Among the specific findings derived from the survey data were:
* Uncoated groundwood capacity fell to less than 1.9 million tons, or almost 20 percent below its 1996 peak level. Capacity for this grade is expected to rise about 2.3 percent in 2004, and then remain unchanged in 2005 and 2006.
* Capacity for coated groundwood dropped by 1.3 percent from its all-time high in 2002. The survey projects capacity to remain essentially unchanged through 2006.
* Coated free sheet capacity declined 4.2 percent from 2002 levels. Capacity is now 14.2 percent below its 2000 peak, and is expected to rise by 2.1 percent annually during the forecast period.
*n Uncoated free sheet capacity was the only printing/writing grade to show an increase between 2002 and 2003, to about 13.9 million tons. Capacity for this grade is expected to remain unchanged during the forecast period of 2004 to 2006.
The changing dynamics in the paper sector were nicely outlined in a recent presentation to the SC Council by industry analyst Verle Sutton of Forestweb, a Los Angeles-based provider of outsourced business intelligence solutions for the forest products industry.
The Shift Is On
Sutton contends that the market for SC printing papers is on the verge of shifting in the producer's favor, with higher prices likely to follow. He attributes this sea change to reduced supplier capacity, fewer European imports and stronger domestic demand. On that latter point, the Pulp and Paper Products Council (PPPC) reports that North American demand for SC-A papers increased by 12.8 percent in the first two month of 2004 alone.
Market conditions are ripe for a price increase, Sutton believes. SC-A prices are already on the way up, with the April increase of $40/ton expected to be implemented fully by July 1st. In addition, the market can expect a second increase in the third or fourth quarter, he says.