RISI uncoated woodfree/freesheet study analyzes risk of closure for 100 mills, 200 machines in North America and Europe

BOSTON, MA, July 29, 2009 Press Release – RISI, the leading information provider for the global forest products industry, today announces the official publication of a new study titled: “North American and European Uncoated Woodfree/Freesheet Risk of Closure Study.” This report details data and risk of closure on over 100 mills and 200+ machines, each ranked by major criteria such as cost position, market prospects for the grade, future regional wood supply, corporate significance of the mill, machine age, and machine size. The report is currently available for purchase on the RISI website: http://www.risi.com/ufs.

John Maine, VP – Pulp and Paper at RISI, Inc and Project Team Leader, noted, “The market for uncoated freesheet in North America has been in decline since 1999, falling 5% and 8% for the past two years, and the drop is certain to accelerate in 2009. Although Europe eluded this downtrend until 2008, we expect the demand drop in western Europe to offset the gains in central and eastern Europe, resulting in a decline in total demand for uncoated freesheet in Europe as a whole over the next five years.” He continued, “opportunities to offset these declines through exports will be sparse as South American and Asian producers expand their uncoated freesheet capacity to become self-sufficient and even enter the export market.”

The report identifies a base case and scenarios based on potentially weaker than expected demand and currency fluctuations. “This market has historically operated at a 92% operating rate,” said John. He continued, “In order for the market to return to anywhere near that rate, we predict that significant closures will occur.”An excerpt from the report shows the data more strikingly:

2009 to 2013 (000 tonnes) RISI Scenario I Scenario II Scenario III
Base
Case		 Weak
Demand		 Strong
Euro		 Strong Euro /
Weak Demand
EUROPE
Drop in Domestic Demand -969 -1479 -969 -1479
Erosion/Gain in Net Trade 90 90 -178 -178
New Capacity 1440 1440 1440 1440
Closures Likely -1599 -2109 -1867 -2377
NORTH AMERICA
Drop in Domestic Demand -2026 -2495 -2026 -2495
Erosion/Gain in Net Trade -78 -78 -17 -17
New Capacity 0 0 0 0
Closures Likely -2104 -2573 -2043 -2512

This timely and valuable study details the most likely mills and machines by ranking them on a six criteria methodology, along with a market overview. In addition, the methodology pits small mills producing primarily specialty products against each other rather than trying to compare their cost structures to those of large, commodity mills.

via RISI.

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