Mr. Dave Hillman

GLG News by Mr. Dave Hillman, Independent Consultant

Tasmanian BEK Market Pulp Mill Back On Track

November 17, 2009

Analysis of:GUNNS SAYS IN TALKS WITH SODRA ABOUT BELL BAY PULP MILL PROJECT | www.paperage.com

Four years after the initial announcement this mill is finally showing signs of becoming a reality. Financial markets have improved and now underwriting the US$1.7 billion project is no longer such a challenge.Having Sodra as a joint-venture partner proved to be the catalyst.This mill will produce 1.1 million mt of Bleached Eucalytpus market pulp for India, China and other SE Asia countries. This is most welcome in light of the new paper machines being installed.

Domtar Follows IP Lead In Reducing UCF Overcapacity

October 25, 2009

Analysis of:Domtar To Convert Plymouth, NC Mill To 100% Fluff Pulp | www.paperage.com

Domtar has made a positive strategic move to reduce its UCF (uncoated freesheet) capacity at a time when this paper grade is shrinking. At the same time it is increasing its position as a Fluff Pulp producer - a market that many estimate is growing 6-7%/year.The Plymouth mill will, by the 4Q of 2010 be producing 444,000mt/year of Fluff PulpThey will reduce UCF production by 210,000. This follows IP announced shut down of their Franklin, VA mill which produces 600,000st/year.

IP Leads In Capacity Reduction

October 23, 2009

Analysis of:International Paper to Shut Down Three Mills | www.paperage.com

IP has said there is excess capacity in both containerboard and uncoated freesheet (UFS). Now they've made a significant move to correct this situation by shutting down 3 papermills. plus one large machine in Oklahoma.Containerboard capacity was reduced by 2.1 million mt. Uncoated Freesheet by 600,000tpy. Coated paperboard (SBS) by 140,000 typy.The mills are located in Franklin, VA, Albany,Oregon, Pineville, LA and the one paper machine in Valliant, OK

Woodchips: a global commodity with a bright future.

October 9, 2009

Analysis of:Global Trade of Wood Chips Down 26% in 2009 | www.paperage.com

WRI has published an excellent overview of the global aspect of wood chips as a strategic benefit to those pulp mills in countries where forest resources are limited.Even though tonnage shipped is down 28% in 2009 the benefits assure this business of growing substantially as economies get back to normal.As market pulp prices increase and energy becomes more expensive, it will prove beneficial for all pulp mills to maximize production-in many cases from purchased chips, especially softwood.

Newsprint's a Problem Even in China!

October 2, 2009

Analysis of:Norske SKog to Sell Hebei Mill in China for RMB 925 Million | www.paperage.com

If newsprint was to be a growth paper grade anywhere in the world it was thought to be China with its 1.3 billion people. However, Norske Skog could not make either of its mills profitable during the last 4+ years.. They are now exiting the Chinese market.Hebei had a production capacity of 330,000mt/year of newsprint. Shandong Huatai will take over the Zhaoxian mill which will make them China's largest producer of newsprint. The deal will be finalized by the end of 2009

CMPC To Increase Brazilian BEK Capacity

October 2, 2009

Analysis of:CMPC in Talks to Buy Aracruz Guaiba Unit for $1.4 Billion | www.paperage.com

CMPC - one of Chile's two major market pulp producers will take over the former Riocell market pulp mill in Guaiba in the southern state of Rio Grande do Sul. Paying US$1.4 billion.This mill already produces 450,000mt/year of BEK as well as 50,000mt of printing and writing paper. Their intention is to move ahead with the stalled expansion project to raise the mill to the 1 million mt/year level.CMPC will become the world's #2 market pulp producer with 3.8 million mt capacity.

Domestic UFS Producers Battered From Both Sides

September 4, 2009

Analysis of:UPM Inks US, Canada Supply Deal with XpedX | www.paperage.com

UPM says all paper imported from Europe will also carry the European Union's Eco-Label, the office EU markk awarded to greener products. Their European market is shrinking and therefore they feel the US market is the best way to take up the slack But...the US market is also shrinking...down 21% for the year to date as of 2008. The Chinese have announced plans to ship 80,000mt/month (1 million mt/year) to the US West Coast and the Texas SE cities.

