IP, GP and Weyerhaeuser Increase Fluff Pulp Production

Implications: 1. IP makes major move to increase Fluff Pulp production
2. IP, GP and Weyerhaeuser all increase their capacities to increase the US's already dominant position if global Fluff Pulp market.
3. New 1Q list price of US$790/admt makes fluff one of the highest priced market pulps which helps improve producers' revenue & profits.

Analysis:
The global fluff pulp market is expected to grow by 5%/year for the next 5 years with Latin America and the Middle East as two of the faster growing areas. The US already enjoys an overwhelming leadership position in this 4 million mt/year business and now IP has announced that their Pensacola, FL mill will concentrate on lightweight bleached packaging papers with their Fluff Pulp tonnage moving to the Riegelwood, NC mill. This mill formerly made lower revenue papergrade softwood and hardwood. Now this mill will have the capability to produce almost 1200mt/day of the higher priced (US$790/admt as of the 1Q) Fluff Pulp. Situated very close to the deep water port of Wilmington, NC will made exporting easier and perhaps with lower freight rates than from the Gulf of Mexico.

Keeping pace, GP (Koch) has increased its Brunswick, GA mill to over 830,000mt/year and expects to increase its Hattiesburg, MS mill above its present 250,000mt/year level.
Weyerhaeuser, now the highest tonnage producer of fluff pulp is transforming its Port Wentworth (Savannah), GA mill from papergrade pulps to strictly Fluff Pulp and expects to produce over 750 mt/day at this mill.

These are all very positive moves...designed to increase these three company's profitability and America's leadership position.