paperloop.com
SAN FRANCISCO, Aug. 8, 2001 (paperloop.com) - North American printing and writing paper production dropped 301,000 tonnes in June compared with production for June of 2000, and producers operated at just 84 percent of capacity for June, according to the Pulp and Paper Products Council (PPPC).
Along with the decreased production compared with last year, overall printing and writing paper inventories decreased by 68,000 tonnes in June from May's level, and was down 152,000 tonnes compared with the June 2000 inventory total. Most of that stock decline was at uncoated free-sheet mills, primarily due to downtime. Coated free-sheet paper inventories remained relatively unaffected, dropping only 4,000 tonnes in June. Total coated free-sheet demand plummeted 21 percent in June compared with year-ago results.
Less downtime in June. While overall printing and writing paper operating rates were down to 84 percent in June in North America, less downtime was taken in June compared with May, when printing and writing papers' operating rate was only 79 percent.
The increased production in June was dependent upon an anticipated swell in demand. Production of lightweight coated (LWC) and coated groundwood usually pick up in the third quarter with demand from the catalog market. In addition, the seasonal swell in demand for uncoated free-sheet (especially reprographic paper for school and office use) begins in August, when large accounts begin their bids. 
The decrease in production of coated free-sheet and coated groundwood paper has helped save North American manufacturers in a weak market. But overall lack of domestic demand, a strong U.S. dollar impeding export, and less expensive imported coated papers has contributed to the sliding prices of coated papers in the U.S. since April.
With magazine subscriptions low and magazine pages down by 20 percent largely due to a decrease in advertising, the coated paper producers said they hope that the start of the holiday catalog season will stimulate sales.
Import competition. According to the PPPC, overseas imports of coated groundwood to North America dipped 13 percent when compared with June 2000 imports. Even though quantity has fallen, domestic manufacturers are having a hard time competing with less expensive Asian and European coated paper.
Uncoated free-sheet witnessed a rush of overseas imports in June, up 67.1 percent compared with June 2000. Overall, however, uncoated free-sheet shipments to the U.S. and Canada fell 74,000 tonnes (6 percent) compared with June 2000 shipments. 
The U.S. was aggressively exporting coated free-sheet to Canada through May this year. The U.S. shipped 128,900 tons in the first five months to Canada, up from 92,500 tons in the first five months of 2000, according to AF&PA. 
Inventory decline. Total inventories of printing and writing papers are tightening. Coated inventories remain high, however. In May, coated paper and coated groundwood inventory combined was at 820,000 tonnes, just 5,000 tonnes less than the inventory in June 2000. 
Inventories of uncoated free-sheet and uncoated groundwood papers slid steadily throughout the second quarter, totaling 1.682 million tonnes in June compared with 1.83 million tonnes in inventory in June 2000. 
Canadian mill shipments fell as much as 16.4 percent since last June for coated groundwood, according to the PPPC. Coated free-sheet shipments from Canada also fell 10.7 percent, reflecting a very loose North American market for coated paper overall. 
However, Canadian shipments of uncoated groundwood remained solid. Overall printing and writing paper shipments from Canada totaled 3.3 million tons in the first half of this year, down 4.2 percent compared with first half 2000 shipments.