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Prices for coated printing paper are likely to continue escalating this quarter, as supply remains constrained and costs, including energy and transportation, keep rising.
Early this week, major domestic producer Verso announced an 8% or about $60 per ton price increase on its coated freesheet (CFS) sheets and sheeter rolls, as well as specialty grades, effective with all new and existing orders with confirmed delivery dates of February 1. In a letter to customers sent on January 4, Verso said the increase includes the following CFS grades: Sterling Premium, Sterling Premium Digital, Anthem Plus, Blazer Digital, and Sterling Ultra C1S.
In December, at least two importers were out with new price increases in the USA. Spain-headquartered Lecta announced a 5-7% ($60 per ton) increase on its CFS, effective Dec. 13 for new or unconfirmed orders. A few days later, South Korea-headquartered Hansol Paper announced a price increase of 6-8% ($60 per ton) on all its CFS grades sold in North America, effective immediately.
Major coated mechanical (CM) producer UPM announced plans to increase its CM paper prices by up to 8% effective January 1, 2022. According to a letter sent to customers on Nov. 4, UPM said the increase involved the following CM grades: Cote, Ultra, and Star. UPM produces CM on one paper machine in the USA and also exports paper from its mills in Europe (Finland, Germany, and Scotland), including CM, CFS, uncoated freesheet, uncoated mechanical, and specialty papers.
Sources also reported that West Coast-based mill Willamette Falls is out with a new price increase on CFS for Feb. 1.
“Demand and supply are obviously extremely tight,” a paper supplier stated. “Capacity reductions and conversions that happened in the last 12 to 18 months are the main drivers for the price increases, combined with costs that started to rise in early 2021 and that continue to be on the rise. … We must see new price increases in the first half of 2022.”
“CFS availability is going to be further challenged going into 2022 (and there is) no rescue coming from Asian or European imports in the near future,” a paper merchant said, citing the challenges overseas mills are facing to ship paper to North America, including higher energy and freight costs, as well as a workers’ strike at UPM’s mills in Finland.
On January 5, the Finnish Paperworkers’ Union declared that their strike at UPM’s mills in Finland that started on Jan. 1 will be extended by two weeks until Feb. 5, unless new agreements are reached. In a press release, UPM stated that it “will service its customers from its mills outside of Finland to the extent possible.” UPM has a capacity of about 2.4 million tons per yr or 200,000 tons per month of graphic papers at four mills in Finland, according to Fastmarkets estimates.
Demand is currently being limited by the lack of (paper) capacity, otherwise demand would be definitely higher than last year,” a contact at a paper company noted.
“Now the UPM Finland strike is going to put even more pressure on capacity,” the contact continued.
Finland and Germany are the major coated printing paper exporters to the USA, accounting for more than 30% of the USA’s total coated paper imports, according to official statistics. In CFS, South Korea is the largest supplier to the USA, accounting for more than 40% of its total CFS imports.
At the end of December, South Korea-headquartered Moorim Paper told customers that, starting on Jan. 1, it would be implementing “strict allocations” for all customers as the company could not “secure sufficient shipping capacity and a competitive freight rate” for 2022.
Industry contacts reported that due to the transportation issues, imports are arriving with about two-month delays for reaching their destinations in the USA.
“They (importers) can’t or won’t ship for a variety of reasons. Others have delayed orders so many times you can only guess when the product may arrive,” a contact said. “It’s a struggle to get any communication on expected delivery of the orders entered. Then when you do get information, the reconfirmed dates are out another two months.”
In North America, sources cited shortage of available trucking capacity.
“We’ve also seen some issue with incoming materials due to transportation, but (it is) hard to tell if that was just the holiday season,” a local supplier commented.
“Domestic CFS mills are trying to reset allocation in 2022, with lower numbers for customers to help improve reliability of shipping dates,” a paper distributor said. “They were not able to produce all the monthly allocated orders taken in 2021, so shipment dates kept being missed.”
Industry contacts reported that the announcement of BillerudKorsnäs acquisition of Verso late in December and its plans of converting Verso’s CFS assets at Escanaba, MI, to boxboard grades from 2025 to 2029 was the big news at the end of 2021.
BillerudKorsnäs announced that it will buy Verso for about $825 million. The deal is expected to close in the second quarter of 2022.
After the acquisition, BillerudKorsnäs plans to convert Verso’s largest facility, the Escanaba mill, into a fully-integrated boxboard production site. One machine is estimated to be converted by 2025, and the second one by 2029. The Escanaba mill has three paper machines with a capacity of 730,000 tons/yr of printing and specialty papers. The mill’s output is focused on coated freesheet and specialty paper, according to Fastmarkets Mill Asset Database.
BillerudKorsnäs said that it plans to continue operating Verso’s Quinnesec, MI, mill and that it is
committed to continuing to serve Verso’s existing customers
with printing and writing paper.
The Quinnesec mill has one 430,000 tons per yr paper machine that makes graphic paper.
Industry contacts thought that BillerudKorsnäs would keep Verso’s printing paper machines running for as long as demand remains good enough and especially in today’s favorable market condition for paper producers.