PaperAge Magazine

Uncoated Free Sheet: Admit It or Not, Lots of Support Emerging

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August 15, 2017 – According to Vertical Research Partners' packaging and forest products analyst Chip Dillon, there are a number of forces that could influence an increase in pricing of uncoated free sheet.

Through June (the latest month for which complete data are available), North American (PPPC) and US (AF&PA) demand are down year-to-date by 4.7% and 5.3%, respectively. The PPPC indicates a North American YTD operating rate of 89% while the AF&PA shows that US mills ran at 88%.

Uncoated free sheet prices in the US are down $30-$70 per ton (depending on sub-grade) over the past year (to July) according to RISI. Dillon says, “Despite this year's challenges, we see five forces that are well-underway or about to emerge that could actually help the US uncoated free sheet industry:

  • higher market pulp prices,
  • rising uncoated free sheet prices outside of the USA,
  • machine conversions,
  • falling imports, and,
  • (possibly) steadying demand."

Market Pulp Prices Matter. North America has about 8.5 million of the roughly 50 million metric tons (tonnes) of global uncoated free sheet capacity, or less than 20% of the total. Much of the uncoated free sheet produced outside of the US is from mills/companies that are not fully sufficient in terms of the pulp needed. This reality is reflected by the relationship seen in non-US uncoated free sheet prices and global market pulp prices. Market pulp prices have risen sharply and steadily this year, with the falling dollar (down more than 10% versus the euro over the past 6 months) helping to boost US-dollar market pulp prices. Specifically, since December, US prices for northern bleached softwood kraft (NBSK) and bleached eucalyptus hardwood pulp (BEHK) are up $80/tonne and $200/tonne, respectively.

Vertical Research Partners is the preeminent independent equity research and consulting firm focused on the Industrials and Materials sectors. Yo learn more, please visit:

SOURCE: Vertical Research Partners