Containerboard suppliers to shut plants
More than 2 million tons of containerboard capacity being removed
Tom Stundza -- Purchasing, 10/14/2009 1:22:47 PM
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U.S. containerboard producers are expected to remove 2 million tons of annual capacity from the market permanently in coming weeks to bring supply in better balance with recession-battered demand.
According to PPI Pulp & Paper Week, market speculation is that some of the announcements will be "new" shutdowns and some will be machines that have been "indefinitely" idled for some time. The market impact of the closures is expected to be heaviest west of the Rocky Mountains, one of the highest cost regions in North America.
Analyst Mark Wilde of Deutsche Bank believes International Paper "is very close" to announcing capacity adjustments while Smurfit-Stone Container may wait until it files its bankruptcy court reorganization plan-possibly as late as January.
U.S. containerboard production in 2009 is forecast to come in around 31.1 million tons, according to latest forecast by the RISI forest products consultancy. That would be down 8.4% from 2008 output and 12.1% off the all-time peak in 2007.
Even with a modest recovery in U.S. box shipments in 2010 and 2011, Waghorne tells a recent RISI-sponsored conference that more than 2 million tons of containerboard capacity must be removed from the market to bring operating rates back anywhere close to a cost-effective 95% level.
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