SPC’s latest pricing bulletin: Input costs continue to rise, mostly because transportation and pulp costs are at ten-year highs.
Mills Are Operating at Peak Capacity
Paper mills are essentially sold out, with operating rates high above 90%. Most mills are implementing some form of allocation and lead times on some grades can be as long as 60 days.
Because of mill closures and discontinued product lines, uncoated free sheet web papers are basically unavailable for new business.
Price Increase Will Continue
These high input costs and tight supply in the market mean that price increases will continue to hold. Also, the uncoated mills announced another round of price increases on Friday, April 20th, effective on orders shipping after mid-May. The market will probably support one more (or even two) coated price increases for Q3 & Q4 2018 as well.
SPC’s Good News
Thankfully, SPC’s prospects are much better than those in most of the industry. Thanks to our strong relationships, we are under no tonnage restrictions with Sappi or Verso for coated free sheet. This should help our clients avoid disruption for the tons needed for both existing business and new business pursuits. However, delivery dates should be verified before making short term commitments.
With the help of our suppliers, SPC has initiated creative inventory programs that will help minimize disruptions on many grades.
Mills to Watch
Sappi will be restarting its largest paper machine in the next month. This machine is currently down for maintenance, which has caused some of the reduction in supply, but its rebuild should help ease the coated free sheet market delivery backlogs.
Appleton Coated paper mill is re-emerging under the name Midwest Paper Group, once again manufacturing some paper grades, but it’s unclear what grades and volume it will be producing.
Garry E. Nielsen
Vice President of Production Planning & Procurement