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Consolidation is Working for Most Grades
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Pulp, linerboard, uncoated freesheet—all are seeing decent pricing and supply stability as compared to the 1990’s and the first few years of this decade. It has been painful and all the work is not yet done, but supply and demand seem to be coming into line. It also seemed to take a very long time, but with all the tradition, egos, and community wishes involved, perhaps that is not surprising. So what’s next? Control of the pulp supply has moved to South America and Iberia, making paper mills worldwide largely dependent on what the big eucalyptus suppliers decide to do. This leaves paper mills squeezed between pulp costs and product pricing, not exactly the best place to be. However, it ought to help the better managers find a competitive edge—they can get very focused on their own business. The steel industry has lived with this model for decades now, and the better ones are doing just fine, thank you. Newsprint is still a problem. Latest North American data I have seen shows demand down roughly 7% year-to-date. The question is, can we use all the LWC or SC paper that converted newsprint mills can make or is the problem just being moved around? Tissue, of course, continues to shine. And tissue is the first grade wanted when standards of living improve in third world countries. Perhaps the lost decade of the 1990s is nearly over—17 years later.

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