More UFS for Europe's Declining Market

September 1, 2009

Analysis of:Portucel Soporcel's New Mill Begins Production in Portugal | www.papereage.com

The Sopocel mill, located in Setubal, Portugal, is coming on stream with lower cost (because it's a fully integrated mill) Uncoated FreeSheet at a time when the market is projected to decline by roughly 5%/year. How many older, smaller paper machines now located in non-integrated mills will this big new machine make obsolete/ uncompetitive? And how many of them will have to shut down? Taking 500,000mt/year of Bleached Eucalyptus off the market will tighten supply.

#1 + #2 Eucalyptus Producers = World's Biggest

September 1, 2009

Analysis of:Merger of Aracruz and Votorantim Creates FIBRIA | www.paperage.com

Two of the biggest and most successful Bleached Eucalyptus producers have merged producing a company with a capacity of over 6 million mt of top quality pulp. Will this merger create a company who can, in effect, strongly effect if not control pricing? They certainly should be the leader. Will the economies of scale and reduced costs make these two low cost producers enjoy even significantly lower costs? This is certain to have an effect on profitability.

Muskegon - another casualty of declining CFS market

August 28, 2009

Analysis of:SAPPI To Permanently Close Muskegon, MI Coated Paper Mill | www.risiinfo.com

Coated Free Sheet production is down 21% for the first six months of 2009 compared to 2008. To maintain a balance in the market and preserve the pricing structure it will be necessary for additional mills to close or paper machines to be shut down.With the Chinese announcing the importation of 80,000 mt/month of CFS the future doesn't look too bright.

All Newsprint Grades Are Suffering

August 26, 2009

Analysis of:EUROPEAN DEMAND FOR NEWSPRINT DOWN IN JULY | www.paperage.com

While is it generally recognized that newsprint tonnage is falling because readership is down it was hoped that the other segments - SC (super calendared), coated and uncoated mechanical would be able to hold their own. Unfortunately this is not the case and all grades declined in July. SC-magazine saw demand fall by only 6.2% - the least amount whereas the other grades fell by 17-19%. Regular newsprint tonnage in July declined by 96,000 tons

China's Enormous Appetite For Recovered Paper

August 20, 2009

Analysis of:RISI ECONOMISTS: The China Factor In World Recovered Paper Markets | www.risiinfo.com

China's paper industry, in just the last few months, has begun to run full out. Their domestic market has increased its consumption which has added to the traditional export market for container packaging grades. China, in 2009, is expected to purchase 25% of all of the US's recovered paper. This has significantly increased the prices which US mills must pay for OCC and ONP. Is this an abberation or will it continue into 2010?

Moorim Will Become Biggest Fine Paper Producer in So.Korea

August 19, 2009

Analysis of:V OITH TO DELIVER FINE PAPER MACHINE TO SOUTH KOREA | www.paperage.com

This world-class size coated paper machine will be installed at the Ulsan pulp mill site making this the first integrated pulp and paper mill in South Korea. Korea has, for the past 15 years been exporting high quality CFS sheets and rolls to the US. Will this new capacity (450,000tons/year) mean they will be exporting even more? Can the South Korean economy absorb this additional tonnage or will Moorim be forced to export most of the tonnage?

Vietnam Paper Industry: flying under the radar

August 7, 2009

Analysis of:MORE INVESTMENT ON PULP & PAPER INDUSTRY NEEDED | www.shpmedia.com

Viet Nam is currently the fastest growing economy in SE Asia. Growth rate has exceeded 7% since 2002.They must import both pulp and paper to supply domestic needs of 84 million people. Demand & consumption are rising and could reach nearly 2 million mt/year by 2010.The country currently has 300 paper mills but all are small, using antiquated technology. Outside investment is needed to update existing equipment and to build both new pulp and paper mills.

Domtar's shrewd strategy-shutting a UFS machine to increase Fluff Pulp

August 7, 2009

Analysis of:DOMTAR TO SHUT UNCOATED FREESHEET MACHINE IN NORTH CAROLINA | www.paperage.com

Why would Domtar choose to shut down e a relatively newer machine at one of their larger fully integrated mills? Did Domtar feel it was necessary to significantly reduce its capacity in light of the fact that IP had previously closed its Bastrop, LA mill and shut down a UFS machine at Franklin, VA. The 7 UFS grades have seen their annual tonnage drop from slightly over 1 million tons/month a year ago to slightly under 900,000 st/month. At Plymouth UFS tonnage could be turned into Fluff Pulp.

