Q2 PAPER OUTLOOK — Run of the Mill Demand

Under the previously followed ground rules, unless shuttered mills were immediately dismantled, they had to remain closed for one year before their capacity was removed from the survey. The association’s current rules call for immediate removal of capacity from all shutdown machines where the owner’s intention to close them permanently has been clearly stated in a public announcement. The net result is that two years’ worth of capacity reductions have been removed from the current survey.

The capacity survey found similarities and differences in the numbers for individual paper grades.

At 27.3 million tons, printing/writing paper capacity in 2002 declined 2.7 percent from 2001 levels and was off 7 percent from the record year of 2000. This represents a loss of about 2.1 million tons in just two years, AF&PA notes. Capacity is now at its lowest level since 1994 and is scheduled to remain essentially unchanged in 2003 before rising by 1.6 percent in 2004 and 0.5 percent in 2005, the reports says.

After falling by almost 7 percent in 2001—to its lowest level since the late 1980s—uncoated groundwood capacity climbed by 10.3 percent in 2002, to 2.01 million tons, the survey found. Capacity is projected to grow another 5.4 percent in 2003 and 3.4 percent in 2004, then remain essentially unchanged in 2005.

Coated groundwood capacity continued its upward trend, growing another 2 percent in 2002—to 5.04 million tons—on top of its nearly 2 percent rise in 2001. Following a projected pause in 2003, with capacity slated to decline by 3.6 percent, the grade is expected to get back into a growth trend with a forecast rise in capacity of 1.8 percent in 2004 and 0.6 percent in 2005, according to AF&PA’s research.

Unlike the groundwood grades, coated free sheet capacity declined in 2002—from more than 5.4 million tons in 2001 to about 5 million tons in 2002, or by about 7 percent. Another 2.4 percent drop is projected for 2003, according to the survey, which will represent a capacity decline of 12.6 percent from the peak level in 2000.

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