efficient machines, thereby adding more capacity to the uncoated mix overall.
In addition, some so-called permanent machine shuts will simply serve as space providers for a future of more efficient and larger volume-producing machines. Willamette Industries' mothballing of two UCFS will be replaced with a larger and more efficient UCFS machine in Kingsport, Tenn., for a difference of an additional 207,000 tons/yr.
Converted papers, such as forms bond, have held well price-wise, mainly because so few mills produce them. However, one West Coast company source said, "Volume of forms bond has eroded 5-7%," speculating that the grade would soon be completely replaced by cutsheets.