~ by Andrew Fennell, Friesens Vice-President of Finance
In many respects, 2024 has been a more stable year thus far for the paper industry in North America. There have been very few price changes, supply has been comparatively stable, and lead times have normalized. Paper has been relatively easy to purchase, and most shipments have been on time.
Having said that, there have been a few disruptions:
- On February 21, 2024, Domtar announced that it will indefinitely curtail paper operations at its Ashdown, Arkansas, facility. The A62 paper machine and associated sheeter will be idled by the end of June, which will Domtar’s annual uncoated freesheet (UFS) capacity by 216,000 short tons. On the more positive side, UFS paper mills are somewhat busier than they were last year in 2023, with an average operating rate of almost 90%.
- Many were surprised by the price increase announcements by most of the North American uncoated freesheet (UFS) paper mills in March 2024, but as explained by Midland Paper, “high fuel and energy costs, transportation and supply chain problems, hiring challenges to run paper machines, rising pulp prices, and other input costs all continue to put pressure on the mills.”
- We are also anticipating the effects of a coated paper mill conversion that was previously announced: On November 10, 2022, Sappi North America announced the approval of a $418 million capital project to convert Paper Machine No. 2 (a coated freesheet machine) at its Somerset Mill in Maine, to increase its capacity and produce solid bleached sulfate board (SBS) products. The conversion will take effect in Q4 2024 and will reduce the amount of coated freesheet paper manufactured in North America.
For the balance of 2024, the predictions are:
- Availability should remain quite good
- For the most part, lead times should stay normal
- UFS paper mills should remain fairly busy and maintain their operating rates of around 90%
- There’s a chance of another price increase in the fall for uncoated freesheet
- It’s unlikely there will be a price increase for coated paper as the coated mills continue to struggle with lower operating rates.
