Our resident expert is at it again. Millcraft's president, Travis Mlakar, gives his take on why the recent announcement by Domtar to make the base stock for Appleton Carbonless will impact pricing in the Uncoated Freesheet(UFS)market.
How is Carbonless Affecting Uncoated Free Sheet Pricing? One of the most significant deals to be announced recently, in terms of the UFS market and the prices we should all expect to pay, was Domtar’s announcement that they will be making base stock for Appleton Carbonless.
Why is this significant? Because the deal between the two companies is for fifteen(15) years and rougly 180,000 tons per year. That alone will tighten the total industry’s operating rates by 2% and boost Domtar’s total volumes by 5%. Now, add that to the capacity reductions that have recently come out of the uncoated manufacturing base (Wausau, Grey’s Harbor) along with increasing operating costs (diesel fuel and chemicals) and you have a tight supply base coupled with price pressures.
In addition, throw in that fact that pulp levels at producers are back to their historical averages just in time for demand to pick up during the summer… and you have all the makings of a stable to increasing price in UFS over the next 6 months.
For a more in depth look into the UFS market, click here to read the analysis by Credit Suisse.
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