Declining Demand + Decreasing Prices = 0 Profits

July 14, 2009

Analysis of:Tembec Plans Newsprint, Lumber Downtime In Kapuskasing | www.paperage.com

Many Canadian newsprint mills are nearing their "cash cost" levels but to fall below this number means to lose money on every ton shipped. No one is covering their fully allocated costs at this point.  How long can this continue?   Demand continues to fall and shows no signs of abating.  Magazines have reduced their circulation 27% in the past year and big city newspapers have seen sizeable declines in both circulation and advertizing.  Will newsprint ever recover?  Many observers believe the internet has had such an impact that no recovery can ever be envisioned. Boise's current price of $460/st for paper to locations near to their mill in Louisiana is proving a terrible deterrent to any price improvement from the current $510/st level.

Another casualty of coated papers' decline - Kruger Shuts 3 Papermachines at Trois-Riviere

July 13, 2009

Analysis of:Kruger To Indefinitely Stop Production Of Coated Paper At Trois-Rivieres Mill | www.paperage.com

Coated paper demand is closely tied to advertizing...Sunday suppliments, direct mail, catalogs and in-store giveaways.  As newspaper circulation declines and as direct mail advertizing budgets are trimmed it is only natural that supply must be adjusted if disastrous prices reductions are to be avoided.  But...how much is enough?  NewPage has shut Niagara and Kimberly, SAPPI shut a machine in Michigan and several Canadian companies have taken extensive downtime on their CGW machines.  What will it take to create greater demand?  Some say a full economic recovery while others say the internet has offered such an attractive alternative that it will be impossible to overcome.  Therefore, reducing supply appears to be the only alternative...which means shutting down the oldest, slowest, smallest, least cost effective machines.

China's Shandong Chenming Seeks To Become #1

July 6, 2009

Analysis of:Metso To Supply Fine Paper Machine To China | www.paperage.com

Zhangiang Chenming is part of Shandong Chenming Paper Holdings Ltd. In 2008 their paper production capacity was over 3 million tons, turnover was EUR 2 billion and with 17,000 employees.  This huge new paper machine will greatly increase their overall capacity and could push them into a leadership position as far as UFS and CFS are concerned.  APP and APRIL are both also huge but their grades include packaging board, tissue and toweling.  Building a new paper machine with this huge capacity is a tangible expression of what their growing middle class is expected to consume in the next decade.  This machine is to be backed up by a greenfield pulp mill but it is questionable whether or not it can supply both long fiber and short fiber in the quantities required. It is not unreasonable to assume this machine will require many tens of thousands of tons of grades like acacia, eucalyptus and long fibered Radiata Pine and NBSK.

Will supply/demand dynamics eventually raise newsprint pricing?

July 2, 2009

Analysis of:North American Newsprint Consumption Continues Slide | www.paperage.com

Since 1999 newsprint production has fallen from an annualized rate of 12 milion st/year to the current 4+ tons/year.  Many entire mills have been closed....some remaining mills have shut one or more machines while other mills have taken 2 weeks to 2 months downtime.  With all this reduced supply it would seem only natural that prices have got to begin to stabilize.  FOEX reported a drop of $8/ton down to $532.30...a drop of nearly $200/st.   This in spite of extensive downtime. If demand continues to shrink will this not mean the permanent closure of a number of older, lower volume mills.....which often are located in rural areas where they are the only employer in the area?  This is a very sad situation for all the employees but it would seem little can be done. Several producers have announced price hikes for August lst but it remains to be seen whether buyers will go along since there is so much capacity overhang.

Is this "on again, off again" Tasmanian mill about to be built?

July 2, 2009

Analysis of:Gunns Picks JV Partner for Bell Bay Pulp Project | www.paperage.com

The demand for hardwood in Asia is expected to continue to grow significantly over the next 10-20 years - especially as India's paper industry develops to meet the needs of its huge middle class.  At least a half dozen new world-class mills will be needed.  The Gunn's mill in Tasmania is ideally located to supply the Indian sub-continent and all of SE Asia as well as China.  The Government has granted approval but a group of very aggressive environmentalists have said they will stop at nothing to prevent this mill from being built. There are a number of conflicting forces at work here....on the one hand there are the commercial considerations (i.e. to make money), plus the Australian governments desire to expand exports and improve their balance of trade, and then there is also the global need for high quality hardwood. Opposing these positive benefits are the "NIMBY" environmentalists.

Page : 123456Next1 to 20 of 111